23rd annual retail technology study

7/16/2019 23rd Annual Retail Technology Study

1/12

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RETAIL

P R E S E N T E D B Y

A S U P P L E M E N T T O R I S N E W S A P R I L 2 0 1 3

S P O N S O R E D B Y :

2 3 R D A N N U A L

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

INSIDE:

Study Methodology

Four Forces of Change

Responding to Opportunity

Reshaping the Store

The Art of Seamless Commerce

Successful Synchronization

Retail at

the

of change

Retail at

the

of change

speed


2/12

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

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ABoUt GARtnER

Gartner Research is a leading provider of research and analysis about the global information technology industry. It worked with RIS to bring out

this study, which was conducted during the rst two months of 2013 . In conjunction with the RISeditorial team, Gartner created the survey and

posted it online. Gartner performed the analysis of the data and was then interviewed by RISon 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.

This years study is based on input rom people who

are senior-level decision-makers within their own orga-nizations. The respondents also represent retail compa-

nies that, due to their size, exert considerable inuence

on retails technology trends. These executives exhibit

both responsibility and authority to set their compa-

nies IT and business agendas, and their insight gives

the study its unique hallmark.

To provide a valuable cross section o the industry,

respondents are invited to participate based on careul

retailer selection, job title, revenue segment and retail

category. Unlike some other studies, the ocus is on

senior-level decision makers. 17% o all survey respon-

dents are CIOs and another 10.4% are C-level execu-

tives. The remainder o respondents include business

leaders who are senior level executives without tech-

nology titles but who have signifcant responsibility or

IT, including directors o IT (39.6%) and departmental

managers (33%), together accounting or just about

three-quarters o the survey pool.

Since large retailers play an important role in driv-ing IT trends, they have large technology budgets and

are a representation o the industrys overall spending.

Many revenue levels are represented, ensuring that the

study is an accurate representation o the diversity in

the industry. The respondent pool is made up o 11.3%

that have more than $10 billion in revenue and 30.2%

that have between $1 billion and $10 billion.

The study also represents retails diversity with ver-

ticals such as apparel/ootwear/accessories, specialty,

hard goods, C-store/drug/grocery, department stores/

mass merchandise/big box discounters and direct

(catalog and e-commerce). The largest verticals repre-

sented are apparel/ootwear/accessories at 23.5% and

specialty at 20.8%, which themselves include a broad

and diverse mix o assortments and business models.

STudy METhodoLogyGaininG technoloGy insiGht from

c-level retail executives

CxO10.4%

CIO17%

Director IT39.6%

DepartmentalMgt.

33%

$10 B

30.2%

$1 B to

$10 B

12.3%

$500 M

to $1 B

7.5%

$250 M to

$500 M

12.3%

$50 M to

$250 M

Apparel/

Footwear/

Accessories

23.5%

C-Store/

Drug/Grocery

16.1%

6.6% Direct(Catalog &E-commerce)

Dept.

Store/Mass

Merchandise/Big Box Discounter

15%

Hard Goods18%

Specialty20.8%

Retail Segment

job title

annual Revenue

w h O r E S p O N d E d

R I S R E T A I L T E C H N O L O G Y S T U D Y 2 0 1 3 a P r i l 2 0 1 3 3

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


3/12


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

FouR FoRcEs oF chAngEa whirlwind of new capabilities will either strengthen retailers or level them

B y J e f f R o s t e R

4 a p r i l 2 0 1 3 R I S R E T A I L T E C H N O L O G Y S T U D Y 2 0 1 3

The era o true retail inno-

vation has arrived, which

Gartner calls the Nexus o

Forces. In this view busi-

nesses are built on our big pillars:

Cloud, Mobile, Social and Inorma-

tion. These orces join together in

a whirlwind that will either recreate

businesses or level them.

Lets be clear about this. In my

opinion retailers have always been

extremely innovative. Thats the

main reason the industry has so

many home-grown systems. Retail-

ers historically were not satisfed

with the unctionality o packaged

applications and chose to developtheir own sotware. This was abso-

lutely the right decision at the time.

The challenge now is that when

ormer cutting-edge unctionality

gets old it can be a roadblock inhibit-

ing the ability to develop cross-chan-

nel capability. This roadblock leads

to a search or solutions and into the

mix o options retailers discover the

transormative power o the Cloud.

With Cloud capabilities, ormerly

conservative adopters o technol-

ogy have the ability to jump orward

and end up with a 21st century inra-

structure, which is both more nimble

and more cross-channel enabled.

