a supplement to ris news april 2010 retail 20th annual...

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 0

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

FINDINGS>> Customers in Charge 5

>> Signs of Spring Thaw 8

>> Finding and Filling Gaps 12

>> Evolution of Store Systems 16

>> Human Capital 20

>> Merchandising 22

>> Inventory Ready 24

>> Leveraging Channels 26

>> Who Responded 30Racing to Catch Up

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P R E S E N T E D B Y

Racing to Catch Up

S P O N S O R E D B Y

2 0 T H A N N U A L

THE RETAIL ENGINE IS STARTING TO HUM, BUT CUSTOMERS ARE IN THE DRIVER’S SEAT

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RETAIL2 0 T H A N N U A L

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

David Weinand 904.374.8590 [email protected]

CHIEF ANALYSTJeff Roster, Gartner

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A S S O C I A T E S P O N S O R S

T I T L E S P O N S O R

5 E X E C U T I V E S U M M A R YCustomers in Charge The retail engine is starting to hum,but customers are in the driver’s seat

8 I T B U D G E TSigns of Spring Thaw Technology weathers the storm in goodshape as smart retailers prepare for a return of consumer spending and growth

12 I T S T R A T E G YFinding and Filling Gaps Over-arching strategies shape specificapproaches to innovation and implementation

16 S T O R E S Y S T E M SEvolution of Store SystemsThe heartbeat of the store is the POS andall of the technologies that connect to it

20 W O R K F O R C EHuman CapitalSmart investments in workforce and humanresources tools can produce immediateand long-term benefits

22 M E R C H A N D I S I N GCustomer-CentricityMerchandising systems are too importantto performance and competitive differentiation to let them get out of date

24 S U P P L Y C H A I NInventory ReadyMany supply chain systems are up to date,but e-commerce and RFID are drivingfuture plans

26 C R O S S - C H A N N E LLeveraging ChannelsAs channels proliferate alignment becomesmore important than ever

30 W H O R E S P O N D E DDecision MakersFindings are based on a 47% participationlevel by C-suite retail executives

CONTENTS

ABOUT GARTNERGartner 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 first two months of 2010. 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.

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C A T E G O R Y S P O N S O R S

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

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R I S R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 5

rediction for #nrf10:Social and mobile willbe major themes

among many vendors.Green without a legit ROI

not so much.”--7:17 AM Jan. 7th from

TweetDeck @JeffPRI wrote this Tweet (JeffPR) three

days before leaving for the NRF BigShow in NYC. If you don’t knowhow to Tweet right now, I’m bettingthat within six months you and yourcompany will.

Tweets are 140 characters longand take seconds to compose. Theycan be launched from any smart-phone that has access to theInternet. A Tweet can be forwardedor Re-tweeted an infinite number oftimes by anybody that either agreesor disagrees with the content.

As long as the message stayswithin the 140 character limit any-one can add their own commentaryto it. You also can add links withphotos.

So, imagine a group of shopperssnapping pictures in a store,adding text about how exciting it is,and then sending it to hundreds,maybe thousands of people whofollow them. Also imagine thosesame shoppers responding nega-tively to a product or promotion andsharing their feelings on a world-wide stage for all to see.

Do you feel uneasy? This is acultural phenomenon that is havinga major impact on retailing.

So, welcome to the year of social

Customers in Charge

Customer satisfaction

Supply chain visibility and efficiency

0 5 10 15 20 25 30 35

29%27%27%

25%25%

21%19%

16%15%

14%12%

8%6%

Store-level inventory visibility and efficiency

Developing multi-channel initiatives

Promotions effectiveness

Workforce efficiency and/or productivity

Cost containmentDelivering actionable business

insights to executivesLeveraging social media

Network and IT systems security

New product or private label development

Developing m-commerce strategy

Adopting unified enterprise platform

Green initiatives

34%

media and mobile commerce.There are no rules or case studiesor best practices that are older thanabout six months. How you and theretail industry respond today willset the stage and ultimately writethe rules for the foreseeable future.

COULD IT BE A SPRING THAW?Beyond social media and M-com-merce, the data in this studyreveals 2010 to be an interestingyear. We are seeing early signs of arebirth of innovation and advancedIT initiatives. Not a big surge, butsomething that could become a ris-ing tide.

The difference between this yearand 2009 is that the industry is notreeling from an economic surprise,

and retailers have had a full year tounderstand that the marketplacehas shifted to a “new normal.” Goneare the question marks. Retailershave begun learning how to operatein a changed environment.

COST CONTAINMENT IS KEY:The 2010 version of cost controldoes not mean just freezing budg-ets and reducing across the board.For an increasing number of retail-ers it also means making strategicinvestments that can return realROI.

CUSTOMER-CENTRICITY ISSTILL HOT: But now it carries alarge dose of social media andmobile commerce initiatives com-

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

THE RETAIL ENGINE IS STARTING TO HUM, BUT CUSTOMERS ARE IN THE DRIVER’S SEAT

B Y J E F F R O S T E R

“P MAJOR ACTION ITEMS OVER NEXT 18 MONTHS

B Y J E F F R O S T E RR E S E A R C H V P, G A R T N E R

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

bined with an ongoing in-storetechnology refresh.

