Retail CIOs Look to Break Online and Offline Shopping Barriers
Tech leaders at retailers are heading for a software refresh, and many are expecting to replace legacy in-store systems with unified ecommerce systems in a bid to keep up with changing shopping habits.
By Kenneth Corbin
CIOs at retail operations are expressing strong interest in consolidating their far-flung and often siloed IT systems in response to the dissolving barriers between the online and in-store shopping experience, according to a new survey from the National Retail Federation and Demandware, a retail technology provider.
In a poll of nearly 250 business and tech leaders in the United States and Europe, a significant minority — just under 36 percent — said that they are considering moving to a single platform to manage the customer experience across multiple channels. Another third are undecided, leaving slightly more than 31 percent who say they aren’t inclined to consider a shift to a uniform platform for customer interactions and transactions.
That suggests that the coming years could see a significant shift away from the in-store point-of-sale (POS) systems that have been a mainstay in the retail environment for decades.
“What retailers are finding is their current tech environment cannot keep pace with the change that’s happening in the consumer world,” says Rob Garf, Demandware’s vice president of industry strategy and insights.
Jump in Ecommerce Spending Prompts Retailers to Rethink Strategy
The survey comes amid double-digit percentage spikes in ecommerce spending over the past year, according to data from the U.S. Census Bureau, continuing a long-running trend that has seen online channel account for a greater portion of overall retail sales.
At the same time, more consumers who still make their purchases in stores are browsing products and comparing prices online beforehand, yet the insights gleaned from those interactions are unavailable to store personnel when the brick-and-mortar systems run on a distinct platform from the retailer’s Web operations.
With disparate systems running across the stores, website, call centers and throughout the supply chain, retailers can struggle with inconsistencies in inventory, pricing and promotions, as well as incomplete views of order statuses and customer profiles.
Retailers are “rethinking their store strategies in light of digital commerce,” Garf adds. “Not having them go away, but reinvigorate them and bring them into the digital age.”
It won’t happen overnight. Even among those CIOs who are leaning toward an omni-channel technology overhaul, many are on the fence about how they will effect the change, or when.
Some of that uncertainty stems from where the individual retailers sit in their technology refresh cycle. However, 70 percent of respondents indicated that they are planning or in the process of an overhaul of their current software, and 80 percent are planning to maintain or increase their in-store tech spending over the next three years.
Asked about the next iteration of POS systems, 38 percent of respondents said that they plan to bring their ecommerce platform into their stores, more than those who said they will extend ERP or CRM systems to handle in-store transactions, or those who said they will maintain a traditional POS system.
Demandware is backing the ecommerce model, but regardless of which platform a retailer selects, the process of streamlining the operations of various divisions into a single IT system presents challenges that go beyond the technology itself.
In a segmentation typical of a retail operation, each division might conduct its work in a distinct technological environment: the store personnel might work in the POS system and other store-specific applications; the team focused on the digital customers would handle ecommerce; ERP applications for the merchandising divisions and CRM for the marketing folks.
“Organizationally, this is not easy, in that there have been specific teams focused on specific technologies to help serve specific constituents within the enterprise,” Garf says.
For Now Retailers Sitting on Sidelines, Remain Risk-Averse
Another overarching concern is the unsettled field of vendors pitching technology solutions to help multichannel retailers overhaul their legacy systems, what Garf calls a “nascent” market segment. That may explain why many retail CIOs are sitting on the sidelines, waiting to see where the market shakes out.
“Retailers are somewhat — as they typically are — risk-averse, and want to make sure they’re making the right bet,” Garf says.
“Retailers aren’t necessarily looking to do a big bang approach today to create the single platform,” he adds. “The retailers, to the degree they can, are biding their time, if you will, to see how some early adopters have benefited from this.”
Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com.