And this is possible to achieve at a

lower cost to operate.

This possibility suddenly opensup new options and also raises ad-

ditional questions, such as: Do Cloud

investments come frst or should

Major action iteMs over the next 18 Months

top 10 technologies for 2013

Developing a mobile enterprise and/or store s trategy

Expanding multichannel (synchronization) initiatives

Developing a mobile commerce strategy

Campaign management and promotions effectiveness

Leveraging social media

Adopting a unified enterprise platform

Cost containment

42.5%

41.5%

30.2%

24.5%

20.8%

19.8%

18.9%

50%

43.4%

42.5%

42.5%

41.5%

40.6%

40.6%

39.6%

39.6%

36.8%

Campaign analysis & forecasting

Standard Forecasting & planning

Mobile POS

Predictive analytics

In-store pickup or return of web goods

Multi-channel planning & forecasting

Campaign management

Allocation

Assortment planning

POS peripherals


4/12


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

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

paring to give customers access to

greater inormation and services.

This is heralding a new era or retail-

ing. Hopeully its not too late.

ConCLusIonThe year ahead or retailers is flled

with challenges, opportunities and

critical decisions. Successul retail-

ers will have to build innovation and

risk taking into their organizational

DNA or risk obsolescence or worse,

irrelevance.

The old adage, ailure is not an

option, is exactly the wrong recipe

or success in the new social/mobile

enabled enterprise. You learn rom

ailure. Retail success has always

been through innovation, determi-

nation and no small amount o luck.

In this new era we are entering, suc-

cessul retailers will need all three in

abundance.

Mobile be frst? How do we harvest

real insights out o the Inormation

weve warehoused or so many

years? And where does Social ft

into the puzzle?

The answers to these questions

will dictate retail success in 2013

and beyond. Welcome to the Nexusand good luck.

MAjoR ACtIon IteMs

Mobility has moved to the main-

stream or oreront o retail strategy,

which is no surprise because its

been buzzed about or several years.

But this years data indicates we are

now seeing real adoption. The hype

is gone, the reality is here, and retail-

ers are moving orward aggressively

with mobility as a key strategy.

Social media slipped down on

the priority list o major action items

this year rom the top perch to fth.

But thats not a bad thing. We are

still quite early in the serious adop-

tion phase and I expect it will rise

higher as the Chie Marketing Of-cer continues the digitization o re-

tail marketing budgets.

The rise o the CMO is clearly

evidenced in the 14% o the respon-

dents who have made a top priority

out o providing marketing depart-

ments with advanced IT tools. Some

retail IT departments could see this

rise as a new competitor or scarce

budget resources. That would be a

mistake. I believe its critical or the

CIO to lead the charge in empow-

ering marketing with the tools or

cross-channel success.

PAIns to oveRCoMe

Retiring legacy systems: This is a

datapoint that has gotten tremen-

dous attention rom both retailersand vendors alike.

Vendors view this as an oppor-

tunity and it is. But theres a clear

warning here because some ven-

dors and their solutions are on the

wrong side o the retirement trend.

Its an equally serious warning

to retailers, because it indicates that

competitors are aggressively improv-ing their capabilities. The key ques-

tion or retailers to ask is: Are you

ready to engage in the business o

retail with a competitor who has im-

proved every aspect o its business

and is operating in a cross-channel

mindset? I not, now is the appointed

hour to remedy the situation.

Empowered consumers: Retail-

ers are now dealing with a consum-

er that has better knowledge than

associates and consumers also have

direct access to competitors while

standing in your store.

But instead o whining about

showrooming, smart retailers are

aggressively battling back and pre-

Top Challenges over The nexT 3 Years

Retiring legacy systems

Developing applications to satisfy empowered consumers

Application integration

Managing big data

Optimizing stores as a major channel

Consumer smart devices in the enterprise

Upgrading store-level bandwidth and infrastructure

PCI compliance

Mobile security

45.3%

41.5%

38.7%

36.8%

32.1%

29.2%

23.6%

17.0%

12.3%

Je Roster is vice president industry market strategies, retail or

Gartner. This is the 13th year he has been the chie analyst or the

Retail Tech Trends Study.