PENT UP DEMAND REMAINSPENT UP: Retailers are re-engag-ing projects that were postponedlast year, but ever so slowly. In2010 progress ranges from POS tomerchandising and supply chain.However, investment plans for2011 look very strong.

INCREMENTAL INNOVATION:Retailers are experimenting withengaging their customers in newand creative ways using Facebook,Twitter and a growing range of consumer-owned Internet-enabledmobile devices.

RETAIL PAINS DRIVE LONG-TERM INVESTMENTRetailers have clearly identified thetop challenges or pains that areaggressively driving their investmentstrategies over the next three years.The top two are Adding Customerand Analytical Insight Capabilityand Multi-Channel Strategy. Theseare in perfect harmony with the topstrategy retailers chose this year

–Customer-Centricity.Speaking to the retailer need to

build high-performance organiza-tions that can be managed costeffectively are three other highlyranked challenges: Real-TimeVisibility, Application Rationalizationand Application Integration.

The placement of EnvironmentalSustainability and SocialResponsibility near the bottom at12% seems to indicate they are notas popular as once thought. This isan indication that retailers are stillmanaging through very challengingeconomic times and focusing oncost-containment strategies withtangible ROI, something they do not believe they can get fromEnvironmental Sustainability andSocial Responsibility Initiativesright now.

WHERE DO WE GO FROM HERE?Retailers are returning to launchingnew initiatives after a very toughyear, but it’s occurring at a slowpace. All the initiatives that madethe high-priority list are well definedsoftware projects with tangible ROIcalculations. It’s interesting to notethat POS hardware and software

plans for the first time in many yearshave fallen off the list. We are clear-ly on the downside of the POSrefresh cycle.

So, what does it mean to operatein the new normal? Well, for onething, the good old days of fast-paced growth are gone — at least forthe foreseeable future. Now it’s keyfor retailers to set a direction thatwill bring them success in a newenvironment.

For some retailers this will beabout a continuing effort to strip outcosts, whether in the IT departmentor the overall organization. But formany more it will require new invest-ments and new nimbleness.

Retailers will deal with a cus-tomer more knowledgeable thantheir associates on a given product.While customers will deal with hav-ing more powerful technology intheir hands and the ability to com-municate opinions on a worldwideplatform in near real-time.

No one knows where this is allheading right now. But one thing iscertain: The future is rushing for-ward and retailers need to respondnow to convert today’s challengesinto tomorrow’s opportunities. •

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

Adding customer and analytic insight capability

Multi-channel strategy 44%

37%36%

33%

28%

20%12%

9%

Real-time visibility throughout the organization

Application rationalization and/or retiring legacy systems

Application integration

PCI compliance

Mobile commerce strategy

Environmental sustainability and social responsibility initiatives

Unified communications

0 10 20 30 40 50 60

60%27% Forecasting and planning

23% Price and markdown optimization

22% Assortment planning

21% Product lifecycle management

21% New product or private label development

20% Allocation

20% Promotion management

19% Replenishment

19% Item management

18%

27%

23%

22%

21%

21%

20%

20%

19%

19%

18% Shelf and space planning

27%

23%

22%

21%

21%

20%

20%

19%

19%

18%

27%

23%

22%

21%

21%

20%

20%

19%

19%

18%

TOP CHALLENGES OR CONCERNS OVER NEXT THREE YEARSTOP 10 TECHNOLOGIESFOR 2010

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ooking over the past 20years of the RIS RetailTech Trends Study wecan point to many

highlights. Two big onesare a 10 year relationship

with Jeff Roster and Gartner as ourresearch partner, and the study’scontinuing ability to draw crowdsat conferences, for many years atthe gone-but-not-forgotten RetailSystems conference in Chicagoand now at the Retail TechnologyConference hosted by RIS.

Low lights during this timeinclude two deep recessions thathit the economy and retail ITbudgets with punishing severity.We are just now emerging from thesecond one and lingering effectsare deeply felt throughout thisyear’s findings.

During most of the two-decaderecord of the RIS Retail TechTrends Study year-over-year rev-enue change was an upbeat data-point, with the percentage ofrespondents reporting a decreasein the single digits most of thetime. This year nearly 31% reporta decrease of 3% or more andanother 11.1% report a decreaseof 1% to 3%.

The good news is that nearly60% of retailers report eitherincreased revenue or no change.No doubt this figure will grow asthe recession loosens its grip.

Most revenue for respondentscomes from the brick-and-mortar

Decreased3% or more

30.8%

0

10

20

30

Decreased1% to 3%

11.1%

Increased3% or more

20.5%

Increased 1% to 3%

22.2%

No change

15.4%

I T B U D G E T B Y J O E S K O R U P A

0

10

15

20

25

30

35

40

45

50

More than 5%

12.5%

3% to 5%

10%

2% to 3%

15%

1% to 2%

46.3%

Less than 1%

16.3%

0

5

10

20

30

40

Decreasebetween

5% to lessthan 10%

5.6%

Decrease10% or more

5.6%

Decreasebetween

1% to lessthan 5%

7.9%

No Change

37.1%

Increasebetween

1% to lessthan 5%

27%

Increasebetween

5% to lessthan 10%

10.1%

Increase10% ormore

6.7%

Signs of Spring Thaw

LTECHNOLOGY WEATHERS THE STORM IN GOOD SHAPE AS SMART RETAILERS PREPARE FOR A RETURN OF CONSUMER SPENDING AND GROWTH

8 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S

REVENUE CHANGE IN LAST 12 MONTHS

IT BUDGET AS PERCENTAGE OF REVENUE

YEAR-OVER-YEAR IT BUDGET

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

channel (88%), which isn’t sur-prising since 88% identify brick-and-mortar as their primary busi-ness model.

