December 15, 2008
Turning Points 2008: Technology is King
By Bill Bittner, President,
BWH Consulting
Editor’s note: In what
we plan to make an annual end-of-year tradition, RetailWire has compiled
a list of the most significant retail industry “Turning Points” of
2008. (See our news release…) What follows is the fourth in a series
of 12 discussions based on the list.
Each April, the Information
Technology Research Institute of the Sam M. Walton College of Business
publishes the results of their survey of retail IT executives and technology
vendors regarding priorities for the coming year. As we look back on 2008,
it is interesting to compare the technology events that appeared in RetailWire against
the priorities set by these business executives. This was the list: (The parenthetical
comments are mine.)
- Corporate
Strategic Planning (Align IT with business) - Speed
of Business/Project Management (Time, money, scope … pick two) - Increase
IT Majors (Technology must be nurtured) - Impact
of Economy (Some things are beyond our control) - Security
and Privacy (There is always someone out to
get you) - Business
Intelligence (So much data, too little information) - Innovation (Stay
one step ahead) - Increasing
Diversity (One person does not have all the
answers) - Organizational
Change Management (Adapt or die) - Governmental Regulations and Compliance (Another
thing beyond our control)
To some extent it seems
that the challenge has not been to create the technology, but rather to
tame it. Retail managers are focused on getting results from investments
in both new and existing technology. The irony is that, often, to get more
from existing technology (e.g. POS scan data) you have to buy more technology
(e.g. Business Intelligence Software).
The RetailWire subjects
referenced during 2008 seemed to bolster this theme. Three of the articles
focused specifically on IT budgets. One of the budget discussions included
a full-scale make over, but the majority focused on tactical benefits from
applications geared to labor utilization, fresh department management,
and interpreting results (Business Intelligence software). Pricing applications
came into maturity as more chains turned over routine margin maintenance
to automation. Others realized that reducing waste in their operations
was a win/win as “green initiatives” built trust with consumers
and reduced expenses.
As efforts to target
individual consumers intensified, customer-facing technology seemed to
return mixed results as customers continued to embrace self-checkout while
pushing back on RFID in dressing rooms. The most exciting consumer item
I saw really came from researching the responses to the demise of biometrics
at Supervalu. Biometric cell phones that assure they’re in their owner’s
possession can present payments (and coupons) to POS systems. Integrating
multiple channels to the consumer and ensuring internet, catalogue and
in-store experiences are coordinated and complementary seemed to be finally
coming together.
RFID was mentioned several
times, but the glamour seems to have died and the hard work is underway.
Closed loop applications for asset, pallet, and tote tracking seem to be
the emphasis as retailers learn how to get the most from this new technology
while costs continue to decline. But the implementation of Business Intelligence
Software and/or Demand Signal Repositories means that retailers are building
the data storage and application platforms needed to glean intelligence
from the huge volumes of data which will be collected through RFID.
Discussion Questions:
What are the technology events you feel marked 2008? Which 2008 technologies
will have the largest impact on operations in 2009? What opportunities
will be traffic and revenue generators?
[Author’s commentary] 2008 may turn out to be the year when many retailers
laid the foundation for taking advantage of new technology. You shouldn’t underestimate
the impact of pricing applications and the insight gained from timely scan
data. In this chaotic economy, retailers can’t always keep up with rising
and falling merchandise costs without help from automation. Fast changing
tastes and new styles make proper assortment planning through business
intelligence software imperative.
2009 does
not portend to be any less hectic, but the retailers who have set the foundation
in 2008 will likely experience the benefits of their investment in technology.
Technology is the benevolent king that will lead them through the confusion.
BrainTrust
Recent Discussions
Discussion Questions
Poll
Retail IT budgets were not the only budgets cut this year nor will they be the only business area suffering for funding next year. Capital will continue to tighten by all forecasts throughout 2009 and not lighten up until early to mid-2010. That being the case, all areas of the retail business have little choice but to do more with what they have. They will be required to look to existing technology to do the new and different things to meet their business strategy. The technology is likely already there but left untapped. Most of what a retailer needs or desires is there and left for the taking when money and resources are unchecked. The result is failure to innovate.
I look for 2009 to be an exciting year for retailers to innovate. Those that provide an open environment where innovations can be fostered, grown and implemented will find great success and a much less costly outcome. This is a time for your internal intellectual capital to be set free to drive results to assist in the implementation of strategy. Cut them loose and by the time their is a free up of financial capital, you just might find out you need less of it than you think.
Its a great time for bottom up solutions that can likely be provided with what you have and you’ll need less of what you don’t. Set up the environment where this can happen without intimidation and it will explode with untapped opportunities to meet strategy that is left wanting for a solution. You may have it already. It’s a great time to turn hand ringing into conversations.
It has become apparent to retailers that business intelligence is imperative in the future from a marketing and sales prospective. POS software paves the way to be able to slice and dice the information to do strategic bulls-eye marketing and gather the information of your prospective consumer. This will dramatically increase traffic and revenue.
The Presidential campaign was a perfect example of technology marketing warfare and the benefits of such.
Retail’s notoriously tiny IT budgets are putting new pressure on IT shops to show quick ROI on projects. As a result, many CIOs report that new projects must come in under “the six month rule.” Luckily, many current initiatives (like business intelligence, which is huge) can show results in a limited period of time.