5/12


I T B U D G E T S

Examining thE gap bEtwEEn succEss and survival in thE agE of rEtail transformation

B y J o e S k o r u p a

8 a p r i l 2 0 1 3 R I S R E T A I L T E C H N O L O G Y S T U D Y 2 0 1 3

During the Great Recession

Warren Buet noted that

when the tide goes out

you see who is swinning

with pants and who isnt. During

the downturn, some without pants

ound cover and some didnt. For

the latter, exposure was both em-

barrassing and costly.

Today, the tide is rushing back

in and a dierent phenomenon

is taking place. Now we see who

has a oundation that can manage

the food and who will get washed

away. The thing about oundations

is they need consistent shoring upor they weaken over time.

The rise o smart, digital shop-

pers and introduction o disruptive

technologies over the last couple o

years have weakened the ounda-

tions or some retailers by under-

mining the traditional strengths o

their core business brick-and-mor-

tar stores.

A major undermining orce

comes rom online pure-play retail-

ers who have perected the art o le-

veraging their inherent advantages.

Until recently, traditional retailers

essentially ignored the threat, rea-

soning that Internet sales were a

relatively small part o the overall

revenue pie. When Internet sales get

larger, so the reasoning went, it willbe time to stop dabbling and sink

major investments into it.

That time has arrived. But ater

REspondIng To oppoRTunITy

IT BudgeTs as a PercenT of ToTal revenue

change In Year over Year IT BudgeT

5%1% to 2% 2% to 3% 3% to 4% 4% to 5%

11.3%

30.2%

10.4%

6.6%

1.9%

7.5%

Decrease

>10%

Decrease

between

5% to 10%

Decrease

between

1% to 5%

No

Change

Increase

between

1% to 5%

Increase

between

5% to 10%

Increase

>10%

4.7% 3.8% 4.7%

28.3%26.4%

16% 16%


6/12


I T B U D G E T S

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

years o online experimentation

and maturity by pure-plays, a new

phenomenon has emerged and

suddenly traditional retailers see

that pure-plays are beating them to

growth opportunities. Not only that,

but pure-plays are also investingheavily in disruptive technologies to

hijack market share rom traditional

retailings core business brick-and-

mortar stores.

In the age o retail transormation

the spectrum o opportunity ranges

rom success on one end and surviv-

al on the other. The deciding actor

is the strength o the retailers oun-

dation.

AmAzon Is not

the PRobLem

Its tempting to single out Amazon

as the traditional retailers arch-en-

emy, but larger orces are at work.

Pure-play retailers as a group have

a start-up mentality that drives them

to be frst to market with innova-tion. They are adept at developing

state-o-the-art websites, exploiting

low prices, pioneering advanced

analytics and perecting high-speed

ulfllment.

Their aggressiveness is backed

by large technology investments

and a willingness to learn rom ail-

ure. A business model o this type

chips away at the oundations o

traditional retail brands, who with

ew exceptions have not made the

necessary fnancial commitments to

match fre with fre.

But there is evidence o change.

Retailers like Walmart, Target, Nord-

strom, Macys, Urban Outftters and

Saks, to name several leading exam-

ples, have converted their omnichan-nel strategy rom a buzzword into a

plan o action. Each has recently re-

ported strong fnancial earnings that

indicate they are reaping monetary

rewards or their eorts.

As we examine this years IT bud-

get trends we fnd that retailers, led

by those cited above, are increasing

their tech investments in 2013. This

is a positive sign, but perspective is

needed. Note that retail tech invest-

ments are made in the millions o

dollars with a capital M. Amazons

tech investments are made in the

billions o dollars with a capital B.

From this perspective retailers

with the best chance o making up

ground against aggressive pure-plays are those investing in technol-

ogy at levels above the industry av-

erage, which is less than 2% o total

annual revenue.

From the data in this years study

we see that the group o above-aver-

age tech investors comprises 26.4%

o retailers. This aggressive group is

composed o a spectrum o retailers

that ranges rom slightly above av-

erage tech investors, those commit-

ting 2% to 3% o revenue to technol-

ogy (10.4% o the respondent pool)

to those that are committing more

than 5% o revenue to technology

(7.5% o respondents).

Obviously, the latter group is tak-

ing an aggressive stance and willlikely become better positioned to

capitalize on the orces o change

sweeping through retail.

