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When Nike hired its first chief digital officer just over a year ago, it wasn’t just to lead a couple of projects. Reporting to the president, the CDO took charge of all products and services across, Nike+ as well the brand's other digital platforms.

Already considered a digital innovation leader, Nike’s decision to hire a CDO was seen by industry experts as a big move.

Nike isn’t the only retailer to hire a CDO. In the last year alone, retailers like Urban Outfitters and Citizen Watch have added the CDO role to the C-suite.

Why companies are hiring chief digital officers

The recent rise of the CDO in retail is driven by digital transformation efforts across all business sectors. For example, L’Oreal, the largest cosmetics and beauty company in the world, began its digital transformation in 2014 and appointed Lubomira Rochet as its CDO to lead digital initiatives. Among Rochet’s biggest priorities: figuring out the company’s approach to programmatic media buying, making sure the brand provides a consistent customer experience and exploring new terrains like artificial intelligence.

Many CDOs bring deep technological expertise, but CEOs also hope that this new C-suite role can bring valuable consumer insight. Part of the CDO’s responsibility is to ensure that “you always have the customer in the room—not the customer today, but the customer you’re going to have tomorrow,” Faisal Masud, CDO of Staples, tells the National Retail Federation.

What retail CDOs need to succeed

CDOs are responsible for tying the digital experience together, so their background can vary. The most successful CDOs are those who are part leader, bridge-builder and evangelist. They need to understand marketing, strategy, e-commerce and IT. They must be able to break down the silos between the retailer’s different departments.

A tech background helps. L’Oreal’s Rochet had a Silicon Valley background that included stints at Capgemini and Microsoft. Similarly, luxury fashion group LVMH filled the role of CDO with an Apple exec.

The duties and skills of the CDO have evolved since the job title first appeared several years ago. More recently, it’s become what McKinsey has dubbed the “transformer in chief.” This person is hired not only to introduce basic digital capabilities and lead a few pilot projects, but also to coordinate and manage comprehensive changes. These projects could include updating how the company works as well as building out new lines of business.

A key challenge facing CDOs is developing a deep and detailed view of customer behavior across all channels in a challenging, competitive landscape where consumers are empowered by digital technology to easily take their business elsewhere. The CDO must distill this insight into strategy that informs both businesses and technology decisions across the company.

Just like other major industries, getting closer to consumers and creating a dialogue with them is becoming an advantage—and this is something CDOs can help drive. In fact, according to McKinsey, successful CDOs obsess over the customer; they make knowing the customer “a driving passion and competency of the organization.”

Ultimately, CDOs need to leverage ongoing customer intelligence to inspire cultural and technological transformation and deliver value to the business. “With technology and customer habits changing so quickly, developing a deep and detailed view of customer behavior across all channels provides a common reference point in any business discussion and arms the CDO to challenge the status quo and make changes,” the McKinsey report explains.

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