You might expect IT budgets in2010 to follow year-over-year rev-enue trendlines pretty closely, but

that is not the case. A total of just19.1% of respondents report theywill spend less on IT than in theprevious year while 43.8% willactually spend more. The rest willremain the same.

Why is IT not feeling the budgetax as sharply as in other reces-sions? One reason is that smartretailers trimmed costs so effec-tively during the crisis that manyactually have a large amount ofcash on hand to spend on capitalinvestments.

Another reason is that IT hasemerged as an essential enablerthat not only helps retailersachieve market advantage againstcompetitors, but also producesmeasurable gains for cost-contain-ment initiatives, which continue tobe a top priority among retailersthis year.

So, where is the IT budgetgoing? We drill into this in greatdetail in later chapters, but from ahigh-level perspective the IT budg-

I T B U D G E T

37.2%Capital

Expenses62.8%OperatingExpenses

6%Training/changemanagement

13%Communications

13%Third-partyservices19%

Software19%Hardware

30%Internal Staff

88%Brick & Mortar

7%E-commerce

5%Catalog/direct mail

86%Brick & mortar

9%E-commerce

4%Catalog

direct mail

1%Contact center

et is mostly spent on operatingexpenses at 62.8%. The biggestportions of this go to hardware andsoftware (38%) and internal staff

(30%). Communications and third-party services are the next largestslices of the budget pie at 13%each. •

2.24%Average IT budget as percentage of revenue

IT HAS EMERGED AS AN ESSENTIAL ENABLER THAT NOT

ONLY HELPS RETAILERS ACHIEVE MARKET ADVANTAGE

AGAINST COMPETITORS, BUT ALSO PRODUCES MEASURABLE

GAINS FOR COST-CONTAINMENT INITIATIVES, WHICH

CONTINUE TO BE A TOP PRIORITY AMONG RETAILERS

THIS YEAR.

OPERATING VERSUS CAPITAL EXPENSES

PRIMARY BUSINESS MODEL

ALLOCATION OF IT BUDGETREVENUE BY CHANNEL

rts_ITBudget_0410_3 3/23/10 4:28 PM Page 2


he currents shaping ITstrategy in the retailenvironment swirl in

complex directions. Toget a sense of how respon-

dents view these currents we diveinto current thinking about innova-tion, implementation philosophyand speed of adoption.

In the area innovation we findthose who describe themselves asLeading Edge Adopters (12%) andQuick Adopters (30%) combine toform a sizable segment in thestudy. But it’s not a majority, whichis what we would expect for a sam-ple to reflect the overall market-place.

An overweight of aggressive ITadopters might lead to optimisticinvestment intentions in other find-ings, but that is not the case.Instead we find a majority of retail-ers who describe themselves asLate Adopters (53%) or Non-Adopters (5%). This doesn’t meanthey are technology averse orLuddites. It just means that if com-petitors and customers weren’tdriving technology upgrades mostretailers would rather invest scarcecapital in building new stores.

With this kind of respondentprofile we would expect a parallelin responses when asked abouttheir organization’s overall IT matu-rity, and we do. Retailers that saytheir organizations have AdvancedIT with Deep Integration come in at18%, which compares favorablywith those who describe them-

I T S T R A T E G Y B Y J O E S K O R U P A

30%Quick Adopter53%

Late Adopter

5%Non-Adopter

12%Leading Edge

Best-of-Breed Software

In-House Developed Software

Integrated Solutions Suites

Third-Party Developed Software

On-Demand or SaaS

Cloud Computing

0 10 20 30 40 50

46%

44%

44%

31%

24%

11%

Finding and Filling Gaps

selves as Leading Edge (12%). Thesame approximate correlationexists between those who say theyhave Mostly Advanced IT But LackComprehensive Integration (35%)and the Quick Adopter segment(30%). Confirming findings likethese between different but related

questions validate the overall accu-racy of study datapoints.

While Integrated Solution Suites(44%) continue to be a majorapproach to software deploymentin the retail tech stack we see Best-of-Breed has slightly pulled aheadin this year’s study. Admittedly the

TOVER-ARCHING STRATEGIES SHAPE SPECIFIC APPROACHES TO INNOVATION AND IMPLEMENTATION

APPROACH TO ADOPTING TECHNOLOGY

ARCHITECTURE APPROACH TO SOFTWARE

rts_ITStrategy_0410_v2 3/24/10 5:36 PM Page 1


difference is slight, but the trendhad been going the other way forseveral years. Plus, with In-HouseDeveloped Software (44%) tyingIntegrated Solution Suites there isevidence retailers have needs to fillthat pre-packaged software alonecan’t supply.

