a supplement to ris news march/april 2016 26 annual … · senior account director ashley ramirez...

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2 6 T H A N N U A L

P R E S E N T E D B Y R E S E A R C H P A R T N E R

• IT Budgets• Store Systems• POS/checkout

• Analytics• Merchandise Management

• Supply Chain• Workforce Management

• E-CommerceT E C H N O L O G Y S T U D Y

Personalization:It’s All About Me!

Personalization:It’s All About Me!

Doubling down on unified systems that deliver a personalized shopping experience

R I S R E T A I L T E C H N O L O G Y S T U D Y M A R C H / A P R I L 2 0 1 6 3

Embracing Ch-Ch ChangesThe more things change the more they stay the same. This old adage came to mind as I was writing about the 2016 Retail Tech-nology Study, which has been retooled and reinvented for the post-omnichannel age.

For the first time in 15 years, Jeff Roster is not the principal analyst and brains behind the study, which is now in its 26th year. The good news is that RIS News continues a close relation-ship with Gartner, but the torch has been passed to an equally astute Gartner research analyst, Bob Hetu.

I began working with Hetu on this project back in November and our col-laboration continued through development of the questionnaire, aggregation of responses, and ultimately the final analysis, which you will read in the fol-lowing pages.

Hetu brings strong experience in retail along with his analyst credentials. This experience includes many years with Kmart, VF and Macy’s. Much of his back-ground includes senior positions in merchandising, which adds great depth to the merchandise management section of the study and all of merchandising’s many related processes. Hetu has also added deep domain expertise in analyt-ics while at Gartner, which is good news because analytics has emerged as one of the major driving forces in retail technology and in this study.

This year’s study contains several familiar elements, such as listing the year’s top 10 strategies, challenges and technologies. But it differs in some fundamen-tal ways, many of which are enabled by a respondent pool of more than 100 re-tailers, including Walmart, Staples, Walgreens, Home Depot, Delhaize America, Costco, Macy’s, The Gap, Albertson’s and more.

With a data pool this deep we are able to do more cross-tab analysis by seg-ment than ever before and take deeper looks into more than 80 technology solutions. In fact, the data pool is so deep that plans are in the works to publish separate slices of the data in reports that focus on individual retail segments, revenue categories and technology solutions. More to come on this soon.

As the Retail Technology Study moves forward, I can’t help but look back at the 15 years of collaboration with Jeff Roster as a high water mark, and this standard now becomes a goal to live up to. Roster’s influence was essential to the success of the study during his tenure at the helm and also to my devel-opment as a professional in this industry. Both influences will continue to be felt for many years ahead even as we embark on a new mission appropriately aligned with the ever ch-ch changing times.

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VP OF TECHNOLOGY BRANDSDave [email protected]

EDITORIALEDITORIAL DIRECTOR Joe [email protected] EDITOR Timothy [email protected] MANAGING EDITOR Jamie Grill-Goodman [email protected] RESEARCH ANALYSTBob Hetu

SALESASSOCIATE PUBLISHER Catherine J. Marder603.672.2796 [email protected] ACCOUNT DIRECTOR Ashley Ramirez904.853.6828 [email protected] ACCOUNT EXECUTIVE Jennifer Cohagan914-693-2948 [email protected] TO THE PUBLISHER Jen [email protected]

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ONLINE MEDIADIRECTOR OF LEAD GENERATION & AUDIENCE DEVELOPMENT Jason [email protected] DEVELOPMENT MANAGER Scott [email protected] EVENT PRODUCER Whitney Ryerson [email protected]

MARKETING/EVENTS/CIRCULATIONDIRECTOR, EVENT PLANNING Pat [email protected] MANAGER Jeffrey [email protected]

SUBCRIPTIONS 978.671.0449REPRINTS: PARS Int’l, 212.221.9595 x319

CORPORATE OFFICERSPRESIDENT & CEO Kollin [email protected]

VICE PRESIDENT & CFO, Kyle [email protected]

CHIEF REVENUE OFFICER Ned [email protected]

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Who Responded

This year’s benchmark study is based on input from 102 retailers who completed all questions in our comprehensive survey and then hit the “done” button at the end. This provides us with a total picture of each respondent to use for reliable cross-tab analysis.

