-
A S U P P L E M E N T T O R I S N E W S A P R I L 2 0 1 0
RETAILT E C H N O L O G Y S T U D Y
FINDINGS>> Customers in Charge 5
>> Signs of Spring Thaw 8
>> Finding and Filling Gaps 12
>> Evolution of Store Systems 16
>> Human Capital 20
>> Merchandising 22
>> Inventory Ready 24
>> Leveraging Channels 26
>> Who Responded 30Racing to Catch Up
®
®
®
®
P R E S E N T E D B Y
Racing to Catch Up
S P O N S O R E D B Y
2 0 T H A N N U A L
THE RETAIL ENGINE IS STARTING TO HUM, BUT CUSTOMERS ARE IN THE
DRIVER’S SEAT
rts_cover_0410 3/22/10 3:28 PM Page 1
-
RETAIL2 0 T H A N N U A L
T E C H N O L O G Y S T U D YPUBLISHER
David Weinand 904.374.8590 [email protected]
CHIEF ANALYSTJeff Roster, Gartner
EDITGroup Editor-in-Chief Joe Skorupa
[email protected] Editor Christina Zarrello
[email protected]
SALESAssociate Publisher Catherine J. Marder603.672.2796
[email protected]
Account Executive Andy Pieri814.520.6300
[email protected]
Senior Account Manager Karen Carvelli973.644.4009
[email protected]
Assistant to the Publisher Jen
[email protected]
ONLINEVP of Online Media Robert Keenan [email protected]
Development Manager Scott Ernst [email protected] of
Lead Generation Jason Ward [email protected] Event
Producer Stephanie Gannon [email protected]
MARKETING/EVENTS/CIRCULATIONDirector, Event Planning Pat Benkner
[email protected], Event Content John Hall
[email protected] Manager Jeffrey Zabe
[email protected]
ART/PRODUCTIONCreative Director Colette Magliaro
[email protected] Director Lauren Cloos
[email protected]
Production Department Pat Wisser [email protected]
Subscriptions 978.671.0449Reprints: [email protected]
212.221.9595
CORPORATECEO/Chairman Gabriele A. Edgell
[email protected] Gerald C. Ryerson
[email protected] President John Chiego
[email protected]
FOUNDERDouglas C. Edgell 1951-1998
CORPORATE OfficeEdgell Communications4 Middlebury Blvd,
Randolph, NJ 07869973.607.1300 FAX: 973.607.1395
A S S O C I A T E S P O N S O R S
T I T L E S P O N S O R
5 E X E C U T I V E S U M M A R YCustomers in Charge The retail
engine is starting to hum,but customers are in the driver’s
seat
8 I T B U D G E TSigns of Spring Thaw Technology weathers the
storm in goodshape as smart retailers prepare for a return of
consumer spending and growth
12 I T S T R A T E G YFinding and Filling Gaps Over-arching
strategies shape specificapproaches to innovation and
implementation
16 S T O R E S Y S T E M SEvolution of Store SystemsThe
heartbeat of the store is the POS andall of the technologies that
connect to it
20 W O R K F O R C EHuman CapitalSmart investments in workforce
and humanresources tools can produce immediateand long-term
benefits
22 M E R C H A N D I S I N GCustomer-CentricityMerchandising
systems are too importantto performance and competitive
differentiation to let them get out of date
24 S U P P L Y C H A I NInventory ReadyMany supply chain systems
are up to date,but e-commerce and RFID are drivingfuture plans
26 C R O S S - C H A N N E LLeveraging ChannelsAs channels
proliferate alignment becomesmore important than ever
30 W H O R E S P O N D E DDecision MakersFindings are based on a
47% participationlevel by C-suite retail executives
CONTENTS
ABOUT GARTNERGartner Research is a leading provider of research
and analysis about the global information technology industry.
It
worked with RIS to bring out this study, which was conducted
during the first two months of 2010. In conjunction
with the RIS editorial team, Gartner created the survey and
posted it online. Gartner performed the analysis of the
data and was then interviewed by RIS on the meaning of the data.