Mid-size retailers, those withrevenue less than $1 billion, areincreasingly moving towardIntegrated Solutions Suites,according to cross-tab analysis ofthe data. They also are big adoptersof On-Demand or SaaS software,which appears to be on a growthtrack for all respondents at 24%.

The big takeaway is the reaffir-mation of Best-of-Breed Softwareand In-House Developed Softwareas necessary complements toIntegrated Solution Suites.

The study’s budget analysisshowed a healthy chunk of ITspending is directed toward third-party IT services. Topping the third-party usage list is IT Consulting(45%), two Web categories (WebDesign 44% and Web Hosting41%), and Packaged Apps (39%).All except IT Consulting are highlytargeted engagements that accom-plish sharply focused tasks.

For the top category, ITConsulting, where do retailers gofor more strategic and broad-basedIT services? Among our respon-dents IBM is the first choice for53% and Microsoft is a strong sec-ond for 31%. Others that havestrong mindshare among retailersare Cisco (24%) and Oracle (20%).A few surprises include Deloitte(17%), AT&T (16%) and Verizon(15%). These firms have not beenknown previously for a strong retailfocus, but there is evidence this ischanging, especially for AT&T andVerizon. •

I T S T R A T E G Y

Web Design

Web Hosting

IT Consulting

Packaged Apps

Custom Apps

App Maintenance

Telecom/Network

Data Center

BPO

Training

0 10 20 30 40 50

45%44%

41%39%

32%31%31%

21%16%

15%

IBM Microsoft Cisco Oracle Deloitte AT&T Verizon SAP JDA Fujitsu0%

10%

20%

30%

40%

50%

60%

53%

31%24%

20% 17% 16%15%14%12%9%

9%Basic with critical limitations

38%Mostly basicbut someadvanced upgrades

35%Mostly Advanced

IT but lackingcomprehensive

integration

18%Advanced IT with deep integration

HOW ARE YOU USING THIRD-PARTY IT SERVICES?

TOP 10 IT SERVICES PROVIDERS

OVERALL IT MATURITY

rts_ITStrategy_0410_v2 3/19/10 4:52 PM Page 2


wo different butrelated technologiesdebuted in 1974

that radically changedretailing and led to the

modern concept of a logical group-ing of technologies called store systems. The first one was barcodes, which most people recalldue to a well publicized debut at aMarsh supermarket. Fewer peoplerecall that POS also debuted thatyear in several Pathmark andDillard’s stores.

Bar codes played a huge role inrevolutionizing checkout and inven-tory management. But POS playeda much larger role by revolutioniz-ing the ability to automate manage-ment and control over a large net-work of widely distributed stores. Italso led to the widespread develop-ment of the client-server model,local area networks and ultimatelya broad suite of hardware and soft-ware technologies making it eveneasier to centrally manage stores.

Both technologies took decadesto spread through the marketplace.But while bar codes have achieveda high degree of maturity, store sys-tems continue to expand into newfunctionalities and evolve.

POINT OF INTERACTIONThe heartbeat of a store today isfound in POS hardware and soft-ware, where store systems allbegan 36 years ago with a modifiedmainframe connected to severalcash registers. Today, POS is so

S T O R E S Y S T E M S B Y J O E S K O R U P A

Evolution of Store Systems

important that retailers risk losingcustomers and market share if theydon’t refresh these systems at reg-ular intervals. An out-of-date POS,

for example, may not have thecapacity to allow associates to doreturns, access customer loyaltyaccounts or handle in-store pick-up

TTHE HEARTBEAT OF THE STORE IS THE POS AND ALL OF THE TECHNOLOGIES THAT CONNECT TO IT

0 20 40 60 80

Self-checkout terminals

Up-to-date tech Started but not finished Will start this year Will start in 2 years

10%2%

4%11%

Wireless fully functionalPOS terminals 12% 4%10% 14%

POS software 36% 24% 14% 13%

POS hardware 42% 16% 13% 11%

QUOTE: POS is so important that retailers risk losing customers and market share if they don’t refresh these systems at regular intervals.12%

Tokenization

Contactless payment

Chip and pin

Check imaging (e-checks)

Signature capture

Check MICR processing

EFT credit card

Gift or stored-value cards

Debit card processing


0 20 40 60 80 100

60%

57%

39%

36% 4% 5% 9%

18% 3% 9%

10% 5% 12%

15% 7% 9%

31% 16%

11% 6% 3% 10%

9% 16%

8% 13%

6% 6% 7% 9%

6% 4% 13% 5%

6% 8%

POINT OF SERVICE

TECHNOLOGIES AT POS

POS IS SO IMPORTANT THAT RETAILERS RISK LOSING

CUSTOMERS AND MARKET SHARE IF THEY DON’T REFRESH

THESE SYSTEMS AT REGULAR INTERVALS.

rts_storesystems_0410_v2 3/23/10 4:29 PM Page 1


of online purchases. As a result of these factors, POS

upgrades go through cycles thatebb and flow. There are periods ofhigh activity among retailers whena sizable portion are installing orplanning to install POS upgrades,which are followed by periods oflow activity when retailers amortizetheir large capital investments.