A majority of respondents work within the IT department, either CIO (10%), VP of IT (16%) or di-rector/manager of IT (28%). More than a fifth is in the C-suite — a combination of C-level non-IT (18%) and CIO (10%).

It is also worth noting that all respondents work for national or large regional chains. Small main-street-type retailers are not included.

In fact, the respondent pool is heavily weight-ed with tier-one retailers who have the budget to

deploy advanced technologies and drive industry trends through their large purchases.

Also, all respondents have major responsibility for IT strategy and purchasing within their organizations and no field-level or store-level staff was included.

As noted, the annual revenue of respondents is weighted toward tier-one retailers: 44% have annu-al sales revenue greater than $1 billion and of these 23% have revenue greater than $5 billion.

All major retail segments are well represented — specialty 34%, apparel/footwear/accessories 21%, food/convenience/drug 21%, e-commerce 14%, and department store/mass merchandise/big box discounter 11%.

This study was conducted during the months of January and February of 2016. •

A B O U T G A R T N E RGartner Research is a leading provider of research and analysis about the global information technology industry. It worked with RIS News to produce this study, which was conducted during the first two months of 2016. In conjunction with the RIS editorial team, Gartner created the survey and posted it online. Gartner performed the analysis of the data and was then interviewed by RIS on the meaning of the data. Gartner was not paid for its involvement and RIS did not involve any of the advertisers in the report during the preparation or analysis phases.


M E T H O D O L O G Y

JOBTITLE

RETAILSEGMENT

ANNUALSALES

VOLUME

11%CEO

21%Apparel/Footwear/Accessories

21%Food/Drug/ Convenience

11%Department Store/Mass Merchandise/Big Box Discounter

14%E-commerce

9% Other

10% CIO

20% Department

Manager/ Director

16%VP OF IT

7%CMO/VP

Marketing

28%Director/

Manager Of It

21%<$100 million

18%$100 million to $500

million

19%$500 million to $1 billion

21%$1 billion

to $5 billion

23%>$5 billion34%

Specialty



1 Developing personalized marketing capabilities 51%

2 Network and IT systems security 47%

3 Leveraging social media

(for sales, CRM, hiring, customer service, etc.) 46%

4 New payment technologies (EMV, contactless, mobile, etc.) 45%

5 Expanding unified commerce (omnichannel) initiatives 44%

6 Advancing mobile commerce 43%

7 Increasing customer engagement

(cross-channel, interactive communication and/or activity) 40%

8 Pricing optimization

(analytics-driven pricing shifts at accelerated speeds) 26%

9 Adding predictive analytic capabilities 26%

10 Advancing mobile store/enterprise capabilities 23%

1 Customer data security 49%

2 Retiring legacy systems 46%

3 Optimizing digital commerce as growth channels 39%

4 Application integration 35%

5 Optimizing stores as a growing channel 29%

6 Consolidating channel silos 28%

7 Fighting intrusions and breeches 26%

8 Upgrading store-level bandwidth and infrastructure 24%

9 Developing apps to enable the newly empowered consumer 21%

10 Amazon and other online-only retailers 21%

E X E C U T I V E S U M M A R Y

Age of Amazon: Challenge and Opportunity

Multichannel retailers finished 2015 battle-weary as competitive pressures and changes in consumer shopping patterns deepened challenges to profit-able growth. Many retailers announced store clos-ings as they culled underperforming locations while others negotiated real-estate sales to generate cash for investment.

In this survey, 21% of respondents listed Ama-zon (and other online competitors) as one of the top challenges for the next three years, which was the first time we included this option in the study. But it is important to note that Amazon is just a proxy for a bigger problem facing retailers.

The challenge is not Amazon, it’s each retailer’s ability (or lack thereof) to sense and support shifts in consumer shopping preferences and exploit their own organizational strengths. Each retail brand has strong built-in value and regardless of claims to the contrary, the brick-and-mortar store is not going away for the next 25 years at least.

The challenges in retail are enormous, no doubt about it, but so are the opportunities, which is why a survey like this is so important for us to take stock of the state of play.

To seize retail opportunities today, step one is to stop reacting. The old adage is still true: the best de-fense is a good offense. However, before creating the offense playbook and seeking answers to prob-lems through technology it is important to ask busi-ness leaders four key questions:

• What do our customers expect from us now and in the future? • What does the organization do exceptionally well?• What is our biggest weakness?• What would you do to disintermediate us? Look for sharp answers, ask why several times,

and in the process you will begin to understand the foundational challenges that will serve as seeds for future strategies. When managing this process it is important to understand that tactics are not strate-gies and that strategies contain tactics.

