Following our series of articles dedicated to specific tech topics, the ubi i/o team brings you today’s article focused on retail tech.
Technology is reshaping the retail landscape faster than ever, with customers now expecting a seamless shopping experience, both online and in-store. Retail companies that are thriving in today’s challenging environment are those that embrace technology to create true differentiation. Technology can not only create incredible shopping experiences for customers, it also brings huge value for retailers. Digital transformation is happening, and doing nothing is losing.
What are the challenges faced by retailers and what are the implications for Retail Tech providers?
1 – Omni-channel
The case for omni-channel is no longer to be made. Brick and mortar retailers must go down this road to survive, and the first step to omni-channel retail is inventory visibility.
Inventory visibility and order management are retailers’ top-two supply chain spending initiatives for 2016. According to a study by Innovative Retail Technologies, Inventory visibility has been key for the past five years (see infographic below). In 2016, 38% percent of retailers plan to invest on solutions that improve inventory visibility and thus inventory management. More than a third will invest in order management/fulfillment solutions.
Cloud – Retail continues to lead other industries on cloud adoption. When Innovative Retail Technologies asked respondents the open-ended question “What was the best systems or operations decision your company made in 2015?”, a majority answered “transitioning applications to the cloud”, followed closely by “inventory visibility and fulfillment initiatives” and “mobile device deployment”.
It is crucial for retailers to have access to enterprise-wide data in real-time to allow inventory visibility and order management. This is enabled by cloud applications. Cloud implementations have been mostly IaaS or PaaS solutions. Security, availability and vendor maturity are all aspects that retailers consider when deciding which functions they want deployed from the cloud.
KPMG’s 2014 Cloud Survey report highlighted the top ways in which retailers use the cloud:
2 – In-store Tech
As retailers invest in data and technology, they’re also spending in what’s already working: the in-store experience. The bulk of retailers’ revenue with both an online and physical presence still comes from their brick-and-mortar locations. Therefore, retailers are prioritizing in-store technology that makes customers’ lives easier such as mobile POS system that allows them to check customers out on the floor or look up inventory from the dressing room.
IOT – the opportunity for IOT in retail is huge, according to Kalypso. Their infographic below describes how IOT can connect systems and enhance the shopper’s experience (beacon technology that can alert nearby customers of in-store deals, RFID tags, interactive displays, etc.)
Mobile POS hardware is the top store level hardware-spending priority for 2016. That was the case for the past 3 years as well – with 38% (2013), 48% (2014) and 51% (2015) of retailers investing in mobile POS.
With all this mobile device proliferation going on in stores, mobile device management was the number one store software spending in 2015. In 2016, however, 33% of retailers plan to invest in their wireless store networks, which are tangible signs of the digital transformation happening in stores.
3 – Marketing
While in 2015, marketing and operations efforts were focused on building e-commerce platforms, customer experience management is job No. 1. Now that the core e-commerce platforms are in place, merchants are strongly investing in customer mindshare with investments in e-mail and social media marketing.
Big Data: From Buzzword to Retailers’ Secret Weapon
Big data can no longer be called just a “buzzword” for big businesses. Smaller retailers have realized that data-backed insights into customers’ buying patterns can help them provide suggestions and boost sales. Utilizing the right data management software can also help them make smarter buying decisions, reducing lost revenue on overstocks or under purchasing.
A 2015 Accenture survey found that nearly 60 percent of shoppers want real-time promotions and offers. “Leading retailers are using technology to serve up customized experiences and recommendations to visitors based on who they are, what they’re doing and, most importantly, their intent at that moment. In short, personalization needs to happen in real-time.
4 – e-commerce applications and services
With online retail sales in the U.S. growing by 14% in Q2 2015, according to the Commerce Department, more web merchants are stepping up their investments in e-commerce solutions. According to a study conducted by Internet Retailer in 2015, the largest web merchants in the U.S. are increasingly investing more money and resources in specialized e-commerce applications and services, such as online advertising and mobile commerce.
Mobile commerce is the fastest-growing vendor category with a customer base that grew by 19.2% to reach 236 retailers in 2015. Website testing/optimization, the fifth-fastest growing vendor category, grew by 8.8% to reach 432 Top 1,000 retailers.
5 – Loss Prevention & Asset Protection – Payment security
Payment security appears as the top security priority for 2016. This is a big shift for LP/AP professionals for whom video surveillance has been a priority year on year. The concern of payment security is directly linked to the 2015 EMV liability shift. U.S. merchants anticipate that chip cards and EMV terminals will help safeguard the POS, but that the EMV initiative will push fraudulent activity to the card-not-present payment environment.
As a conclusion, it’s worth noting that tech spending decisions are no longer made in discipline-specific silos – think Point of Sales (POS) solutions, security, digital marketing, inventory etc. Instead, they’re being made by cross-disciplinary teams with a complete view of the company and its omni-channel goals.