During the boom years, prior tothe Great Recession, there was ahigh level of POS activity.Recessions always put the brakeson large cap ex projects, but thedata suggests this would haveoccurred anyway due to the cycli-cal, ebb-and-flow nature.

Right now a majority of retailerseither have up-to-date POS hard-ware (42%) and software (36%) orthey are currently finishing projectsalready begun – POS hardware at16% and POS software 24%.

Because so many retailers areup-to-date right now, the outlooktwo years out is relatively low byPOS standards. For hardware andsoftware we see about a quarter ofrespondents planning futureupgrades. When POS is at the highend of its activity cycle we typical-ly see future buying intentions at35% to 40%.

Something new to note here isthe early signs of inexpensivemobile phone POS systems.Wireless POS systems have existedfor years, but the technology is rapidly developing. Although theinstalled base for Wireless FullyFunctional POS Terminals is lowtoday, we can see that future buying intentions show growinginterest.

TECHNOLOGIES AT POSAlthough it started out as an elec-tronic cash register with automatedback up, the modern POS system is

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

now integrated with a cluster ofadditional hardware and softwaretools. And like the cyclical naturenoted earlier for deployment ofPOS, the cluster of technologiessurrounding POS has cycles, too.

A great amount of recent workhas been done with Debit CardProcessing and Gift or Stored-ValueCards, where a huge majority ofretailers are either up-to-date orpresently finishing projects. Thesame is true for EFT Credit Cards.

However, a big surprise is thejump in future interest in SignatureCapture devices. The current installbase is large, with 31% up-to-dateand another 16% currently finish-ing projects, but future plans arestrong, too, with 25% of respon-dents saying they will upgradewithin two years.

Since signature capture devicesenable retailers to get lower trans-action rates from credit cardprocessors we can assume that

long-term cost savings are a bigmotivator here.

IN-STORE TECHNOLOGIESAs previously noted, store systemscontinue to expand and evolve, andthere is more evidence of this.

Such relatively new technologiesas Store Pick-Up and Return of WebGoods (27% over the next twoyears), Store Level Task Management(32% over the next two years), andDigital Signage Displays (28% overthe next two years).

These three are all leading-edgesystems that could conceivably giveretailers an advantage over theircompetitors.

Older POS systems cannot easi-ly integrate with new technologieslike this, and as a result manyretailers will have to upgrade to beable to keep pace with the market-place. Also, helps drive the nextturn of the wheel in the POSrefresh cycle. •

RECESSIONS ALWAYS PUT THE BRAKES ON LARGE CAP

EX PROJECTS, BUT THE DATA SUGGESTS THIS WOULD

HAVE OCCURRED ANYWAY DUE TO THE CYCLICAL,

EBB-AND-FLOW NATURE.

0 20 40 60 80 100

40%

26% 24% 5% 12%

17% 12% 13%

25%

19%

17%

16%

10%

6%

5%4%4% 9%

1%2%

13%

4% 7% 21%

12% 7% 17%

11% 17% 15%

11% 9% 18%

7% 13% 12%

Item-level RFID

Electronic shelf labels

Digital signage displays

Kiosks

Store level task mgmt

Store pick-up/return of Web goods

Shopper tracking

Loss prevention

In-store servers


IN-STORE TECHNOLOGIES

rts_storesystems_0410_v2 3/23/10 4:30 PM Page 2


id you notice that taskmanagement softwaremorphed into execu-

tion management abouta year and a half ago? No?

You can agree or disagree with theshift, but one thing is certain: thesoftware’s current evolutionary pathputs it squarely into the store sys-tems category as opposed to theworkforce management category.

Which is why we put the chartthat contains the datapoint aboutexecution management in the storesystems chapter. However, it isworth noting that while these solu-tions are relatively new to retailingcompared to other technologies,they have matured quickly andadoption rates are growing fast.

Much more mature than taskmanagement are tools for time andattendance and labor scheduling.No retail chain can operate withoutthem, so it’s not surprising to see51% of respondents are up to datewith time and attendance solutionsand 34% are up to date with laborscheduling.

It’s a different story for work-force management, which is anadvanced system that helps labormanagers achieve the best possibleschedules by using rules engines toincorporate labor engineering stan-dards, budgetary targets, state andfederal regulations, union rules,employee restrictions, input fromstore-level managers, year-over-yearsales and more

Workforce management systems

W O R K F O R C E M A N A G E M E N T B Y J O E S K O R U P A

Workforce management

Labor scheduling

Time and attendance

Started but not finished Will start this year Will start in 2 years

0 20 40 60 80

51% 13% 11% 7%

34% 13% 15% 12%

27% 13% 18% 12%

Up-to-date tech

Human Capital SMART INVESTMENTS IN WORKFORCE AND HR PRODUCE SHORT AND LONG-TERM BENEFITS

are high-priced projects thatrequire change management initia-tives before, during and afterdeployment. So, despite case stud-ies that show strong ROI and deliv-ery of increased customer satisfac-tion just a little more than a quar-ter of respondents have up-to-datetechnology in place and another13% have started but not finishedimplementations.

However, the real story is infuture deployment intentions. Wesee 18% plan to start a workforcemanagement initiative this yearand another 12% plan to begin intwo years. So, nearly a third ofrespondents plan to upgrade theirworkforce management tools withintwo years.

