Innovative Retail Technologies

MAR-APR 2017

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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of most of the transactional data that affects inventory accuracy (and thus visibility) produces dirty data and was never intended to be integrated in real time with anything but payment systems. Furthermore, in-store POS was never intended to be anything but a checkout system, i.e., it was not designed to integrate with an omni- channel customer order management system, let alone be part of one. This is a big challenge, especially for the big retailers, but one that they must finally embrace. In the next section, we'll see how retailers — winners, especially — plan to address these showstopping inhibitors. Technology Enablers Some Agreement, But Many More Differences We've already seen that winners acknowledge the challenges associated with integrating their selling environments into one cohesive offer, and that technology is a key enabler to addressing those challenges. Winners' attitudes towards the enabling nature of new technologies is further underlined in the value they assign to them. There are some technologies that retailers in every performance group agree are very valuable, most notably inventory visibility, but also a single customer interaction platform that crosses channels and an application program interface layer in the application architecture to ease integration. Simply put, retailers of all stripes see the same baseline issues; they need to make available-to-sell inventory visible across all their selling channels, they need to address consumers' demands for a seamless experience, and they need to be able to implement component parts of a total solution more easily than they might have been able to do in the past. These are essential ingredients of an omni-channel offering and not particularly differentiating except in the negative: That is — a retailer is negatively impacted compared to competition if it can't enable these capabilities. That's where the concurrence between over-, average, and underperformers stops. Answering the concern that they expressed about legacy in-store technologies in the Organizational Inhibitors section of this report, two-thirds of winners place importance on a more modern POS platform in addition to a more modern e-commerce platform, while over 60% of average and underperformers don't. Most overperforming retailers seem to acknowledge that while they each have their purpose, both the physical and the digital selling environments must integrate to a single customer interaction platform that supports a seamless shopping experience for consumers. Winners think of these capabilities as joined together, while most average and underperformers tend to think of them separately. A Lot O f Work To Do Despite the value that retailers assign to the various technologies that enable a more omni-channel offering, when we asked retailers to tell us how far they have progressed to implement those enablers, we got a far different — and frankly pretty depressing — view of their progress to date. In no single instance does the number of "implemented/satisfied" responses come close to the number of "implement/planning a change" plus "budgeted project" responses. The most charitable interpretation of this set of findings is that the entire industry is in the throes of a major upgrade. A more realistic interpretation is that after several years of saying that they want to address the challenges and opportunities that these technologies represent, retailers are finally at that point where they must change. Indeed, the only enabling technology that less than 40% of responding retailers indicated is up for a change in the near future is the last one on the list: clienteling and assisted selling. Not All Bad News There's a lot of dissatisfaction with efforts to date to enable omni- channel capabilities with technology, but the news isn't all bad. As one might expect, winners fare better in key capabilities such as distributed order management and a mobile commerce platform. And there are big differences between the verticals (most notably between FMCG/GM merchants and apparel/boutique merchants), showing some encouraging progress. For example, apparel and boutique merchants have made much better progress with enterprisewide customer and inventory visibility than FMCG/GM merchants. This is probably reflective of the fact that these retailers are much more fashion trend-oriented than retailers that sell highly replenishable consumer products and tend to encourage cross-channel fulfillment as a part of their service offering more than FMCG/GM merchants (especially FMCG retailers) do. But we must acknowledge that while these are positive signs, the percentage of retailers who report "implemented/satisfied" for key enabling technologies is still very low. Retailers of all stripes have a lot of work ahead of them to truly enable an omni-channel environment. Getting Unstuck Where to start? It's hard to make any sense from such an all- encompassing list of to-do's, and given typical capital constraints and/or the limitations to the allowable impact on retailers' P&L expense ratios, it's totally unreasonable to think that retailers can address these enablers all at once. But as it turns out, winners once again give us some clues about how to get unstuck. Winners' top technology enablers that are slated for replacement or are budgeted for net-new implementation. From this cut, we can see that a different kind of story emerges. While a more modern POS system and enterprisewide inventory are still very important to winners, overperformers are even more Mar-Apr 2017 18

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