Gartner was not paid for its involvement and RIS
did not involve any of the advertisers in the report during the
preparation or analysis phases.
®
®
®
®
®
P R E S E N T E D B Y
C A T E G O R Y S P O N S O R S
R I S R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 3
rts_toc_0410 3/19/10 5:19 PM Page 1
-
R I S R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 5
rediction for #nrf10:Social and mobile willbe major themes
among many vendors.Green without a legit ROI
not so much.”--7:17 AM Jan. 7th from
TweetDeck @JeffPRI wrote this Tweet (JeffPR) three
days before leaving for the NRF BigShow in NYC. If you don’t
knowhow to Tweet right now, I’m bettingthat within six months you
and yourcompany will.
Tweets are 140 characters longand take seconds to compose.
Theycan be launched from any smart-phone that has access to
theInternet. A Tweet can be forwardedor Re-tweeted an infinite
number oftimes by anybody that either agreesor disagrees with the
content.
As long as the message stayswithin the 140 character limit
any-one can add their own commentaryto it. You also can add links
withphotos.
So, imagine a group of shopperssnapping pictures in a
store,adding text about how exciting it is,and then sending it to
hundreds,maybe thousands of people whofollow them. Also imagine
thosesame shoppers responding nega-tively to a product or promotion
andsharing their feelings on a world-wide stage for all to see.
Do you feel uneasy? This is acultural phenomenon that is havinga
major impact on retailing.
So, welcome to the year of social
Customers in Charge
Customer satisfaction
Supply chain visibility and efficiency
0 5 10 15 20 25 30 35
29%27%27%
25%25%
21%19%
16%15%
14%12%
8%6%
Store-level inventory visibility and efficiency
Developing multi-channel initiatives
Promotions effectiveness
Workforce efficiency and/or productivity
Cost containmentDelivering actionable business
insights to executivesLeveraging social media
Network and IT systems security
New product or private label development
Developing m-commerce strategy
Adopting unified enterprise platform
Green initiatives
34%
media and mobile commerce.There are no rules or case studiesor
best practices that are older thanabout six months. How you and
theretail industry respond today willset the stage and ultimately
writethe rules for the foreseeable future.
COULD IT BE A SPRING THAW?Beyond social media and M-com-merce,
the data in this studyreveals 2010 to be an interestingyear. We are
seeing early signs of arebirth of innovation and advancedIT
initiatives. Not a big surge, butsomething that could become a
ris-ing tide.
The difference between this yearand 2009 is that the industry is
notreeling from an economic surprise,
and retailers have had a full year tounderstand that the
marketplacehas shifted to a “new normal.” Goneare the question
marks. Retailershave begun learning how to operatein a changed
environment.
COST CONTAINMENT IS KEY:The 2010 version of cost controldoes not
mean just freezing budg-ets and reducing across the board.For an
increasing number of retail-ers it also means making
strategicinvestments that can return realROI.
CUSTOMER-CENTRICITY ISSTILL HOT: But now it carries alarge dose
of social media andmobile commerce initiatives com-
E X E C U T I V E S U M M A R Y
THE RETAIL ENGINE IS STARTING TO HUM, BUT CUSTOMERS ARE IN THE
DRIVER’S SEAT
B Y J E F F R O S T E R
“P MAJOR ACTION ITEMS OVER NEXT 18 MONTHS
B Y J E F F R O S T E RR E S E A R C H V P, G A R T N E R
rts_ExecSummary_0410_v2 3/23/10 4:08 PM Page 1
-
6 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
bined with an ongoing in-storetechnology refresh.
PENT UP DEMAND REMAINSPENT UP: Retailers are re-engag-ing
projects that were postponedlast year, but ever so slowly. In2010
progress ranges from POS tomerchandising and supply chain.However,
investment plans for2011 look very strong.
INCREMENTAL INNOVATION:Retailers are experimenting withengaging
their customers in newand creative ways using Facebook,Twitter and
a growing range of consumer-owned Internet-enabledmobile
devices.