For example, price matching is not a strategy, it’s a tactic. What is the reason for price matching? May-be it’s because the retail brand is not doing a good

The way forward for retailers is to quickly sense and respond to shifts in shopper preferences and effectively exploit existing internal strengths By Bob Hetu

Top 10 challenges over next 3 years

Top 10 major strategies over the next 18 months


synchronization efforts.”) Consumers are demand-ing consistent experiences with the retail brand when they move across channels during shopping, researching, browsing and transacting activity.

This kind of channel surfing is not about om-nichannel or any other buzzword. Rather it gives ur-gency to the task of creating a retail experience that meets the customer’s evolving needs.

Newly appearing on the top strategies list this year is price optimization, which was cited by 26% of respondents as a major focus. Price optimization is closely aligned to both personalization and unified commerce strategies and indicates that retailers are grappling with issues around individual pricing as well as unifying back-end marketing and merchan-dising systems. Note that price matching is not a long-term answer and consumers will only tolerate it for so long before defecting.

CONCLUSIONSOne of the most terrifying phrases that I have ever heard came from the lips of my wife as we shopped a local big box discounter where she proclaimed, “There is nothing here to buy.” This was in response to a short shopping list that could not be satisfied from a store full of merchandise. The problem was extensive stock-outs, sloppy aisles, lack of sales as-sociates — the list goes on. The cautionary tale is that customer expectations matter.

Multi-channel, omnichannel, e-commerce, mo-bile commerce, now unified commerce, it’s all just retail. Customers’ demands have not changed: they want the right product in the right place at the right time for the right price. How customers seek to fulfill those demands has changed, and how retailers en-able those demands to be fulfilled has changed.

Technology is the enabler of experiences that each customer faces as she tries to transact. Invest-ments in technologies that improve the retailer’s ability to meet customer expectations, exploit innate strengths, overcome weakness and disintermediate others, will move the needle. Make wise choices. •

enough job of meeting customer expectations. Per-haps cost structure is the biggest weakness, prevent-ing the easy setting of competitive pricing. Getting answers to these questions will greatly improve the odds of investing in the right technologies.

Customer personalization capabilities (51%) lead this year’s survey of the top strategies retailers are focused on over the next 18 months. This is not sur-prising since personalization is perceived to be the last best hope of offsetting competitive pressures by physical retailers seeking to build relationships that buoy loyalty.

Enabled by advanced analytics and beacon tech-nologies, retailers will set their sights on communi-cating with customers through personalized mes-sages including offers for discounts and special services. Personalization implies a relationship that cannot be taken lightly. As a result, retailers must tread carefully as they foray into building stronger relationships. Since truly personalized offers require deep understanding of customer behavior and are difficult (if not impossible) to do on a one-to-one ba-sis, the most common scenarios today are general-ized offers delivered personally.

Other priorities aligned with personalization on the list include leveraging social media (46%) as a tool for both learning about consumers and market-ing directly to them in a targeted fashion.

One of the key strategies that quickly established itself on the list this year is expanding unified com-merce initiatives, which can be thought of as one step beyond omnichannel initiatives. (Note: Last year we used the term “expanding multichannel


E X E C U T I V E S U M M A R Y

Top 10 technologies for 2016

1 EMV payment (cards with computer chips) 50%

2 Social media analytics 46%

3 Product purchase history analysis (POS and transactions) 45%

4 Promotion optimization 45%

5 CRM/Personalization 45%

6 Shopper tracking capability 43%

7 Multi-channel customer behavioral segmentation 43%

8 Mobile devices for associates/manager 42%

9 Inventory optimization 42%

10 Campaign analysis and forecasting 42%

Bob Hetu is a Research Director with the Gartner Retail Industry Services team. His responsibilities involve racking the technology markets and trends impacting the broad-based retail merchandising and planning areas as well as advanced analytics for retail. Mr. Hetu is an expert in the areas of brand, vendor and assortment management, merchandise planning, allocation, and replenishment. Contact him on Twitter: @bob_hetu

In the post-omnichannel world retailers are doubling down on personalization and unified commerce

By Joe Skorupa

No Channel Left Behind

It’s been nearly 10 years since omnichannel retail-ing made the leap into a defining go-to-market strategy. It got off a slow start, but ultimately the buzzword became widely adopted because it apt-ly described the rapid expansion into new sales channels that had just begun by both online-on-ly and brick-and-mortar retailers. This expansion occurred at a rapid pace and included such sales channels as e-commerce, mobile commerce, so-cial media, flash sales, membership groups, sub-scription sales, affiliate partner platforms and complex mash ups of all of the above.

