Retailers Aren’t Sold on In-Store Mobility and Wireless Systems

No doubt, retailers are facing tough economic times as gas prices surge, real estate troubles persist and employment worries increase. As a result, U.S. consumer confidence recently dropped to its lowest point in 16 years.

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At the same time, many retailers are delaying or cutting back on technology initiatives at precisely the time when, industry watchers say, IT-based services can deliver enhanced customer service, more efficient store operations and competitive advantage. (See “Retailers Are Winning by Focusing on Customer-Centric Systems — Not Whining About the Economy” for more on how retailers are coping with the downturn.)

One of those areas for opportunity is to connect with customers using mobile and wireless technologies, according Paula Rosenblum, a managing partner at Retail Systems Research (RSR), in a May 2008 RSR benchmark report called “The Customer-Centric Store.”

Rosenblum points out two areas in which retailers can provide better customer service and experiences using new mobility tools: In-store managers can use wireless applications on handhelds to spend more time with customers on the selling floor; shoppers also can receive product and promotion information on their own mobile devices while in the stores. (See “Retailers’ No. 1 Tech Priority Is Business Intelligence” for more on how retailers are aiming to serve customers better.)

So far, however, most retailers have been less than enthusiastic about mobility and the potential efficiencies and expanded service options it can deliver, which is troubling to Rosenblum. “The dearth of mobility in store has to change,” she says.

RSR survey results detailed in the report illustrate retailers’ reluctance: Just 22 percent of 126 respondents said mobile applications were a very important technology, and 40 percent perceived little to no value in bringing key performance indicators (KPIs) (such as how certain products are selling) and alerts directly to those employees on the sales floor. Similarly, only 21 percent said delivering product information to customers’ handheld devices was very valuable, and 40 percent thought there was little or no value in that. (For more on how businesses are missing out on mobile opportunities, see “Blowing Mobile.”)

To Rosenblum, retailers who do not embrace and offer mobile options will face serious consequences. “The lack of the ability to support wireless in the store is going to kick them in the [rear],” she says. “It’s going to create more problems for retailers than the data breaches they’ve experienced to date.”

What’s the Holdup?

The number-one cited business challenge for retailers right now was “improving customer service while holding the line on payroll costs,” according to the RSR survey. In addition, Rosenblum notes that “garbled technology infrastructures have become the chief organizational inhibitor to new technology initiatives,” such as wireless.

Those two roadblocks are contributing to slow adoption of wireless systems inside retailer environments today. In addition, while Rosenblum understands the “natural reticence” to wireless given the rash of data security breaches at retailers, “just eschewing wireless is not a guarantee of data security.” (See “How TJX Avoided Wall Street’s Wrath” for more on one big retailer’s experience with a major customer data breach.)

In fact, many managed services providers will create service level agreements (SLA) to help ensure compliance to standards and on-going review of procedures, policies and threats, Rosenblum writes in the report.

Even so, only 23 percent of the RSR survey respondents have wireless available throughout their entire stores; nearly half (44 percent) have no wireless available at all in their stores. RSR “expected far higher usage by this time,” Rosenblum writes, “but all retailers still lag in this fundamental requirement.”

Of course, Rosenblum makes it clear that “wireless for wireless’s sake” is not the point. To that end, she encourages retailers to start with small pilot programs. One area is in using SMS (short message service) to deliver messages to customers’ handheld devices. This service “should be an arrow in every retailer’s quiver,” Rosenblum claims. “It’s the easiest way to get personal with your customer, provide information to her that she might hold onto and use later, and drive promotions and other offerings.” (See “How IT Systems Can Help Starbucks Fix Itself” for more on IT’s ability to help retailers.)

Rosenblum says the onus is now on retailers to catch up to their customers’ mobile habits and needs. “Consumers are using these types of devices in their daily lives,” she writes. “Isn’t it time retailers did the same?”