RETAIL PAINS DRIVE LONG-TERM INVESTMENTRetailers have clearly
identified thetop challenges or pains that areaggressively driving
their investmentstrategies over the next three years.The top two
are Adding Customerand Analytical Insight Capabilityand
Multi-Channel Strategy. Theseare in perfect harmony with the
topstrategy retailers chose this year
–Customer-Centricity.Speaking to the retailer need to
build high-performance organiza-tions that can be managed
costeffectively are three other highlyranked challenges:
Real-TimeVisibility, Application Rationalizationand Application
Integration.
The placement of EnvironmentalSustainability and
SocialResponsibility near the bottom at12% seems to indicate they
are notas popular as once thought. This isan indication that
retailers are stillmanaging through very challengingeconomic times
and focusing oncost-containment strategies withtangible ROI,
something they do not believe they can get fromEnvironmental
Sustainability andSocial Responsibility Initiativesright now.
WHERE DO WE GO FROM HERE?Retailers are returning to launchingnew
initiatives after a very toughyear, but it’s occurring at a
slowpace. All the initiatives that madethe high-priority list are
well definedsoftware projects with tangible ROIcalculations. It’s
interesting to notethat POS hardware and software
plans for the first time in many yearshave fallen off the list.
We are clear-ly on the downside of the POSrefresh cycle.
So, what does it mean to operatein the new normal? Well, for
onething, the good old days of fast-paced growth are gone — at
least forthe foreseeable future. Now it’s keyfor retailers to set a
direction thatwill bring them success in a newenvironment.
For some retailers this will beabout a continuing effort to
strip outcosts, whether in the IT departmentor the overall
organization. But formany more it will require new invest-ments and
new nimbleness.
Retailers will deal with a cus-tomer more knowledgeable
thantheir associates on a given product.While customers will deal
with hav-ing more powerful technology intheir hands and the ability
to com-municate opinions on a worldwideplatform in near
real-time.
No one knows where this is allheading right now. But one thing
iscertain: The future is rushing for-ward and retailers need to
respondnow to convert today’s challengesinto tomorrow’s
opportunities. •
E X E C U T I V E S U M M A R Y
Adding customer and analytic insight capability
Multi-channel strategy 44%
37%36%
33%
28%
20%12%
9%
Real-time visibility throughout the organization
Application rationalization and/or retiring legacy systems
Application integration
PCI compliance
Mobile commerce strategy
Environmental sustainability and social responsibility
initiatives
Unified communications
0 10 20 30 40 50 60
60%27% Forecasting and planning
23% Price and markdown optimization
22% Assortment planning
21% Product lifecycle management
21% New product or private label development
20% Allocation
20% Promotion management
19% Replenishment
19% Item management
18%
27%
23%
22%
21%
21%
20%
20%
19%
19%
18% Shelf and space planning
27%
23%
22%
21%
21%
20%
20%
19%
19%
18%
27%
23%
22%
21%
21%
20%
20%
19%
19%
18%
TOP CHALLENGES OR CONCERNS OVER NEXT THREE YEARSTOP 10
TECHNOLOGIESFOR 2010
rts_ExecSummary_0410_v2 3/23/10 4:26 PM Page 2
-
ooking over the past 20years of the RIS RetailTech Trends Study
wecan point to many
highlights. Two big onesare a 10 year relationship
with Jeff Roster and Gartner as ourresearch partner, and the
study’scontinuing ability to draw crowdsat conferences, for many
years atthe gone-but-not-forgotten RetailSystems conference in
Chicagoand now at the Retail TechnologyConference hosted by
RIS.
Low lights during this timeinclude two deep recessions thathit
the economy and retail ITbudgets with punishing severity.We are
just now emerging from thesecond one and lingering effectsare
deeply felt throughout thisyear’s findings.
