Innovative Retail Technologies

NOV-DEC 2016

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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conducted for Innovative Retail Technologies' annual Retail Tech Spending report (see page 6 of this issue). Those are: • Achieving channel-agnostic inventory visibility • Furthering investment in omni- channel systems and technologies, such as order management That assertion that these initiatives are central to overcoming omni-channel merchants' biggest challenges is drawn from the simple fact that anywhere from 92 percent to 95 percent of retail sales — depending on which research analyst you ask — are still consummated in physical stores. That reality makes investment in cross-channel inventory visibility and omni- channel fulfillment systems an imperative for multi/cross/omni-channel retailers. That ongoing reality — this ratio of store-to-e- commerce sales has stalled in favor of stores far longer than many had anticipated — has contributed to the maturation of the omni- channel mentality; within the four walls of an enterprise, physical and digital retailing is no longer an "us versus them" proposition. As noted earlier, consumers have set that tone. The Inventory Visibility Challenge Remains Meeting the modern consumer's expectations first and foremost requires accurate inventory visibility; it's simply foundational. But our Retail Tech Spending benchmark reporting effort paints a less- than-perfect, but improving, picture of retailers' confidence that they've achieved it. As the chart on this page illustrates, 55 percent of merchants agreed with the statement, "My company has inventory visibility across all channels," in 2016, down from 62 percent in 2015, but up from just half in 2014. That brief spike in confidence during 2015 may have been a premature assumption, corrected over the course of the past twelve months as merchants have attempted omni-channel execution — and perhaps experienced a degree of failure. We see measurable improvement, however, among those with more confidence. The percentage of retailers that agree with the statement has climbed considerably, from 17 percent in 2014 to more than 26 percent today. Accurate visibility of inventory in and of itself, however, isn't enough. Meeting the customer's omni-channel expectation also requires the ability to execute on accurate visibility of enterprisewide inventory: to take that inventory and make it available to online shoppers in stores, whether in person, in a ship-from-store environment, or both, and to allow flexible allocation of inventory from DCs to DCs, DCs to stores, stores to stores, or in effect, anywhere to anywhere. When we asked our survey respondents whether they agree or disagree with the statement, "My company is actively investing in omni-channel systems and technologies," we again saw evidence of progress. Among those in agreement, the percentage has risen from 17 percent in 2014 to 24 percent today. Next, we dug a bit deeper into those purported omni-channel systems and technology investments. Customer Experience Management Leads Spending Plans A three-year review of merchants' omni- channel systems and technology investment plans offered up some surprises. Retailers' omni-channel investment plans for 2017 are down compared to their 2015 and 2016 plans in many categories. Customer experience management is the most solid performer over the three- year stretch, with over 40 percent planned 13 Nov-Dec 2016 Just 23 percent of merchants have implemented distributed order management and are satisfied with it, while a staggering 46 percent have implemented it but are planning a change.

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