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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investment in each of those years. Gartner defines customer experience management as "the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty, and advocacy." That's a cat that can be skinned in many different ways, but again, inventory visibility and flexible fulfillment methodology are foundational. While we would expect cyclical stagnation and a bit of plateauing in some areas, such as e-commerce platform investment and perhaps even social media and email marketing, the reported pullback on order management and plateau of inventory management/visibility is perplexing at first blush. It's corroborated, however, by RSR's August 2016 report Retailers' Omni-Channel Blind Spot: Digital. That report found that 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. That's a red flag that deserves a closer look. In that most recent report, RSR reveals what might be the root cause of the order management hang-up. Asked to identify their top inhibitors to progress, 62 percent of retail winners cited "inventory and order management not being integrated across all the channels." What's more, the report points out that this has been the case for the last five years. The underlying problem isn't the new technology; it's getting it to work with legacy systems, namely POS. In fact, retailers understand the value of order management; in the same study, three- quarters of retail winners named it a "very valuable" technology enabler, second only to mobile commerce platforms. As you can see in our annual Retail Tech Spending Report in this issue, the legacy POS issue isn't going away all too soon. Just a quarter of retailers are planning POS software upgrades this year. To oversimplify the problem, while stores want to exploit their role on the new customer journey, their "if it ain't broke, don't fix it" mentality around store systems is holding them back. While the back-end digital/physical retail connectivity tools available on today's market are sophisticated enough to drive true omni- channel from concept to reality, protection of legacy investments and difficulty integrating with them is holding merchants back. It's like putting a modern addition on a century-old farmhouse; the addition would be great, but there's that sagging foundation to be dealt with, and that slumped roof, and those rickety old windows. Preparing the old to accept the new adds incrementally to the cost of the project. Key Takeaways For 2017 While earth-shattering advances to back- end omni-channel functionality were somewhat hamstrung by legacy investments this year, we do see active progress as merchants achieve clearer, enterprisewide visibility into inventory. The next step — enabling order management execution and fulfillment practices that aren't just flexible, but efficient across the enterprise — is going to take digital-minded leadership and, of course, technology investment. Those investment priorities might not be immediately clear; the commerce platform needs to prepare the brand for whatever customer experience expectation comes next, and while some of that is unknown, it will become clearer the more entrenched the executive leadership team gets in the customer journeys it seeks to understand. That ongoing exercise — combined with analytics to support a test-and-measure approach to success and failure — will cast a light on the legacy systems that are holding merchants back. Nov-Dec 2016 14

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