Retail survival lies in good IT service

Consumers want a consistent shopping experience on and off line

Retail IT leaders must resist short-term cost-cutting pressure and focus on back-end system integration to deliver consistent online and in-store customer experiences, say experts.

Though IT can contribute to cost containment, in an economic downturn improving efficiency and implementing the right mix of technology to retain key customers is paramount, according to a consumer survey and retail market research from analyst Gartner.

With personal consumer expenditure in mature markets accounting for 25 per cent of national gross domestic product, differing reactions to the current economic climate will depend on service offerings, sector and exposure to international retail markets.

This, in turn, will shape IT planning and prioritisation, said the report.

Even though a slowdown in IT spending within the retail sector is yet to be seen, priority must be given to projects that directly affect customer behaviour, said John Davison, managing vice president at Gartner.

On the shop floor, technology-based options such as self-checkout as an alternative to point of sale systems, and transaction-enabled information kiosks are improving customer experience, said Gartner.

Customer relationship management through loyalty card-based segmentation strategies are helping retain key customers, and alongside customer behaviour analytics and modelling are improving returns, said Gartner’s Aligning Cost Containment Efforts with Retail Business Strategy research paper.

“IT and business leaders should defend against short-term cost-cutting initiatives that impair execution of the consumer basics. Businesses that do not align business and IT strategy, especially during a customer downturn, will be those that lose out in the short term as well as the long term,” said Davison.

“Not only will such initiatives affect consumers in the short term, but they can affect the performance of the business and technology in the mid-term, long after an economic downturn has eased.”

At the supply chain level retailers are introducing scan-based trading under which the supplier bears the cost of the inventory right up to the point at which stock is sold at the retailer’s checkout.

And in a time of rising fuel costs, transport optimisation and fleet management technologies are increasingly being deployed.

Many retailers have also introduced IT systems to cut inventory holdings, manage warehouses and replenish store shelves.

In an Ipsos MORI survey of 1,000 UK consumers, 82 per cent wanted improved services to rationalise their in-store, online and catalogue shopping experiences. For example, 53 per cent of respondents said they found it difficult to return merchandise to a catalogue or online vendor, compared with only 12 per cent who found it hard to return items to a high-street outlet.

“Retailers have some work ahead of them in providing the same standard of customer service for online shopping as in-store,” said the Sterling Commerce-commissioned report.

“Considerable investment has been made in stores, catalogues and online transactional sites, yet many retailers are let down by the lack of integration of their channels and back-end systems.

“The end result is poor customer experience and lost sales opportunities. And the lack of consistency in off and online experiences will likely lead to
further erosion of high-street sales,” it said.

At Domino's Pizza, consumer-focused schemes are high on the IT project list. Read more about the retailer's strategy here.