The motivation for the expansion was simple to understand: every channel a retailer did not appear in meant it was invisible to shoppers who were using it. No retailer can afford to be invisible to shoppers, so there was an urgency to be pres-ent everywhere, to be omnipresent.

Today, we are fast-approaching the post-om-nichannel era and, finally, some perspective is emerging. At its best, omnichannel retailing meant doubling-down on improving the shopper experi-ence wherever it occurred by delivering new and better services for convenience, product selection and fulfillment. It also meant a renewed commit-ment to innovation, i.e. figuring out how to ship small orders using systems designed for bulk, converting store associates into multichannel ad-

visors, and testing a wide range of emerging tech-nologies as rapidly as they were being adopted by category leaders.

This year’s RIS/Gartner Retail Technology Study tracks the progress of omnichannel retailing as it evolves into two new important phases: 1. Unified commerce, which attempts to consolidate back-end systems that were bolted onto the retail tech stack in a siloed manner, an approach that traded interoperability for speed of deployment; and 2. Personalization, which is the ultimate expression of customer-centricity and represents a strong commitment by retailers to make tailored engage-ment as close to one-to-one interaction as is tech-nologically feasible.

Change in Year Over Year IT Budget


I T B U D G E T S

Of all retailers will increase their IT spending budgets year over year, 60% are smaller retailers with revenue less than $1 billion.

Decrease >10% 5%

Decrease 5%-10% 4%

Decrease 1%-5% 9%

No change 23%

Increase 1%-5% 27%

Increase 5%-10% 25%

Increase >10% 6%

60%

1 0 M A R C H / A P R I L 2 0 1 6 R I S R E T A I L T E C H N O L O G Y S T U D Y

In this cross-tab we see that smaller retailers are actually growing their IT budgets faster than tier-one retailers. We find that of those who say they will increase their IT spending this year 60% fall into the sub-billion dollar category.

In a second breakout, which looks at retailers by segment, we find that e-commerce retailers (those that say their primary business model is online) plan to increase their IT budgets the most in 2016 of the four segments tracked. E-commerce retail-ers are followed by food/drug/convenience retail-ers and then specialty retailers. Apparel/footwear/accessories retailers plan to increase their IT bud-gets by the least amount compared to the other segments.

However, the overall story in IT budgets for 2016 is a decision to maintain current levels of spending. While it is true that retail leaders plan to spend more year-over-year and are clustered in the 1%-5% increase and 5%-10% increase catego-ries, it is also true that the overall average increase for all respondents is roughly 1% and this figure is closely maintained in a narrow range through all breakout categories.

PRIMARY BUSINESS MODELOne finding that clearly demonstrates how our un-derstanding of retail is changing is a datapoint that highlights retailer business models. In this data-point, we see that one fifth (20%) say that digital or e-commerce is their primary business or revenue model. This number has been steadily climbing from the single digits as recently as 2013 (7%). Hit-ting 20% is a milestone that shows how far digi-tal merchants have penetrated the mainstream, multi-trillion-dollar retail industry.

2016 IT INVESTMENT PLANSIn previous iterations of this study we tracked overall IT budgets as a percentage of corporate revenue, and it stubbornly stuck to a narrow range between 1.7% to 2.5%, the latter figure of which occurred in last year’s report thanks to a high per-centage of respondents who were e-commerce pure-plays that invested a higher-than-average amount in technology compared to primarily brick-and-mortar retailers.

This year our respondent pool is deep enough to focus on changes in year-over-year IT budgets broken out in several cross-tabs. In one of the breakouts we looked at the difference between re-tailers with less than one billion dollars in revenue and those with revenue greater than one billion dollars.


Primary business/revenue model

Brick-and-mortar Digital/E-commerce

Direct Marketing/Catalog

20%

73%

7%


I T B U D G E T S

“At its best, omnichannel retailing meant doubling-down on improving the shopper experience wherever it occurs by delivering new and better services for convenience, product selection and fulfillment.”