Maturity of it architecture

Advanced IT

infrastructure/

systems w/ deep

integration

Mostly basic IT infrastructure/

systems w/ some advanced

upgrades

Mostly advanced

IT infrastructure/

systems w/ some gaps

in integration

32%

13%

36%

19%

Basic IT infrastructure systems

w/ critical limitations

architecture approach to Software

Seek best of breed software

Seek integrated solutions suites

Seek software-as-service models

Use third-party services to help develop software

Use in-house IT resources to develop software

57%

51%

39%

31%

36%


7/12


I T B U D G E T S

Drilling one level deeper into

budgets, we see that ew retailers

are actually planning to decrease

spending on IT, just 13.2%. But

a much larger group plans to go

through the year with a at (no in-

crease) budget projection 28.3%.

That means that 58.5% intend toincrease their IT budgets year over

year, which is 5 points higher than

last year. As previously noted, the

important act to consider is not just

that retailers are investing more in

technology year over year, but how

much more they are investing. Is it

enough to maintain status quo when

you actor in ination and the cost o

opening new stores? Is it enough toclose gaps with competitors?

When looked at through this lens

we see that 32% o retailers are ag-

gressive IT investors, meaning their

budgets committed to IT are ris-

ing at an above average level. This

group consists o 16% who will in-

crease IT budgets 5% to 10% year

over year and 16% who will increasetheir IT budgets more than 10%. The

good news is this aggressive group

o 32% is nearly twice as large as it

was last year (17%).

IT STraTegy

I retailers were making steady in-

vestments in their IT inrastructure

in such areas as advanced upgrades

and deep integration, we would ex-

pect to see year-over-year progress

in the maturity o their architecture,

applications and tech stack. To be

able to track this progress we would

need to ask the same question in the

same way each year, and we have

done that.

On the lowest step o maturity,

which we call basic IT inrastruc-ture and systems, we see 13% o

respondents, which is down slightly

rom last year. One step up is called

mostly basic with some advanced

upgrades. Here we see a dramatic

reduction rom 45.7% in 2012 to

32% in 2013. So, clearly, retailers aremoving out o these two lower steps

on the maturity ladder.

The biggest gainer in this maturi-

ty model is called mostly advanced

but lacking comprehensive integra-

tion. This jumped rom 22.9% last

year to 36% in 2013, a huge leap.

And in the fnal step, called ad-

vanced IT inrastructure with deep

integration, we see a rise o two

points year over year.

The data shows a picture o

emerging inrastructure strength

or a majority o retailers. Those on

the lower rungs o the ladder will be

acing sti headwinds.

As the retail tech stack evolves so

does the architecture approach to

sotware. Seeking best-o-breedsotware (chosen by 57%) has

been the top approach chosen by

retailers or many years because it

oers the most exibility.

Using IT resources to develop

sotware has also been a top ap-

proach, and last year it came in sec-ond place, just two points below the

best-o-breed option. But this year

developing sotware in-house drops

ar down the list and was selected

by just 31% o respondents.

This datapoint indicates another

kind o maturity taking place in retail

technology the maturity o pack-

aged sotware solutions to deliver

what retailers want. Previously, re-

tailers had been orced to write their

own sotware to get the retail-spe-

cifc solutions they needed. But this

is no longer the case or more than

two thirds o retailers.

As the whirlwind o change plays

out in retail, it will reward those

who are investing wisely to shore

up their oundations. For those whohad been investing wisely and con-

sistently over the last several years,

the rewards will be even greater.

Top 10 IT ServIce provIderS reTaIlerS Seek

for STraTegIc InSIghTS

Microsoft

IBM

Oracle

SAP

Cisco Systems

JDA

Deloitte

HP

NCR

Accenture

41.5%

37.7%

30.2%

26.4%

23.6%

15.1%

13.2%

12.3%

11.3%

10.4%

The archITecTure maTurITy model ShowS

a pIcTure of emergIng STrengTh for a

majorITy of reTaIlerS.

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


8/12


S T O R E S Y S T E M S

MOBILITY, RFID AND CUSTOMER LOYALTY INVESTMENTS ENHANCE STORES PIVOTAL ROLE

B y A d A m B l A i r

The store remains a key fo-

cus of technology invest-

ments and the reasons are

obvious: despite the im-

pressive growth of digital channels,

stores are still where the vast major-

ity of transactions take place. But a

funny thing is happening to store ITas retailers move closer to a seam-

less omnichannel operating model.

Retailers are beginning to use

store technology not just to sell

more products but to learn more

about their shoppers, as demon-

strated by high levels of current ac-

tivity and future interest in frequent

shopper/loyalty programs and shop-per tracking capabilities.

