Black Friday is still nearly three months away, but breathless holiday retail sales forecasts are already in full swing. Happily, predictions are optimistic this year: eMarketer forecasts that U.S. retail sales will reach a whopping $885 billion in November and December, an increase of 5.7 percent over last year and the biggest year-over-year growth rate since 2011.
Retailers can’t heave a sigh of relief just yet, of course. They are hunkering down to make sure they can compete properly for the consumer dollar, and experts say the key to their success is how they handle technology issues.
“The challenge retailers have is not only keeping up and ahead of their competition when it comes to technology, but also keeping up with their consumers and engaging with them on the technologies consumers expect to be engaged with, such as smartphones and tablets,” says Alan Lipson, Principal Industry Marketing Manager for the Retail and Consumer Packaged Goods (CPG) industries at analytics provider SAS.
For example, during the 2014 holiday season, mobile traffic and sales increased by 25 percent over the previous year, according to IBM Digital Analytics Benchmark reports, with 45 percent of all online traffic to retail websites and apps coming from smartphones and tablets.
Here are four ways retailers need to be at the top of their technology game as the holidays get closer, in order to capitalize on consumer shopping behaviors, boost efficiency and gain a competitive edge:
1. Focus on the infrastructure fundamentals
“Retailers must ensure they can execute the technology fundamentals well,” says Bill Lewis, vice president of Consumer Products and Retail Distribution for technology consulting firm Capgemini. That is a combination, he explains, of real-time performance so retailers can get a “single version of the truth” and insight to data at a very granular level; reducing the cost of ownership of IT so the retailer can spend more on consumer experience and marketing; and making infrastructure more resilient to outages and downtime. “Last holiday season there were definitely retailers who went down or had very delayed response during peak periods,” he adds.
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Most retailers have learned from their 2014 experience and are making investments and pressure-testing their systems to ensure they can handle the volume, as well as building and leasing cloud storage for data. “All the retailers we speak with are very focused on ensuring they are ready from the technology infrastructure standpoint,” says Lewis.
2. Double down on security
With the high-profile retail hacks of top retailers on everyone’s mind – such as Target in 2014 and Home Depot in 2015 – security remains a challenge for the entire industry, as retailers need to protect customer relationships and maintain trust. “Anyone that’s not shoring up their ability to protect data is an endangered species,” says Lewis.
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October 1 is also the deadline for retailers to migrate to EMV chip technology, which is meant to improve security against fraud. However, the accompanying liability shift – in which the burden for accepting responsibility for fraud will now shift to the retailer, rather than banks and credit card companies – is worrisome. “Everyone has some sort of security assessment or strategic priorities they are implementing, hoping they will not fall short,” says Lewis.
3. Hone in on analytics capabilities
As retailers look to squeeze as much profit out of the holiday season as possible, data analytics has become essential in several ways, including increasing revenue; managing costs and better engaging with customers. “Analytics helps retailers take the data they have from customer shopping histories, combine it with other demographic information to better understand who their customers are and provide better offers,” says SAS’s Lipson.
But analytics also helps achieve higher profits on the supply chain side, by finding ways to move product from the factory to the consumer faster and more efficiently. ”We see retailers getting ready to analyze their October and early November sales data and position their goods accordingly,” he explains. “They can see where the actual consumer demand is coming from, using structured and unstructured data with analytics tools, which informs better matching of supply and demand.”
4. Connect the back-end to the front end
The most successful retailers will be able to connect their front-end consumer experience marketing tools and omnichannel insights with their back-end consumer-driven supply chain, says Lewis. That means intelligently developing capabilities that consumers are increasingly seeing as table stakes, including shipping from the store, or ordering online and picking up at the store.
“If those capabilities don’t already exist, they need to be piloted and pressure-tested to be available to the consumer in the peak shopping period,” he explains.
It’s never too late to boost technology readiness
While the holidays are upon us, it’s never too late to instill and develop a continuous learning environment that will boost technology capabilities going forward, says Lewis, who says many retailers are announcing laboratory stores where they pilot their most innovative ideas and concepts to see what gets traction during the holiday season.
“One size doesn’t fit all in this omnichannel world, so each retailer has to determine what its capabilities need to be based on its brand value proposition,” he says. “It’s never too late to examine the work that’s been done already and to invest to shore up what might be some question marks in terms of holiday readiness.”