“Single-channel retail is dead, either online or brick-and-mortar, and only multi-channel retailers will survive.”

T E C H N O L O G Y S T U D Y

retail sales? Yes. The figures cited typically come from the U.S. Census Bureau or Department of Commerce, which means they are a complicated mix of data not commonly thought of as being core to the retail industry, such as automobiles, airline and event tickets, movie and music sales, and takeout meals from restaurants.

These government figures can be parsed to remove outlier information, but they frequently aren’t. The truth is that most national and large re-gional retail chains generate far more digital sales than 10% of their overall revenue. In fact, study respondents say that 20%* of their overall revenue comes from e-commerce, 73% from brick-and-mortar, and 7% from direct marketing/catalog.

This gives credence to the notion that it is a myth to say that 90% of retail sales come from physical stores and the new reality is backed up by the find-ings in this study and the fact that there is a long list of brick-and-mortar retailers whose online sales are in the billions of dollars including: Walmart, Macy’s, Home Depot, Staples, Sears, Best Buy, Office De-pot, Costco, The Gap and Newegg.

The retail industry has come a long way since online revenue was commonly calculated as being approximately equal to operating one brick-and-mortar store. Today, the online figure for many re-tailers would be closer to 100 stores. •

Also worth noting is that just because a retail-er checks the box indicating its primary revenue source is e-commerce doesn’t mean it has no stores. In fact, one of the major trends in retail to-day is that online retailers are branching out into the world of brick and mortar. A short list of digital only retailers expanding into physical stores in-cludes Athleta, Warby Parker, Bonobos, Rent the Runway, Birchbox, ModCloth and, the big kahuna, Amazon.

Underscoring this point, Scott Galloway, the founder and CEO of L2 and author of YouTube vid-eos that have gone viral, has famously said the days of pure-play e-commerce are over. In fact, he has said that single-channel retail is dead, either online or brick-and-mortar, and only multi-channel retailers will survive.

This point is driven home in the finding that just 73% of overall revenue for study respondents comes from the brick-and-mortar channel. Is this figure for real? Haven’t we read many times that brick-and-mortar stores account for about 90% of


Revenue by source

Brick-and-mortar

E-commerce

Supplier/Distributor

Direct Marketing/Catalog/Contact center

Mobile commerce

Social commerce

69%

20%

17%

10%

6%

2%

“Smaller retailers are growing their IT budgets faster than tier-one

retailers. Of those who say they will increase their IT spending this

year 60% fall into the sub-billiondollar category.”


I T B U D G E T S

* Note that 15% of respondents are e-commerce pure-plays, which will drive up the average online revenue figure.

In this snapshot of retail revenue by source the figures shown are for

the entire respondent pool and do not add up to 100%. For example, for the

88 retailers who say they have brick-and-mortar revenue the average is 69%.

For the 27 retailers who say they have supplier/distributor revenue the

average is 17%. And so forth.


Tracked individually, investment trends for 83 solutions show an industry struggling to set priorities, but a clearer picture emerges from a 30,000-foot view

By Bob Hetu and Joe Skorupa

Personalization and Unification


There are approximately 100 software solutions commonly used by major retailers today, although few retailers use every one of them. Identifying these solutions, tracking those that are broadly used, and highlighting the ones that are targeted for deployment within the next two years is the mission of this study.

To get as comprehensive a picture of the retail technology landscape as possible we tracked a to-tal of 83 solutions in this year’s report. These solu-tions are broken out into the following technology categories: in-store, POS/checkout, analytics, mer-chandising management, supply chain, workforce

management and e-commerce.Most of the 83 solutions are presented briefly

in seven charts that benchmark the status of each solution today and forecast retailer plans for major upgrades in the next two years. Note that several emerging solutions have not been included here due to low adoption and limited space in the re-port. These include checkout/payment on a cus-tomer’s own device and electronic shelf labels, for example. However, RIS is currently making plans to include all 83 solutions and deeper analysis in follow-up reports that slice the data by retailer rev-enue, retail segment and technology categories.