The desire to gather as much in-

formation as possible during a cus-

tomers store visit makes sense.

As stores become just one channel

among many that todays consumers

use on their path to purchase, retail-

ers are importing the data-gathering

and analytics theyve used in the dig-

ital world into the brick-and-mortar

sphere.

POS ON THE MOVE

One major theme in this years study

is the accelerating move to mobility,

in this case to mobile point-of-sale.

Nearly three in 10 respondents have

already invested in mobile POS, and

another 22.6% say they are planningto invest in 2013.

However, it should be noted a

solid 35.6% say they have no mobile

REshApIng ThE sToRE


StatuS of PoS technology

StatuS of Item-level RfID

DoeS youR oRganIzatIon Plan to InveSt

In mobIle PoInt of Sale (PoS) In 2013?

POS terminals (traditional, fixed)

POS peripherals

POS software

Self checkout terminals

Mobile POS

47%

39%

39%

8% 14%6%

5%

6% 14% 28% 18%

18% 18% 14%

17% 20% 11%

15% 15% 8%

Up-to-date tech in place Started but not finished major tech upgrade

Will start major tech upgrade in next 12 months Will start major tech upgrade in next 12-24 months

Don't know

12.3%

Yes, already investing

29.2%

Yes, planning to invest during 2013

22.6%

No

35.8%

Item level RFID 4% 6% 5% 14%




9/12


S T O R E S Y S T E M S


POS plans, reinorcing the point that

there are retail environments where

this technology does not appear to

add value at this early phase.

One in our (25.5%) o respon-

dents say they will decrease the

number o xed POS units in storesas a result o their mobile POS in-

vestments, though nearly two-thirds

say they will not, implying that in

many store settings, mobile POS

will be an addition to, rather than a

replacement or, traditional POS.

Do these trends spell a slow de-

mise or traditional POS systems?

Certainly not. Spending plans re-

main solid and will remain that wayas xed-POS stations evolve. One

way to describe the planned de-

crease in xed-POS stations is right

sizing. In many stores all POS lanes

are intermittently manned. The ad-

dition o mobile POS to the mix en-

ables retailers to serve customers

during sales peaks while simultane-

ously removing rarely used lanes.Nearly hal (47%) o respondents

have up-to-date POS terminal tech-

nology in place, and 39% are up to

date with their POS sotware and pe-

ripherals. The percentage o retail-

ers with upgrades already in prog-

ress is in the high teens or all three

technologies, and is at similar levels

or those planning upgrades during

the next 12 months.

RFID RIsIng

Another area showing both prog-

ress and promise is item-level RFID.

In recent years, major retailers have

not only gotten on board but strong-

ly publicized this technologys ben-

ets. The change can be seen rom

the 2012 Tech Study, when only 1%o respondents had up-to-date tech-

nology, to the 4% that are up to date

this year. An impressive 14% o re-

tailers plan an RFID upgrade within12 to 24 months.

This years other star technol-

ogy is actually an old retail standby,

the requent shopper/loyalty pro-

gram: it tops the list o current up-to-

date store technologies at 29%, and

also shows strong gures or cur-

rent and uture investment (a total

o 30% within the next 24 months).Learning as much as possible about

individual customers is seen as criti-

cal to customer engagement and the

more targeted, personalized market-ing necessary in todays inorma-

tion-saturated age.

Retailers are also turning a more

analytical eye on the way custom-

ers shop their stores, as refected in

the strong gures or shopper track-

ing capabilities. These technologies

have advanced ar beyond tradi-

tional trac counting and can pro-vide important insights into stang,

merchandising, marketing and cus-

tomer service.

Will your organization decrease fixed Pos units

in stores during 2013 due to mobile Pos investments?

status of sto re technology

Yes, plan to decrease f ixed POS

25.5%

No plans to decrease

fixed POS

63.6%

Don't know

10.9%

Frequent shopper or loyalty program

Store level loss prevention

Kiosks

Shopper tracking capability

Store level task management

Digital signage displays

NFC (Near Field Communication) payments

Electronic shelf labels

29% 21% 12% 19%

25% 1 4% 8% 16 %

19% 8% 10% 13%

19% 16% 11% 19%

17% 11% 12% 21%

10% 1 3% 9% 14%

5% 1 1% 7 % 2 0%

3%

6% 14%

3%




10/12

T E C H T R E N D S

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

C R O S S C H A N N E L

ThE ART of SEAmLESS CommERCEclimbing up the maturity ladder to synchronize the shopping experience across channels


Until a ew years ago, e-

commerce operated as i

it were on the edges o the

retail enterprise, somewhat

similar to a surprisingly successul

startup or large pilot program. The

revenue generated by e-commerce

in this view was thought o as addi-

tive to the core business but not reallypart o the core itsel. This mentality

also extended to how e-commerce

technology ft into the tech stack.

