Dear Retailers, retail is a hard business to be in, isn’t it…?
…actually, creating and implementing retail technology solutions is probably even harder…
…and it is both for tech vendors and for retailers’ ICT teams.
[To be clear, “retail technology solutions” are any mix of hardware, software, expertise, etc. packaged together, whose short description liberally includes terms like Web, Digital, Mobile, Enterprise, etc.]
Let’s discuss some of the most significant challenges.
Challenge #1: no two retailers are alike
In Europe, Tesco (UK), Mercadona (Spain) and Esselunga (Italy) – for example – are apparently quite similar from the outside, but in reality – when you dig in their processes, organizations and technologies – they haven’t so much in common.
The truth is, retailers all over the world are extremely heterogeneous internally, hence nobody can create “one-size-fits-all” solutions in retail: there is a lot – a mountain-high heap – of expensive, time-consuming customizations and personalizations to be done.
Challenge #2: budgets & ROIs
Today many retail markets are shrinking – again, old Europe is a significant case – so many retailers’ budgets are shrinking accordingly.
Since less money is available, limiting the upfront technology investment is a must; furthermore, the related ROI (Return on Investment) is required to be, more than ever, significant and quick.
A well known secret: considering that basically a successful retail solution drives and captures value by either improving sales or reducing operative costs, you can be sure that, for better or worse, retailers are far more sensitive to “more money coming in”, than “less money coming out”.
Challenge #3: reliable vendors, reliable technologies, reliable solutions
As a rule, retailers require a high degree of “stability” from their retail solution vendors – in particular they want to be sure that their vendors will still be in business in ten/twenty years, delivering on their promises – so no startups, please…
Speaking of technologies, retailers are not early adopters, on the contrary, they are very conservative, that’s why they always select technologies that have longevity.
Speaking of solutions, “high availability” is still the #1 requirement for retailers, and since in-store everything is mission-critical, Quality and Support are very important:
- Quality means that any solution is always 100% operative and performing
- Support means that somebody will take care of any problem (should something bad happens) and of any change (this is called “evolutive maintenance”) – possibly within 5 minutes, the world over…
My boss (…in another life…) used to say: “Give your solution away for free… …and make a huge pile of money on support!”
Challenge #4: integration
Any new retail solution needs to adapt to the existing IT infrastructure and workflow – this is what is commonly known as “integration with existing processes, organization and technologies”.
CTOs in retail have already invested – according to them – in too many technologies, so prefer to steer clear of a new one since they’d rather not:
- buy and manage additional licenses
- re-train their people
- add complexity to their IT systems and infrastructure
…so it is crucial for retail technology solutions to support as many customers’ technologies as possible.
Challenge #5: “agility”
Retailers are used to solutions that have a life-span of decades, think of ERPs, Order Management Systems, POS solutions, etc. On the contrary, modern Web/Digital/Mobile/…-based solutions are usually dated after no more than 5/10 months (…or even less!). This means that, especially for what client-facing applications are concerned, retailers need to become more “agile”, that is, in constant “test-&-learn” mode.
Please take inspiration from startups in the Silicon Valley: if you’re on the wrong path and need to start over again, you need to be able to do it in days or weeks, not years…
A final thought…
Several retailers are now setting up innovation-labs to incubate new ideas and to hatch forward-thinking solutions.
Even if the 90% of the output has often no tangible impacts in the short term, these labs are very valuable because they show how retail will evolve in the future.
I believe that we live in a world where having the technological edge makes the difference between success and failure; the adoption of new technologies will truly shift the retail landscape – I can’t wait to see this transition and what lies ahead.