Status of in-store technologies

• Up-to-date tech in place • Started major upgrade • Will start within 12 months • Will start within 12-24 months

R E T A I L S Y S T E M S

In-store shipping

WiFi for customers

In-store pickup/return of web goods

Mobile devices for associates/manager

Real-time store monitoring/KPIs

Digital devices (signage, kiosks, magic mirrors, etc.)

Shopper tracking capability

Clienteling/guided selling

In-store video analytics

Location-based sensing for marketing/communication

31%

29%

27%

25%

19%

16%

13%

11%

7%

6%

12%

20%

20%

21%

22%

20%

20%

18%

15%

19%

11%

10%

17%

21%

17%

19%

19%

12%

16%

15%

9%

9%

12%

6%

14%

12%

12%

15%

8%

13%

start in 12 months for a total of 50% of retailers who are in an active investment mode.

Mobile POS shows medium-to-high levels of investment interest going forward on top of cur-rent install bases of 15%. The same is true for NFC (Near Field Communication) payment.

ANALYTICSRetailers without advanced analytic capabilities may be toppled by their inability to capitalize on the use of big data to predict outcomes and im-prove performance. To understand the risk and op-portunity, Gartner defines four phases of analytic development:

• Descriptive — reporting and dashboarding fo-cused on what did happen

• Diagnostic — reporting and query focused on why it happened

• Predictive — modeling focused on what may happen

• Prescriptive — decision making based on what will happen

Most retailers live firmly in the realm of diag-nostics. Results of this survey demonstrate this

STORE SYSTEMS AND POSAlthough in-store shipping and WiFi for customers have been prime targets for investment in store systems in recent years, the hottest areas in 2016 are in-store pickup/return of web goods, mobile devices for associates/managers, real-time-store monitoring of KPIs, digital devices (signage, ki-osks, magic mirrors, etc.), and shopper tracking.

Not shown in the study are the figures for such advanced technologies as item-level RFID and electronic shelf labels. Each of these solutions is in the single digits for deployment today and show signs of relatively weak planned deployment with-in two years.

In the area of POS, the two most active tech-nologies are EMV payment and POS peripherals, and it is clear that the strength of the latter (which includes credit card readers) is being driven by the need to support EMV.

Earlier in the report we cited EMV payment as being named the number-one technology invest-ment area for 2016 and the evidence for this as-sessment is shown here — 32% say they have started a major upgrade and 18% say they will


Status of POS checkout lane technologies


POS terminals (traditional, fixed)

POS peripherals (signature pads, pin pads, printers, etc.)

POS software

EMV payment (cards with computer chips)

Mobile POS

NFC (Near Field Communication) payments

Split tickets (any combination of in-store and digital purchasing)

SaaS POS (software as a service or cloud-based)

Self-checkout terminals

Checkout and payment on customer’s own device



47%

44%

42%

24%

15%

15%

10%

9%

6%

4%

17%

24%

21%

32%

16%

19%

13%

11%

9%

11%

8%

9%

10%

18%

18%

16%

15%

6%

6%

11%

14%

8%

12%

8%

15%

15%

12%

12%

9%

20%

ics and data visualization. These capabilities are two of the most powerful analytic tools retailers can use to drive comp store sales, identify new op-portunities, and improve margins while providing

and also show significant investments in optimi-zation of a variety of analytic capabilities.

While that is good, what’s of note are the invest-ments at the bottom of the list — predictive analyt-

Status of analytics capabilities


Replenishment optimization

Product purchase history analysis (POS and transactions)

Market basket analysis

Inventory optimization

Markdown optimization

Multi-channel frequent shopper or loyalty tracking

Assortment optimization

Competitive analysis (benchmarking competitors, market share, etc.)

Space optimization

Campaign analysis and forecasting

Promotion optimization

Social media analytics

Price optimization (modeling for pricing elasticity, sales & margins)

Pricing intelligence (real-time competitive pricing data)

Mutli-channel customer behavioral segmentation

In-store shopper tracking analytics

Data visualization

Predictive analytics



32%

30%

27%

27%

25%

24%

22%

22%

21%

18%

16%

16%

15%

14%

13%

8%

6%

2%

24%

21%

22%

19%

20%

19%

22%

21%

12%

16%

21%

19%

12%

14%

18%

18%

19%

17%

16%

24%

19%

23%

14%

20%

13%

13%

16%

26%

24%

27%

26%

21%

25%

17%

21%

26%

13%

9%

11%

16%

12%

14%

16%

16%

16%

19%

17%

14%

17%

13%

21%

18%

16%

22%



Status of merchandise management capabilities


Replenishment

Category management

Merchandise financial planning

Allocation

Price management/execution

Item master data management

Merchandise assortment planning

New product or private label development

Campaign SKU/product management

Core Enterprise Resource Planning (ERP)

Micro space planning (planograms)

Product lifecycle management

Macro space planning (allocation of floor space and store design)

Trade promotion management



excellent service to customers. The good news is that in both areas more than 40% of retailers say they will upgrade their capabilities within two years.