But those days are rapidly draw-

ing to a close. A number o retailers

recently reported 50% year-over-

year increases in online revenue

capping several years o double

digit growth. When revenue fgurestravel an upward arc like this they

begin to attract serious attention

and so do the eorts to more closely

integrate digital channels into the

core business.

When we examine this trend over

the last two years we see that sig-

nifcant progress has been made in

e-commerce maturity and mobile

channel development.One way to track e-commerce ma-

turity is to check the upgrade status o

the e-commerce platorm, the basic

building block o online retailing. I re-

tailers are steadily investing in e-com-

merce capabilities we would expect

to see signs o maturity emerge in

upgrade status over time, and we do.

Last year, or example, 16.9% oretailers said they dont have an e-

commerce platorm and this year the

number drops to 14.2%. Even more

dramatic is the number o retailers

who say they have replatormed with-

in the last two years and thereore

have up-to-date technology 27.4%

this year compared to 18.3% last year.

In the mobile channel we can see

that progress is moving steadily or-ward, but not at a brisk pace. The

reason or the measured pace is that

current sales volumes in the mo-

bile channel are still low compared

to overall sales. Where we see the

most activity is the datapoint or

pilots in progress 28.3% this year

compared to 24.1% in 2012.

Although many in retail have

dubbed 2013 the year mobility be-comes a reality, it is also true that it

will take several years beore it ully

enters the retail mainstream.

R I S R E T A I L T E C H N O L O G Y S T U D Y 2 0 1 3 a p r i l 2 0 1 3 1 7

StatuS of E-CommErCE P latform

StatuS of organizationS CuStomEr faCing

mobilE ChannEl dEvEloPmEnt

Re-platformed within 2 years,

no need to upgrade

Plan to upgrade within 24 months

27.4%We don't have an

e-commerce platform

14.2%

Platform needs updating,

but no plan to upgrade

Currently upgrading

platform now

7.5%

28.3%

Plan to upgrade within 12 months

15.1%

7.5%

Fully functioning mobile

commerce strategy in place

9.4%

Pilots in progress28.3%

Not planning any activity17.9%

Planning under way44.3%


11/12

M E R C H A N D I S I N G & S U P P L Y C H A I NRETAILT E C H N O L O G Y S T U D Y


TIghTenIng The LInkAge beTween meRchAndIsIng And The suPPLy chAIn


SuccESSfuL SynchRonIzATIon

Retail organizations are

composed o a number o

departments that rely on

each other to share inor-

mation in a symbiotic relationship.

When the departments are synchro-

nized the enterprise is capable o

delivering a greater level o peror-mance than the sum o its parts.

But interdepartmental linkage

goes deeper than that. In many cas-

es, the output o one department is

the input or another. For example, in

a car company the engine or a vehi-

cle is built in one plant and shipped

to another plant or fnal assembly. I

the engine plant is running behind,

then a chain reaction occurs and the

production o fnished vehicles will

get delayed.

This concept, which is also a

orce at work in retail enterprises, is

known as interdependence, and it is

especially evident in the linkage that

occurs between the merchandising

and supply chain departments.

meRchAndIsIng And

suPPLy chAIn PRIoRITIes

The process o replenishment o

products to stores is a perect ex-

ample o interdependence between

merchandising and the supply

chain. It is so critical to store per-

ormance that 33% o retailers have

made it a point to keep their replen-ishment technologies up to date, the

highest level o up-to-date tech on

the merchandising priority list.

A substantial number o retailers

(21%) also say they have begun but

not fnished major upgrades to their

replenishment systems. This means

that more than hal o retailers (33%

up-to-date plus 21% with projects

underway) have been involved with

upgrading their replenishment sys-tems within the past ew years. This

is a large amount o IT activity and

it is indicative o how important re-

plenishment is to meeting sales and

merchandising goals.

