Retailers use IT to build value

January 23, 2012

IT spending is on the rise, partly because omni-channel shoppers push chains to keep up with their demands.

Repeat this quote twice so it sinks in.

“Retailers were blindsided by the number of people in-store shopping with mobile devices [during Christmas season],” said Deborah Weinswig, managing director-retailing/broadlines, and food & drug chains, Citigroup Global Markets. She was on the stage at the National Retail Federation Convention presenting Retailers Move From Defense to Offense With Technology: Driving Growth on Main Street and Wall Street.

Was your chain in that camp? The Lempert Report has reported repeatedly on the rise of the omni-channel shopper (mobile, e-commerce, stores), who is better informed than most about products, price and consumer reviews. As their numbers grow, supermarkets that lag in satisfying their needs risk being tossed out along with yesterday’s food waste.

Chains can’t afford to be behind the trend again as 2012 unfolds - they’ll lose more trips to food-sellers in other channels and provoke shrugs from consumers who are empowered by their information. Better that chains aim to keep pace with retail leaders (such as Target, CVS and Walgreens) spending more on IT to develop “customer analytics.” By aggregating shopping and spending data to gain customer insights, chains can build predictive capabilities that lead to more accurate forecasts and demand plans and stronger customer retention and loyalty.

Weinswig said retailers are budgeting more for IT in order to understand their customers better, drive sales across multiple channels, and build a more integrated supply chain. This contrasts with recession moves to lower costs.  While she anticipates a 3.5% year-over-year rise in IT capital expenditures in 2012, she points to the omni-channel supply chain as “one of the year’s top initiatives as retailers look to consolidate their e-commerce and bricks-and-mortar buying teams, as well as create more efficient supply chains.”

In her view, 13 key themes will drive technology investment in 2012:
1.    Mobile and social analytics shape retailers’ views of the customer
2.    Retailers look to the cloud to get the right data into the right hands
3.    Retailers engage customers through mobile devices
4.    Maximize returns with optimization technologies
5.    Moving to one view of the customer with customer analytics
6.    Embracing the omni-channel supply chain
7.    Marketing and IT converge
8.    Workforce management to drive lower SG&A
9.    RFID: Has its time finally arrived?
10.  Streamline the product pipeline with MLM (Merchandise Lifecycle Management)
11.   Make payment easier with near field communication
12.   Protect the integrity of data with security technology
13.   Connect with suppliers on the B2B marketplace