The connectivity between discovery and execu-

tion continues to be lacking. Poor execution has stolen the benefits of traditional BI. In an inefficient process, where the line-of-business user must re-quest reporting to facilitate a real-time decision,

39%

36%

33%

32%

32%

32%

31%

30%

30%

28%

26%

24%

21%

20%

22%

20%

17%

17%

20%

24%

17%

22%

19%

21%

11%

16%

14%

13%

17%

13%

17%

16%

17%

8%

18%

13%

13%

11%

13%

13%

15%

11%

10%

7%

15%

11%

10%

13%

15%

11%

11%

12%

6%

21%

9%

18%

which causes the opportunity to frequently break down due to an inability to get the information in time to make the decision.

Optimization technologies like those listed for replenishment, assortment, inventory and mark-down help to alleviate some of these problems, but for most upgrades tracked here more than half of retailers surveyed are still at least 12 months out from implementation.

The lesson to learn from the analytic solutions tracked in this report is that if your organization isn’t reflected in the first two columns (technology is up-to-date and have already started a major upgrade) you are running late and will be playing catch-up.

This is especially true in the area of personal-ization, which retailers tell us is their number-one strategy over the next 18 months. Without ad-vanced analytic tools in place personalization is virtually impossible.

MERCHANDISE MANAGEMENT AND SUPPLY CHAINCompetitive pressures combined with dynamical-ly changing customer behavior will test the foun-dations of retail merchandising over the next five years. Twenty-five years ago retailers were elimi-nating stockrooms to maximize selling space. To-day selling space is excessive and areas are being



Warehouse management

Fulfillment

Logistics

Transportation management

Real-time inventory visibility

Drop-ship management

Returns management

Sourcing

Distributed order management

Radio frequency identification(RFID) case or pallet

Status of supply chain capabilities



49%

48%

47%

38%

36%

35%

35%

34%

26%

9%

13%

15%

12%

14%

20%

13%

18%

19%

28%

5%

11%

11%

8%

8%

18%

17%

15%

9%

10%

14%

11%

13%

13%

13%

8%

8%

10%

10%

10%11%

Looked at from a 30-thousand-foot perspective individual investment

plans show an industry struggling to develop methods to become personally

relevant to shoppers and consolidate systems in a way that breaks down tech stacks into a new

architecture that is truly interoperable and unified into

platforms or broad application suites.

be effectively managed across channels.One of the most important solutions in making

this happen is item master data management. In order to merchandise effectively across channels master data must be clean, deep and well-struc-tured to support all channels simultaneously.

Price management and execution are also criti-cal. Multichannel pricing strategies are key to success in the digitized retail environment. Re-tailers must be able to manage a diverse set of pricing strategies to the meet customer’s growing expectations for consistency while also responding to pressures from the dynamic e-commerce marketplace.

With 20% to 40% of retailers somewhere in the process of working on or starting an upgrade in merchandising capabilities we expect to see lots of new solution development by vendors, which is needed because many retailers struggle with mer-chandising implementations.

This is due in large part to the failure of the or-ganization to adapt new solutions to traditional roles and functions. Change management will be another big investment area during this transi-tional phase.

The top two areas of investment in supply chain management this year are real-time inventory vis-ibility, which is more of a multi-solution system than an individual technology, and distributed order management. In both areas nearly 40% of retailers say they are currently working on an up-grade or will begin one by the end of the year.

At the bottom of the list is RFID for cases or pal-lets, which matches the low figures recorded for item-level RFID. In the supply chain as well as in the store, RFID remains an emerging technology that keeps on emerging but never seems to break through. The vast majority of retailers still aren’t sold on RFID when they examine the costs and po-tential benefits.