Three other items on the mer-

chandising priority list deserve

special notice. They are campaign

analysis and orecasting, campaign

management, and multi-channel

planning and orecasting. Thesethree are noteworthy rom a data

analysis perspective because they

register the highest levels o uture

StatuS of MerchandiSe technology

Replenishment

Item management

Forecasting and planning

New product or private label development

Allocation

Category management

Assortment planning

Price and markdown optimization

Product lifecycle management

Campaign analysis and forecasting

Shelf and space planning

Campaign management

Multi-channel planning and forecasting

Replenishment

Item management

Forecasting and planning

New product or private label development

Allocation

Category management

Assortment planning

Price and markdown optimization

Product lifecycle management

Campaign analysis and forecasting

Shelf and space planning

Campaign management

Multi-channel planning and forecasting

21%33%

25%

24% 25% 19% 13%

24%

21%

21%

19%

19%

17%

15%

12%

9%

8%

21%

16%

20%

25%

12%

22%

19% 14% 8%

25% 25% 16%

14% 15% 13%

15% 15%16%

23% 17% 12%

17% 15% 11%

21% 19% 7 %

13% 14% 8%

18% 17% 8%

11% 10%




12/12

M E R C H A N D I S I N G & S U P P L Y C H A I N

R I S R E T A I L T E C H N O L O G Y S T U D Y 2 0 1 3 A P R I L 2 0 1 3 1 9

investment plans in the merchandis-

ing category and, just as signifcant-

ly, all three are important to market-

ing executives, the new center o

gravity in retail organizations.

Campaign analysis and orecast-

ing not only registers strong current

activity (with 25% saying they have

already begun upgrades) but it also

shows strong plans or uture de-

ployment 25% say they will start

within 12 months and another 16%

in 12 to 24 months.

Campaign management is equal-

ly strong with 21% working on up-grades now, 20% who will begin in

12 months, and 12% who will begin

in 12 to 24 months.

Multi-channel planning and ore-

casting, oten reerred to as an om-

nichannel strategy, lags in current

activity (16% deploying now), but

strong uture intentions will enable

it to quickly catch up 25% will de-

ploy within 12 months and 22% will

begin in 12 to 24 months.

In supply chain trends we see con-

frming evidence that multi-channel

strategies are gaining traction, espe-

cially in the area o multi-channel ul-

fllment. Here we see that 18% plan

to begin deployment o an upgrade

within 12 months and 22% will begin

in 12 to 24 months.All o these technologies are wor-

thy o singling out because their

numbers are signifcantly higher

than the others on merchandising

and supply chain priority lists. But

when we look at a related area o

demand-chain technology, business

intelligence and analytics, we see

numbers that are even higher. In act,as a group BI and analytics shows

the strongest set o purchase inten-

tions across the board o any other

technology grouping in the study.

The lowest rated technology or

uture investment, or example, is

market basket analysis, where 29%

o retailers say they will be upgrad-

ing within 24 months. The highest

is predictive analytics, where 46%

say they will be upgrading with-

in 24 months. A close second is

social media analytics (43% upgrad-

ing within 24 months), which is not

only the newest kid on the block, but

perhaps the most difcult to eec-

tively manage.

StatuS of BI/analytIcS technology

StatuS of Supply chaIn technology

Warehouse management systems

Distributed order management systems

Transportation management systems

Sourcing

Real time inventory visibility

Multichannel fulfillment

Trade promotion management

Radio frequency identification (RFID) case/pallet

Warehouse management systems

Distributed order management systems

Transportation management systems

Sourcing

Real time inventory visibility

Multichannel fulfillment

Trade promotion management

Radio frequency identification (RFID) case/pallet

16%32%

24%

24% 14% 8% 13%

22%

20%

16%

8% 12%

7% 8% 9%2%

17% 10%

16% 18% 22%

14% 19% 17%

13% 10% 11%

13% 8% 18%

11% 8%

Up-to-date tech in place Started but not finished major tech upgradeWill start major tech upgrade in next 12 months Will start major tech upgrade in next 12-24 months

Market basket analysis

Shopper tracking

Margin optimization


Social media analytics

Market basket analysis

Shopper tracking

Margin optimization


Social media analytics

21%25%

21%

19% 16% 16% 17%

10%

9% 18% 17% 26%

18% 25% 21%

22% 15% 20%

16% 13%



T E C H T R E N D S

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

23rd annual retail technology study

Documents

e n t t o r i s n e

s p o n s o r e d b

s e c t i o nretailt

usaf o u n d e rdouglas

o g y s t u d yinside

remainder o respondents

valuable cross section

years study