In the human resources realm,we find future buying intentions forself-service HR/benefits tools is32% over the next two years (14%will start this year and 18% willstart in two years).

The more a retailer can shift toself-serve automation the more itcan increase productivity. Thesame is true for education/training,which actually has the largest cur-rent install base of the tools meas-ured here (17% for up-to-datetechnology and 18% for started butnot yet finished). Education andtraining are keys to increasing pro-ductivity, reducing turnover andimproving morale. Investments inthese tools produce immediate andlong-term benefits. •

Education/training

Recruitment/hiring

Self-sevice HR/benefits


0 20 40 60 80

20% 15% 14% 18%

19% 10% 13% 17%17% 18% 16% 13%

D WORKFORCE MANAGEMENT

HUMAN RESOURCES

rts_workforce_0410_v3 3/23/10 4:31 PM Page 1


s a core technology inretailing merchandis-ing has been the sub-ject of a great deal of

investment over the pastfew years. We can see evi-

dence of this in the study by look-ing at the high numbers in up-to-date technology in place. For athird of respondents four majorcomponents are up to dateincluding Item Management,Replenishment, Allocation andForecasting and Planning.

As a result, installation workbeing done right now is at a lowebb. You can see this in the catego-ry for started-but-not-finished,where the numbers are mostly inthe single digits.

However, the picture changesdramatically when looking atinvestment plans one and two yearsout. Here we see high intentionrates, especially for Forecastingand Planning (27% in one year and12% in two years) and Price/Mark-Down Optimization (23% in oneyear and 18% in two years).

Even Promotion Managementand Shelf and Space Planning,which have the lowest installedbases in the merchandising catego-ry, show high rates of future invest-ment. Merchandising systems aretoo important to performance andcompetitive differentiation to letthem get out of date.

Equally important are applica-tions that deliver customer analyt-ics, but there is a big difference in

M E R C H A N D I S I N G B Y J O E S K O R U P A

their installment cycles. While mer-chandising deployments currentlyunder way are at a low water markour findings show customer analyt-ics apps have twice the activity forprojects started but not finished.

This means a high rate of invest-ments were made to improve capa-bilities in such areas as TrackingCustomers, Segmenting Customersand normalizing CustomerRecognition Across Channels. •

Allocation

Replenishment

Forecasting and planning

Category management

Item management

Assortment planning

Product lifecycle management

Price/markdown optimization

Campaign management

New product/privatelabel development

Shelf and space planning

Promotion management


0 20 40 60 80 100

35% 11% 19% 12%

34% 9% 19% 14%

33% 11% 20% 14%

33% 10% 27%

26% 9% 17% 15%

25% 11% 21% 5%

23% 12% 21% 13%

23% 7% 22% 16%

22% 11% 23% 18%

22% 12% 15% 11%

21% 14% 20% 13%

21% 5% 18% 15%

12%

40%A

Customer-CentricityMERCHANDISING SYSTEMS ARE TOO IMPORTANT TO LET THEM GET OUT OF DATE

MERCHANDISE MANAGEMENT TECHNOLOGIES

Tracking customers

Centralizing customer data

Customer recognition across channels

Segmenting customers

Frequent shopper/loyalty program

Started but not finished Will start this year Will start in 2 years

0 20 6040 80 100

37% 13% 15% 13%

33% 23% 16% 14%

24% 26% 16% 19%

21%

20% 26% 17% 17%

24% 16% 14%

Up-to-date tech

CUSTOMER ANALYTICS

rts_Merchandising_0410 3/23/10 4:31 PM Page 1


etailers neglect coreIT systems at theirperil and few arewilling to risk it.

Which is why supplychain, like merchandis-

ing, POS and workforce systems, gothough regular cycles of investmentto ensure they are as up-to-date aspossible

In this section we can see a greatdeal of recent work has been done inseveral key areas of the supplychain. Up-to-date technology is inplace for Warehouse Management(40%), Order Management (34%),Returns Management (33%) andSourcing (32%).

As a result, there are few areasin the supply chain that show big levels of current work underway or planned for one and two yearsout. The big exceptions areTransportation Management, whichshows 26% percent of retailersplan an upgrade within two years,and Warehouse Management,which shows 24% have upgradeintentions in 24 months.

Warehouse Management is aninteresting exception because somuch investment has already beendone there, but with rising salescoming from the e-commercechannel many retailers are discov-ering the need to reorganize theirwarehouse and DC operations toaccommodate greater levels ofstore-to-store shipping and in-storepickup/returns of online goods.

Looking at the RFID installed

S U P P L Y C H A I N B Y J O E S K O R U P A

Warehouse management

Sourcing

Returns management

Real-time inventory visibility

Transportation management

Order management

RFID item level

RFID case/pallet


0 10 20 30 40 50 60 70 80

40% 13% 10% 14%

34% 9% 11% 17%

33% 10% 10% 9%

32% 9% 10% 10%

28% 11% 9% 15%

27% 4% 12% 14%

7% 3% 4% 12%

5%2%2%

11%

Inventory Ready

based of up-to-date technology andfuture plans some might be tempt-ed to say it is at extremely low lev-els. “But this is not an accuratereading of the data,” says JeffRoster, retail technology analystwith Gartner. “The data shows ahealthy level of investment inRFID. In fact, RFID is picking upinterest and is still on track for anormal adoption pattern for a five-year-old technology. It appears tobe a niche play, similar to self-serv-ice POS, for example, but it is mov-ing ahead both in stores at the itemlevel and in warehouses at the case

and pallet level.” Clearly, the supply-chain data

indicates that broad IT spendinghas given way to highly focusedprojects. For some technologies,like Forecast Planning andWorkforce Management, invest-ment plans remain high. But forothers, including those in the sup-ply chain, pent up demand remainslargely pent up.

