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Analysis Retail
Measuring ROI
Return on investment is the mantra for both the IT and finance
departments. But how, realistically, is this measured?
IT Reseller put the question to Brian Hume, managing
director of Martec International.
etailers as a breed are purpose designed EPOS device because capture solutions. At store level, it is
extremely good at expense they don’t need the same level of security. harder to quantify ROI and the latent
control, and things such as Very often the owner works in the business growth just is not there at present.
labour savings delivered by any and keeps a closer eye on things.”
new technology mostly get So, where does that leave us? According
realised. This is the view of Martec’s Brian to the Bank of England, growth will be
Hume. “An interesting upside to the current Driving growth “fragile” in 2010. This will undoubtedly
financial climate is that if the project has a be reflected in retail and Hume gives an
good ROI, the cost of money is a lot lower In terms of putting one sector under the equally cautious assessment of how the
and the minimum return a project needs microscope, then mobility for the workforce next year or two may develop. “Personally,
to achieve is also lower,” he added. is an area a little like multi-channel, which I’m not convinced that growth will resume
can demonstrate continued investment in 2010. I suspect that the current
However, Hume points out, where it can through having such clear potential benefits, economy is what normal looks like for the
get harder is in margin improvements and and hence has driven the develop ment next two or three years. I believe that
sales increases. “Potential margin improve- of more and more sophisticated and investment in 2010 will follow the pattern
ments can often be identified, but afterwards feature-rich mobile computers. Claims of in 2009. In other words, it will be based on
no-one can prove whether they really got deliverable ROI are still helping to drive projects with a demonstrable ROI. I think
them,” he remarked. “However, when
building an ROI model, the logic of achieving
a margin gain can be modelled. For
example, in fashion a margin gain might
be realised theoretically through increasing
the degree of full-price sell through the
percentage of goods that get sold before
any price reduction is necessary. While
you may not be able to prove that you got
the margin gain, you can at least prove
that your full-price sell through increased
in line with your predictions.”
On the assumption that a project has the
green light, what are the key elements
that retailers should have at the top of
their list of priorities when selecting new
point of sale hardware and software?
Hume is clear: “For the volume retailer,
Brian Hume: “For the volume retailer, speed through the checkout
is critical these days.”
speed through the checkout is critical
these days. The next aspect is loss
prevention. In this economy, losses are growth among DCs, where everyone has retailers will continue to play it safe, hence
rising and the volume retailers are more enough scale but a recent Martec survey big ERP projects won’t be at all common
affected. In a low-volume, high transaction shows there is less scope in stores and the focus will continue on projects
value environment, it is easier to notice because a high percentage of the stores like merchandise and assortment
issues. When it comes to SME retailers, not using mobile technology are small planning, forecasting and replenishment,
they may choose to have a PC on a cash format fashion stores without the scale labour scheduling and the like, where
drawer type of system rather than a for the adoption of real-time mobile data there are clear paybacks.” a71
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