16 HORIZONS
USING TECHNOLOGY TO STAY AHEAD
Retail Technology’s annual Horizons feature discovers that automation, integration, effi ciency and personalisation will remain key priorities during 2011
times. As a result, retailers are having to rely increasingly on technology to gain a competitive edge. Taking the short-term view, after the coldest winter on record, the Offi ce of National Statistics reported total sales volume in the three months to December 2010 was 0.4% higher than the same period a year ago. And the all forecasts for growth are modest at best.
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Looking forward, Neil Saunders, Verdict Research consulting director in his capacity as KPMG/Synovate Retail Think Tank panellist, commented: “After the heavy consumption of Christmas, it is also the quarter in which consumers are more prepared to cut back. Given the challenging backdrop…the big question mark is whether this is a blip or the start of a sustained downturn in the state of retail health.” Double-digit retail sales growth, with the exception of e-commerce, is a thing of the past. To ensure sales growth, customer retention will need to be a top priority for retailers. So, technology enhancements and investment will focus on keeping pace with consumer buying habits, which have evolved to incorporate many channels and methods of interaction. Even last year, research from BT and Martec International revealed the 100 largest UK retailers were planning to prioritise store and e-commerce systems. This was in spite of the fact that IT budgets will remain fairly fl at. Even though the appetite for investing in customer-facing systems for growth has returned, understanding changing consumer dynamics is becoming more complicated – particularly when managing customers remotely. Martec found home shopping retailers spent the largest proportion of sales on IT, at 3.5%. The same research found that IT spend across all retail sectors was 1.1% of sales.
RETAIL TECHNOLOGY JANUARY/FEBRUARY 2011
he art of retailing has undergone profound changes in the wake of the worst global recession of modern
But failure to deliver consistently high
levels of customer service across every channel that a retailer operates in will only help the competition. Therefore multichannel retail integration is still critical; retailers must unify the channels to deliver a seamless customer experience. The Olympics is one area that is likely to spur projects to increase returns on targeted marketing and precision merchandising activities. It will also open up sales channels to more international markets than ever, putting more emphasis on core IT infrastructure resilience and security. Retailers must also prepare for the growth of mobile and social commerce. Analyst fi rm Ovum, has predicted both will offer sales growth potential in 2011 and should not be disregarded as fads. They also put extra technology-based complexity into the multichannel mix. Greater complexity, however, need not mean greater cost. As Martec predicts IT budgets are unlikely to grow, technology investment will need to enable retailers to do more with less. Therefore, retail IT decision makers will strategically target those technologies that deliver greater levels of automation, integration, effi ciency and customer insight and personalisation.
Improving people, management and
business processes will also have a role to play. But only technology can enable more streamlined operating infrastructure, joined- up customer propositions and demand-driven supply chain management. In this context, we should see the technology vendors showcased in this year’s Horizons supplement as evidence of how the technology market is responding to retailers’ most pressing needs. From technology innovation through the concept of converged retailing to the entry of a virtual network operator, most will be tasked in helping retailers make the most of what growth opportunities emerge during the coming year.
Ovum, working closely with Datamonitor retail experts, Verdict Research, has identifi ed the key enabling technologies that shape the outlook for the coming twelve months: • Retail channel fragmentation is still problematic.
• Targeting customers has become even more complex.
• Preparing for the Olympics should be a marathon, not a sprint.
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