Already-small IT budgets are being cut for next year, which for a lot of retailers will be the equivalent of eating the seed corn. It will be interesting to see what the effects are.
Walmart’s in-store Smart Network launch is hands down the most game-changing technology happening of 2008 and it will be fascinating to watch how Walmart’s ongoing refinements take shape (and how others react).
The Smart Network promises to quantify the previously unquantifiable (the sales impact of in-store advertising and nuances of location), and it will forever change the relationship between marketers and retailers as a result. It’s yet another costly, long-term initiative that Walmart has taken on at a time when others are hunkering down and waiting for the storm to blow over. If history is any indicator, Wal-Mart will have the bugs worked out and efficiencies humming by the time its competitors are researching possibilities.
It is interesting. Most people in answering this question seem to be focused on the back-end. I think the greatest technological advance is the expansion of self-checkout. If retailers can continue to move traffic through the front of the stores at a more rapid rate, with fewer employees, the customers will be happy.
But we are not recommending that these employees that are no longer needed be fired. Instead, imagine the shopping experience if more employees were on the floor helping consumers, and less were needed at check-out punching keys. It would make the overall shopping experience significantly better.
Once the retailers are able to marry self-checkout with their customer database information, they will be able to utilize technology to track their customer’s shopping experience, and create a more sophisticated customer dialogue at multiple selling touchpoints.
#1 technology event in 2008: Microsoft stock declined 45% YTD versus the 40% S&P 500 decline. Vista’s continued failure to captivate the public and the lack of anything else from Microsoft to make up for the disappointment continues to signal the giant’s momentum slowdown. With more resources than any other software company in the world, Microsoft accomplished no game-changing breakthrough in 2008. The game changer for 2007 was Vista. Beginning to see a pattern?
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Retail IT budgets were not the only budgets cut this year nor will they be the only business area suffering for funding next year. Capital will continue to tighten by all forecasts throughout 2009 and not lighten up until early to mid-2010. That being the case, all areas of the retail business have little choice but to do more with what they have. They will be required to look to existing technology to do the new and different things to meet their business strategy. The technology is likely already there but left untapped. Most of what a retailer needs or desires is there and left for the taking when money and resources are unchecked. The result is failure to innovate.
I look for 2009 to be an exciting year for retailers to innovate. Those that provide an open environment where innovations can be fostered, grown and implemented will find great success and a much less costly outcome. This is a time for your internal intellectual capital to be set free to drive results to assist in the implementation of strategy. Cut them loose and by the time their is a free up of financial capital, you just might find out you need less of it than you think.
Its a great time for bottom up solutions that can likely be provided with what you have and you’ll need less of what you don’t. Set up the environment where this can happen without intimidation and it will explode with untapped opportunities to meet strategy that is left wanting for a solution. You may have it already. It’s a great time to turn hand ringing into conversations.
It has become apparent to retailers that business intelligence is imperative in the future from a marketing and sales prospective. POS software paves the way to be able to slice and dice the information to do strategic bulls-eye marketing and gather the information of your prospective consumer. This will dramatically increase traffic and revenue.
The Presidential campaign was a perfect example of technology marketing warfare and the benefits of such.
Retail’s notoriously tiny IT budgets are putting new pressure on IT shops to show quick ROI on projects. As a result, many CIOs report that new projects must come in under “the six month rule.” Luckily, many current initiatives (like business intelligence, which is huge) can show results in a limited period of time.
Already-small IT budgets are being cut for next year, which for a lot of retailers will be the equivalent of eating the seed corn. It will be interesting to see what the effects are.
Walmart’s in-store Smart Network launch is hands down the most game-changing technology happening of 2008 and it will be fascinating to watch how Walmart’s ongoing refinements take shape (and how others react).
The Smart Network promises to quantify the previously unquantifiable (the sales impact of in-store advertising and nuances of location), and it will forever change the relationship between marketers and retailers as a result. It’s yet another costly, long-term initiative that Walmart has taken on at a time when others are hunkering down and waiting for the storm to blow over. If history is any indicator, Wal-Mart will have the bugs worked out and efficiencies humming by the time its competitors are researching possibilities.
It is interesting. Most people in answering this question seem to be focused on the back-end. I think the greatest technological advance is the expansion of self-checkout. If retailers can continue to move traffic through the front of the stores at a more rapid rate, with fewer employees, the customers will be happy.
But we are not recommending that these employees that are no longer needed be fired. Instead, imagine the shopping experience if more employees were on the floor helping consumers, and less were needed at check-out punching keys. It would make the overall shopping experience significantly better.
Once the retailers are able to marry self-checkout with their customer database information, they will be able to utilize technology to track their customer’s shopping experience, and create a more sophisticated customer dialogue at multiple selling touchpoints.
#1 technology event in 2008: Microsoft stock declined 45% YTD versus the 40% S&P 500 decline. Vista’s continued failure to captivate the public and the lack of anything else from Microsoft to make up for the disappointment continues to signal the giant’s momentum slowdown. With more resources than any other software company in the world, Microsoft accomplished no game-changing breakthrough in 2008. The game changer for 2007 was Vista. Beginning to see a pattern?