During most of the two-decaderecord of the RIS Retail TechTrends
Study year-over-year rev-enue change was an upbeat data-point, with
the percentage ofrespondents reporting a decreasein the single
digits most of thetime. This year nearly 31% reporta decrease of 3%
or more andanother 11.1% report a decreaseof 1% to 3%.
The good news is that nearly60% of retailers report
eitherincreased revenue or no change.No doubt this figure will grow
asthe recession loosens its grip.
Most revenue for respondentscomes from the brick-and-mortar
Decreased3% or more
30.8%
0
10
20
30
Decreased1% to 3%
11.1%
Increased3% or more
20.5%
Increased 1% to 3%
22.2%
No change
15.4%
I T B U D G E T B Y J O E S K O R U P A
0
10
15
20
25
30
35
40
45
50
More than 5%
12.5%
3% to 5%
10%
2% to 3%
15%
1% to 2%
46.3%
Less than 1%
16.3%
0
5
10
20
30
40
Decreasebetween
5% to lessthan 10%
5.6%
Decrease10% or more
5.6%
Decreasebetween
1% to lessthan 5%
7.9%
No Change
37.1%
Increasebetween
1% to lessthan 5%
27%
Increasebetween
5% to lessthan 10%
10.1%
Increase10% ormore
6.7%
Signs of Spring Thaw
LTECHNOLOGY WEATHERS THE STORM IN GOOD SHAPE AS SMART RETAILERS
PREPARE FOR A RETURN OF CONSUMER SPENDING AND GROWTH
8 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
REVENUE CHANGE IN LAST 12 MONTHS
IT BUDGET AS PERCENTAGE OF REVENUE
YEAR-OVER-YEAR IT BUDGET
rts_ITBudget_0410_3 3/24/10 5:34 PM Page 1
-
1 0 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
channel (88%), which isn’t sur-prising since 88% identify
brick-and-mortar as their primary busi-ness model.
You might expect IT budgets in2010 to follow year-over-year
rev-enue trendlines pretty closely, but
that is not the case. A total of just19.1% of respondents report
theywill spend less on IT than in theprevious year while 43.8%
willactually spend more. The rest willremain the same.
Why is IT not feeling the budgetax as sharply as in other
reces-sions? One reason is that smartretailers trimmed costs so
effec-tively during the crisis that manyactually have a large
amount ofcash on hand to spend on capitalinvestments.
Another reason is that IT hasemerged as an essential enablerthat
not only helps retailersachieve market advantage
againstcompetitors, but also producesmeasurable gains for
cost-contain-ment initiatives, which continue tobe a top priority
among retailersthis year.
So, where is the IT budgetgoing? We drill into this in
greatdetail in later chapters, but from ahigh-level perspective the
IT budg-
I T B U D G E T
37.2%Capital
Expenses62.8%OperatingExpenses
6%Training/changemanagement
13%Communications
13%Third-partyservices19%
Software19%Hardware
30%Internal Staff
88%Brick & Mortar
7%E-commerce
5%Catalog/direct mail
86%Brick & mortar
9%E-commerce
4%Catalog
direct mail
1%Contact center
et is mostly spent on operatingexpenses at 62.8%. The
biggestportions of this go to hardware andsoftware (38%) and
internal staff
(30%). Communications and third-party services are the next
largestslices of the budget pie at 13%each. •
2.24%Average IT budget as percentage of revenue
IT HAS EMERGED AS AN ESSENTIAL ENABLER THAT NOT
ONLY HELPS RETAILERS ACHIEVE MARKET ADVANTAGE
AGAINST COMPETITORS, BUT ALSO PRODUCES MEASURABLE
GAINS FOR COST-CONTAINMENT INITIATIVES, WHICH
CONTINUE TO BE A TOP PRIORITY AMONG RETAILERS
THIS YEAR.
OPERATING VERSUS CAPITAL EXPENSES
PRIMARY BUSINESS MODEL
ALLOCATION OF IT BUDGETREVENUE BY CHANNEL
rts_ITBudget_0410_3 3/23/10 4:28 PM Page 2
-
1 2 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
he currents shaping ITstrategy in the retailenvironment swirl
in
complex directions. Toget a sense of how respon-
dents view these currents we diveinto current thinking about
innova-tion, implementation philosophyand speed of adoption.