These plans could change quick-ly, however, if consumers beginspending again, unemploymentdrops, and the economic recoverypicks up steam. •

RMANY SUPPLY CHAIN SYSTEMS ARE UP-TO-DATE, BUT RFID MAKES A SURPRISING RETURN

RFID APPEARS TO BE A NICHE PLAY, BUT IT IS MOVING AHEAD

BOTH IN STORES AT THE ITEM LEVEL AND IN WAREHOUSES AT

THE CASE AND PALLET LEVEL.

SUPPLY CHAIN SYSTEMS

rts_supply chain_0410_v2 3/23/10 4:32 PM Page 1


emember when aretailer’s e-com-merce revenue was

smaller than a singlebrick-and-mortar store?

Those days are long gone. Howlong? Consider this. Since e-com-merce accounts for 9% of totalrespondent revenue (see the ITBudget chapter for more details),then only those retailers with ninestores plus an e-commerce divisionhave a single-store revenue equiva-lent. In this scenario, all stores pro-duce similar annual sales and e-commerce contributes one-tenth tothe total.

But respondents with just ninestores are the exception in thisstudy. The typical respondent toRIS studies (as observed over mul-tiple years) has an average of about400 stores, which means the e-commerce revenue contribution isthe equivalent to several dozenstores. And this figure is growingeach year.

This kind of success has raisedthe profile of e-commerce withinretail organizations, and compelledmany to leverage their online divi-sion to promote sales in otherchannels. This sophisticatedapproach is called cross-channelretailing, and it refers to strategicalignment of goals and synchro-nization of technologies on boththe front-end (customer-facing)and the back-end (order manage-ment and fulfillment).

Cross-channel retailing enables

C R O S S C H A N N E L B Y J O E S K O R U P A

Using first-generation, no plan toupgrade

Using first-generation,plan to upgrade within 2 years

Using first-generation,plan toupgradein 1 year

Using first-generation,and currentlyupgrading

Using second-generationsystem withadvanced capabilities

15%14%

0

5

10

15

20

25

30

35

20% 19%

31%

Leveraging Channels

retailers to effectively meet con-sumer demand for shopping onmultiple channels, and maximizingsales for the company as a whole.In addition, cross-channel strate-gies enable retailers to betterunderstand customer preferencesand patterns so they can fine tuneinventory management and fulfill-

ment. In this view, all customers inall channels get the products theywant whenever and wherever theywant them.

E-COMMERCE PLATFORMSFor the past few years, retailerswent on a buying spree to upgradetheir e-commerce technology plat-

RAS CHANNELS PROLIFERATE ALIGNMENT BECOMES MORE IMPORTANT THAN EVER

CROSS-CHANNEL RETAILING ENABLES RETAILERS TO MORE

EFFECTIVELY MEET CONSUMER DEMAND FOR SHOPPING

ON MULTIPLE CHANNELS, AND ALIGNING STRATEGIES

ACROSS CHANNELS TO MAXIMIZE SUCCESS OF

THE OVERALL COMPANY.

BENCHMARKING E-COMMERCE SOFTWARE PLATFORMS

rts_crosschannel_0410_v2 3/23/10 4:33 PM Page 1


forms, and evidence in the databacks this up.

In last year’s study we found26% were still Using a First-Generation E-Commerce Platformwith No Plan to Upgrade. Thismeans all but a quarter of respon-dents either had an advanced e-commerce platform or they wereplanning to upgrade. By itself, thisis a strong indicator of upgradeintentions. But this year the num-ber is just 15% for those who haveNo Plan to Upgrade. The continu-ing rise in e-commerce sales andthe pace of technology develop-ment are likely to keep e-commerceupgrade activity on the front burn-er for some time to come.

Those Using a First-GenerationE-Commerce Platform who Plan toUpgrade Within One Year com-prised just 13% of respondents lastyear. This year the figure is up to20%. So even as many other tech-nologies show a trend toward cau-tious restraint, e-commerceupgrade plans are on the rise.

Finally, those already Using aSecond-Generation System withAdvanced Capabilities comprised21% of respondents last year. Thisyear the number jumps to 31%,which indicates that a great deal ofwork was done last year to enable alarge number of retailers to get up-to-date with their e-commerce plat-forms. Going forward with futurestudies it will be necessary toreword this question to normalize itwith our other technology statusquestions. The days of first-genera-tion or second-generation e-com-merce platforms are coming to aclose. Online evolution is occurringin cycles measured in months andnot years.