WORKFORCE MANAGEMENTThe workforce management refresh cycle is in some ways similar to the refresh cycle for POS software. Both technologies are essential to run-ning a successful enterprise. They are a necessity in modern retailing and retailers run a risk if they let them get too far out of date.

carved out for picking, packing and staging click-and-collect orders.

About a third of retailers surveyed report they have up-to-date merchandising technologies in place across the 14 solutions we tracked. When you add those who say they have started a major upgrade we bump the number to about 50%.

Congratulations, but you have to ask yourself this question: How effective is the merchandising staff in utilizing the technology they currently have to improve merchandising performance? Are the tools they use enablers or chokepoints?

Merchandising applications today must be built on a foundation of advanced analytics. Walmart and others are experimenting with new store for-mats that require precise analytics to determine the right assortment for the customer base that frequents the store. Assortments must be planned using advanced analytics to enable discovery and make corrects. This cannot be done using the tra-ditional models in Excel.

What about multichannel merchandising? Up-to-date merchandising applications must not only plan by channel, but plan all channels simultane-ously in a unified commerce way. This is the only way to effectively manage assortment decisions in stores or online or both. Inventory must be planned to ensure effective and flexible distribution until the last possible minute. Trade promotions must




As most retailers know, when employees feel they are being well taken care of they will make it a point to take good care of the business.

E-COMMERCEIn the recent past, e-commerce was a dominant focus for achieving growth in retailer investment plans and the recipient of a large share of technol-ogy investment. Today the growth rate of e-com-merce as a standalone channel is gradually slow-ing down and investment levels are not as high as they have been in previous years.

Topping the list of planned investment technol-ogies in e-commerce this year is CRM/personaliza-

In the current refresh cycle it is interesting to see that the biggest area of investment is in mo-bile workforce and human resource applications. No doubt this is being driven by the recent focus by many retailers on improving employee engage-ment, a hot-button issue that has major implica-tions for maintaining or increasing shopper satis-faction.

Mobile HR applications are ideally suited to im-prove communication with associates and enable such services as managing schedules, making easy shift changes and ensuring employee fair-ness, all of which go a long way toward improving employee attitudes and workplace feelings.





Time and attendance

Human resources and benefits

Recruitment and on-boarding

Task management

Education and training

Labor scheduling

Employee engagement management/monitoring

Mobile workforce and/or HR applications

Real-time store/employee monitoring

Status of workforce management capabilities

52%

47%

42%

16%

24%

22%

14%

10%

10%

2%

8%

5%

38%

38%

34%

32%

23%

23%

13%

26%

23%

18%

17%

13%

14%

12%

17%

16%

22%

8%

3%

4%

7%

8%

8%

9%




third who say they are up-to-date, a third who are in the process of upgrading, and a third who will begin upgrading in two years.

Looked at individually, the 83 technology so-lutions tracked in this report appear to be a grab bag of investment interests spread across a broad retail spectrum. But when looked at from a 30-thousand-foot perspective individual invest-ment plans show an industry struggling to develop methods to become personally relevant to shop-pers and consolidate systems in a way that breaks down tech stacks into a new architecture that is truly interoperable and unified into platforms or broad application suites. •

tion, an area of high interest seen throughout the study. While none of the other e-commerce tech-nologies comes close to matching the current and planned activity in CRM/personalization upgrades, several others show significant strength. These in-clude product recommendation, product/catalog management, distributed content management, and community.

It is commonly noted that retailers need to up-grade their e-commerce platforms every three years and our data confirms this reality — 35% of retailers say they are either upgrading their e-com-merce platform now (27%) or will start an upgrade within 12 months (8%). This works out to about a

Status of e-commerce capabilities


E-mail, mobile, text marketing/messaging

E-commerce platform

Customer reviews/ratings

Product recommendations

Product/catalog management

Distributed content management/repository

Remarketing

CRM/Personalization

Community

Dynamic pricing

51%

43%

42%

40%

38%

30%

29%

27%

26%

10%

19%

27%

21%

19%

22%

16%

20%

26%

20%

14%

17%

8%

12%

17%

13%

18%

10%

19%

14%

14%

7%

10%

8%

7%

7%

11%

8%

10%

9%

10%

T H A N K Y O U T O O U R S P O N S O R S


P R E S E N T E D B Y

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a supplement to ris news march/april 2016 26 annual … · senior account director ashley ramirez...

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