by Sharon Goldman

7 technology lessons retailers learned in 2015

Oct 19, 2015
Retail Industry

From tech-enabled associates to same-day fulfillment to personalization, retailers have had a lot of valuable tech takeaways this year.

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Credit: Thinkstock

As the autumn air turns crisp and the leaves fall, retailers around the country are gearing up for what they hope is a highly profitable holiday season. But besides making sure they’re fully stocked with the holiday gifts customers want, they are also taking stock of everything they learned in 2015 – so they can up their game after the New Year rolls around. 

This is particularly true in the realm of sophisticated technology tools, which can now be found in every nook and cranny of today’s leading retail organizations – from up and down the supply chain and every corner of the store, across marketing departments, and, of course, at the very core of ecommerce and mobile. Savvy retailers know that in order to compete in a fast-paced landscape of demanding customers looking for shopping Nirvana through smartphones and social media, they need to keep up with constantly evolving technology at every turn. 

These are seven big lessons retailers learned in 2015, with an eye towards 2016 success: 

1. Sales associates need to be tech-empowered 

In 2015, retailers learned that sales associates can no longer be focused on the details of just one location, but have insight into available inventory across the brand’s full network, as well as an understanding of customer preferences and transaction histories,” says Vikas Aron, director at Manhattan Associates, a supply chain software provider. “Essentially, they are selling the enterprise, not just the stock of one location, and as such they must act as enterprise sales associates.” That means retailers must focus on training their associates to use and understand technology tools not only to serve in-store customers, but pick, pack and ship inventory and handle omnichannel orders and questions. 

[Related: 5 cutting-edge retail technology trends] 

2. Omnichannel is not a choice 

Retailers spent 2015 embracing the notion of omnichannel – that is, streamlining and improving the use of multiple channels along a shopper’s journey, from researching online and checking prices on mobile phones to buying in-store – because customers are demanding it, says Oliver Guy, retail practice head at digital business platform Software AG. “Omnichannel is no longer a choice,” he says. “It has to be an integral part of a retailer’s overall transformation strategy to meet growing customer needs and expectations,” he says. The challenge for 2016 will be to leap over serious technology hurdles, he adds. “Existing systems and processes are optimized for a single-channel world and retailers must introduce new processes, increased levels of visibility and increased automation to deal with the additional complexity of omnichannel.” 

3. Cyber-crime isn’t going anywhere 

EMV, encryption and tokenization technologies, meant to prevent fraud, have been adopted by more US retailers than ever, thanks to October’s EMV compliance deadline and liability shift. But in 2015 retailers learned that cyber-crime – especially the type associated with POS malware attacks – would not decline, says Jay Townsend, senior associate in Booz Allen’s retail business. “The operational urgency of POS malware attacks will only increase and could be more ambitious against major retailers as criminals attempt to gain access and take advantage of existing vulnerabilities,” he says. As a result, he explains, in 2015 many top retailers began to implement more sophisticated cyber security operations centers to integrate cyber threat intelligence, threat defense operations, and vulnerability management capabilities. 

4.  Same-day fulfillment is mission-critical 

Ecommerce giant Amazon is the current master of same-day fulfillment, but other big-box retailers including Walmart, Nordstroms, Macy’s and Home Depot have realized they need to get shorten their supply chain as much as possible by opening up localized fulfillment centers, says Robert McCarthy, Technical Advisor at Mobiquity. “This is a radical shift from the old days of centralized fulfillment, and it’s a result of consumer expectations – they see it, want it, purchase it, and demand it on the same day,” he says. That fulfillment can either be shipment to the home, or in-store pickup (click-and-pick conversion), but the fulfillment centers need to be geographically close to make this happen. 

5. Personalization must be real-time 

“It’s important to capitalize on shoppers’ interest while it’s hot – not the next time they visit or an hour later – otherwise a sale could easily be lost,” says Andy Zimmerman, CMO at software provider Evergage, whose clients include retailers RueLaLa and Gardener’s Supply Company.  There’s no doubt that customers want a higher level of real-time personalization as they shop – a 2015 Accenture survey found that nearly 60 percent of shoppers want real-time promotions and offers. “Leading retailers are using technology to serve up customized experiences and recommendations to visitors based on who they are, what they’re doing and, most importantly, their intent at that moment,” says Zimmerman. 

6. Stores need to reflect local preferences and products 

Large retailers spent 2015 adjusting their offerings to better cater to local customer needs, hoping to keep shoppers from going to multiple stores and boosting loyalty, says Riyad Tahir, head of Xerox’s Retail and Consumer Practice. This requires lots of technology adjustments to accommodate local product acquisition: “Making local products available in a big box retailer creates both labor and technology platform challenges since smaller vendors typically don’t have high-end digital platforms for the administrative processes needed to deliver, check, approve and charge for, and re-stock product inventory,” he explains. In addition, once stores are localized, the head office is challenged to audit, enforce and track how each store is laid out: “Retailers can use video analytics and data analytics to create unique store profiles from a footprint and fixture point of view and indicate what merchandise is where – so it can be tracked and measured.” 

[Related: Retail CIOs become heroes with the help of CMOs] 

7. Testing and learning using data is a must 

Retailers came up with lots of ideas in 2015. Many, however, may look great on paper, but not work in practice, says Jonathan Marek of Applied Predictive Technologies, a data analytics firm that works with retailers such as Lane Bryant, Wal-Mart, Lowe’s, and Staples. That’s where testing and learning comes in: “In order to know which ideas will be winners and which will damage profitability, the smartest retailers are using business experiments to find their true incremental impact on profits,” he says. For example, Chico’s learned recently that a more aggressive promotional strategy was not profitable and Lane Bryant learned that they should merchandise sports bras and tops together but not pants. “We expect retailers to continuing testing in 2016 across new products and categories, improving the in-store experience, omnichannel strategies, targeted outreach and more,” says Marek.