M-COMMERCEDespite all the hoopla about the

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

48%35%

11%

6%

Planning under way

Not planning any activity

Pilots in progress

Fully functioningstrategy in place

0 10 20 30 40 50

mobile commerce explosion thenagging question remains: Is itmostly hype right now? Many obsta-cles still need to be overcome forthe vast majority of retailers alreadyinvolved in the m-commerce chan-nel to clear a dime on their invest-ment. And beyond ROI, manyretailers worry about lack of tech-nology standards, security and con-sumer trust.

However, we’ve seen all thisbefore. Remember the dot-comboom? It’s never a good idea to waituntil a new channel is packed withcompetitors to launch a me-too pro-gram.

The indisputable fact is thatsmartphones are a retail marketer’sperfect storm, because they arealways carried, always connectedand location aware. Last year174.2 million smartphones weresold worldwide to Internet-connect-ed consumers. Four times as manymobile Internet devices have beenshipped worldwide during the lasttwo years compared to shipmentsof PCs.

Mobile Internet devices are sup-planting desktop and laptop com-puters as gateways of choice forconsumers. The implications of thisshift are enormous, both culturallyand for the future of retailing.

Still, with mobile purchasing lev-els still so low (compared to otherchannels) and limited to a narrowrange of products that generate note-worthy sales (flowers, digital mediaand food ordering, for example) manyexecutives won’t be able to refrainfrom asking: Where’s the ROI?

Despite legitimate concerns theevidence in the study indicates thewait-and-see period is quickly com-ing to an end. Nearly half of therespondents say that m-commerceplanning is currently under way(48%). Only about a third (35%)actually do not have planned m-commerce activity. These numbersdemonstrate how fast m-commerceis spreading through the retail mar-ketplace.

At this early stage 6% of respon-dents already have a fully function-ing m-commerce strategy in placeand another 11% are in the pilotproject phase. Combined these twocategories represent 17% of therespondent pool, a number thatcorresponds to those who definethemselves as leading-edgeadopters of technology. Right nowthese retailers are acquiring newskill sets in a promising new chan-nel. Study data indicates a largeportion of the retail industry willquickly follow. •

CURRENT M-COMMERCE CHANNEL DEVELOPMENT

rts_crosschannel_0410_v2 3/23/10 4:34 PM Page 2

RETAIL2 0 T H A N N U A L

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

A S S O C I A T E S P O N S O R S

T I T L E S P O N S O R

®

®


C A T E G O R Y S P O N S O R S

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

rts_pg29_0410 3/24/10 2:25 PM Page 1

ne executive who filledout the RIS/GartnerTech Trends form a fewyears ago called it

exhaustive. Not becauseit was overly long — this

year’s version had 26 questions —but because it has several multi-part questions that require deepknowledge of the company youwork for.

It also may seem exhaustivebecause the executives most qual-ified to fill out the survey are thosewith the least amount of time.

Fortunately, the Tech TrendsStudy is well established after 20years and RIS has strong relationswith many senior-level retailers. Ofthose who filled out the survey17% were C-suite executivesexcluding CIOs, which in their ownsegment accounted for 30% of therespondent pool. This means thatfindings in the study are based ona 47% participation level by C-suite executives.

Decision Makers

Business Leaders

CIOC-Suite

Director/Manager of IT

30%

22%

17%

31%

The remainder of the respon-dent pool includes business lead-ers (22%), who are senior levelexecutives without technologytitles but who have significantresponsibility for IT, and directorsor managers of IT (31%).

Vertical segmentation in thestudy is a good cross section of theretail landscape. The largest cate-gory is specialty retailing (59%),which is as it should be. Itincludes both hardline and softlineretailers. Grocery is another largegroup, and at 24% it is probably abit higher than in the marketplaceas a whole. But since grocers arelarge, tier-one companies theyhave a big footprint. Their outsizepresence is actually a bonus forgetting a better peek into technol-ogy created and used by retailers.

Although one of the smallestsegments in the study, it is inter-esting to see that 6% of respon-dents consider their major busi-ness model to be in e-commerce or

catalog sales. This could be anearly sign that non-brick-and-mor-tar retailers are growing largeenough and maturing to the pointwhere they are beginning to openup physical stores and/or operatein ways that are increasingly similar to their brick-and-mortarcousins.

The retail group that movestechnology forward the most is theone that has the resources toinvest in technology deployments,upgrades and innovation. Andthese are typically the large retail-ers. So, it is a good sign to see thatthe largest respondent category inthe study is the group retailerswith revenue greater than $1 bil-lion (45%). The second mostimportant category from this per-spective is the group that acts likea tier-one organization or aspires tobecome one. This is the revenuecategory ranging from $250 mil-lion to $1 billion, and it represents17% of the respondent pool. •

W H O R E S P O N D E D

OFINDINGS ARE BASED ON A 47% PARTICIPATION LEVEL BY C-SUITE RETAIL EXECUTIVES

6%E-commerce/Catalog

8%General Retail/Mass

3%Pharmacy

24%Grocery

59%Specality

45%$1 billionor more

17%$250 million to $1 billion

22%$50 million to $250 million

16%Less than $50 million


JOB TITLE RETAIL SEGMENT ANNUAL REVENUE

rts_Who Responded_0410_v3 3/23/10 4:35 PM Page 1

a supplement to ris news april 2010 retail 20th annual...

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