| Technology predictions for retail in 2011 |
By: Scott Storey, MD of CTS Retail
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Posted: Monday, December 6, 2010 3:00 pm
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Technology is radically changing the face of retail and the pace of change is getting quicker by the day. Today’s consumer has become very familiar with technology and it is increasingly becoming part of everyday life for many, regardless of their age, from using the Internet and online marketplaces such as Amazon to mobile phone web stores and iPhone Apps.
The consumer of 2011 will be best known for their ability to call the shots, having more control over their shopping experience than ever before. They will decide how, where and when they want to shop and will expect a higher standard of shopping experience to be provided by retailers across a variety of sales channels.
So how will the retail industry evolve to keep up with an increasingly in-tuned customer? Here are my top technology predictions for 2011.
Online stores will gain greater share of sales…
With reports showing that more customers than ever are turning to the web as their destination of choice, large high street retailers through to small independent chains will need to embrace the online world by having an effective and functional online webstore. Retailers such as Sports Direct, Staples and Argos clearly demonstrate to the rest of the industry the true profit potential of investing in the e-store experience.
EPOS solutions that include built-in embedded webstore technology mean that in 2011, retailers can have at their disposal everything they need to reach a wider online audience, sell more effectively to existing customers and keep online inventory information up-to-date.
…But bricks & mortar stores will not die off
Despite the growing demand for the online shopping experience, the high street store is certainly not dead. Moreover, customers want to engage with a hybrid retailer that is able to combine the experiential benefits of the bricks and mortar store experience with the flexibility and 24/7 nature of the web.
Today’s consumer is informed and has access to various sources of information via the internet to research and buy products, but the Bricks & Mortar store will always exist for the following reasons:
* Having researched the item customers prefer to ‘want it now’ so whether this is reserve & collect or just drive to the store and purchase, immediacy will drive bricks & mortar sales.
* Some products are very personal and therefore the product’s condition needs to be seen and considered in person even if it has been researched previously.
* Customers look to the retailer for expertise and knowledge, so speaking to a member of staff in a store will again instil confidence in the customer purchase.
Multi-channel integration will become king
In the current environment, a seamless integration between online and bricks & mortar offerings is key to building customer loyalty and truly understanding your target audience. If your customer does not receive the same level of experience through the various shopping channels available, then the retailer runs a significant risk of losing market share.
Typically retailers have managed web stores and Bricks & Mortar stores with different management structures and disciplines. Both independently delivering customer service and ensuring the level of service not only is maintained but also increased, is a crucial component to the success of this integration. In the first instance this is about the retailers personnel, aligning their working processes and values to deliver a true cross-channel customer experience. Stock availability and customer service at local store level is critical.
Retailers will therefore focus their efforts in 2011 on striving to consolidate systems and maximise return on investment through the integrated use of all sales channels. Tesco, Next and Homebase are all examples of retailers who have truly embraced the cross-channel service model and are clearly reaping the benefits. Retailers will continue to realise the benefits of integrating online and offline sales and creating a single customer experience, regardless of which channel the customer chooses to use and will look to invest in solutions in 2011, which enable seamless integration of multi-channel and multi-store sales.
Contactless payments will remain with early adopters
Contactless payments are the next step in electronic payments revolutionising the way consumers will interact with retailers. Contactless payments will enable goods of £10 or under to be purchased using ‘touch n go’ credit or debit cards. Also known as ‘wave and pay', these cards are a method of paying for everyday items, such as coffee or newspapers, imply by swiping your credit or debit card across a reader.
Some experts believe that by the end of 2011, 70% of debit cards and 45% of credit cards are expected to be Contactless-enabled in the UK. Personally, I do not see the majority of retailers adopting contactless payment systems for at least 3 – 5 years. The retail world is now very consumer led and delivering the complete user experience across all channels will be the primary driver for the next 12 -18 months.
Capital investment will be under scrutiny
According to new reports, retail chains around the world have changed their main focus in the last 12 months and are now investing heavily in inventory and technology. The 2010 Global Retail Chief Financial Officer (CFO) Survey by professional services firm PricewaterhouseCoopers (PwC) found that retailers are now typically focusing on improving strategy execution and merchandising effectiveness.
Other reports have also shown that investment in ecommerce is the leading priority for non-food retailers, with many now planning to replace ageing infrastructure that is deemed no longer fit for purpose, with store management systems a particular target for investment.
Until now, retailers were limited to purchasing a select few pricier EPOS systems, often with complicated license terms and costly bolt on packages. 2011 will see many retailers revisit their IT expenditure and explore the variety of EPOS solutions now available.
Customer centricity will drive brand strategy
Customer centricity is the true driver of the need to integrate online / offline systems. In my opinion this leads to the seamless integration of many systems – accounts package, POS solution, inventory management, web store(s), warehouse management system, ERP and CRM. To truly deliver the customer experience, the EPOS solution and webstore(s) need to be completely integrated delivering a strong message to customers from a marketing perspective through social media applications such as Facebook or Twitter. Front End or customer facing solutions must be the first components on the road to customer centricity followed closely by all traditional back office applications supporting this activity.
Costs per transaction models will rise in popularity
With an uncertain future ahead, A Pay-As-You-Sell EPOS solution which enables retailers to pay less for their EPOS systems when their sales are down will enable them to deal with the critical issue of stabilising cashflow, something which could mean make or break for many retailers.
Cost per transaction EPOS systems which have zero upfront license fees and have no additional charges should you wish to expand and open additional tills, as all costs are on a pence per transaction basis.
A Pay As You Sell EPOS solution is already available in the marketplace, delivered by Cervello. This sophisticated, yet cost effective software+services solution means that retailers can cut expensive upfront costs associated with EPOS licenses and simply pay as and when the sales come in.
Retailers will need to keep up with consumer thirst for social mediaMobile technology is giving retailers a new way of communicating with our customers. Ocado is one of the biggest apps and Tesco has its loyalty barcode on a phone. But how many use Facebook or Twitter with customers, because these are the ways they want to be
communicated with.
A recent survey found 83 per cent of consumers wanted seamless connection between web and mobile phones and emphasises why retailers across all sectors should do “retail health checks” on their online customer interaction and their use of social networking sites. They could also mark themselves from one to five on whether customers received the same quality of service regardless of how they bought a product. Staff incentives to promote cross-channel sales, putting inventory and loyalty data online and keeping people informed by “tweeting” on Twitter are other useful tactics, and many haven’t even scratched the surface when it comes to the potential that lies within social media.
The primary objective is to provide customers with the ability to interact in any way they want, allowing them to order from their Xbox, computer or mobile phone if they wish. Ultimately, customers want the complete view and it will be up to retailers in 2011 to find innovative ways to deliver exactly that. |
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