In the area innovation we findthose who describe themselves
asLeading Edge Adopters (12%) andQuick Adopters (30%) combine
toform a sizable segment in thestudy. But it’s not a majority,
whichis what we would expect for a sam-ple to reflect the overall
market-place.
An overweight of aggressive ITadopters might lead to
optimisticinvestment intentions in other find-ings, but that is not
the case.Instead we find a majority of retail-ers who describe
themselves asLate Adopters (53%) or Non-Adopters (5%). This doesn’t
meanthey are technology averse orLuddites. It just means that if
com-petitors and customers weren’tdriving technology upgrades
mostretailers would rather invest scarcecapital in building new
stores.
With this kind of respondentprofile we would expect a parallelin
responses when asked abouttheir organization’s overall IT
matu-rity, and we do. Retailers that saytheir organizations have
AdvancedIT with Deep Integration come in at18%, which compares
favorablywith those who describe them-
I T S T R A T E G Y B Y J O E S K O R U P A
30%Quick Adopter53%
Late Adopter
5%Non-Adopter
12%Leading Edge
Best-of-Breed Software
In-House Developed Software
Integrated Solutions Suites
Third-Party Developed Software
On-Demand or SaaS
Cloud Computing
0 10 20 30 40 50
46%
44%
44%
31%
24%
11%
Finding and Filling Gaps
selves as Leading Edge (12%). Thesame approximate
correlationexists between those who say theyhave Mostly Advanced IT
But LackComprehensive Integration (35%)and the Quick Adopter
segment(30%). Confirming findings likethese between different but
related
questions validate the overall accu-racy of study
datapoints.
While Integrated Solution Suites(44%) continue to be a
majorapproach to software deploymentin the retail tech stack we see
Best-of-Breed has slightly pulled aheadin this year’s study.
Admittedly the
TOVER-ARCHING STRATEGIES SHAPE SPECIFIC APPROACHES TO INNOVATION
AND IMPLEMENTATION
APPROACH TO ADOPTING TECHNOLOGY
ARCHITECTURE APPROACH TO SOFTWARE
rts_ITStrategy_0410_v2 3/24/10 5:36 PM Page 1
-
1 4 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
difference is slight, but the trendhad been going the other way
forseveral years. Plus, with In-HouseDeveloped Software (44%)
tyingIntegrated Solution Suites there isevidence retailers have
needs to fillthat pre-packaged software alonecan’t supply.
Mid-size retailers, those withrevenue less than $1 billion,
areincreasingly moving towardIntegrated Solutions Suites,according
to cross-tab analysis ofthe data. They also are big adoptersof
On-Demand or SaaS software,which appears to be on a growthtrack for
all respondents at 24%.
The big takeaway is the reaffir-mation of Best-of-Breed
Softwareand In-House Developed Softwareas necessary complements
toIntegrated Solution Suites.
The study’s budget analysisshowed a healthy chunk of ITspending
is directed toward third-party IT services. Topping the third-party
usage list is IT Consulting(45%), two Web categories (WebDesign 44%
and Web Hosting41%), and Packaged Apps (39%).All except IT
Consulting are highlytargeted engagements that accom-plish sharply
focused tasks.
For the top category, ITConsulting, where do retailers gofor
more strategic and broad-basedIT services? Among our respon-dents
IBM is the first choice for53% and Microsoft is a strong sec-ond
for 31%. Others that havestrong mindshare among retailersare Cisco
(24%) and Oracle (20%).A few surprises include Deloitte(17%),
AT&T (16%) and Verizon(15%). These firms have not beenknown
previously for a strong retailfocus, but there is evidence this
ischanging, especially for AT&T andVerizon. •
I T S T R A T E G Y
Web Design
Web Hosting
IT Consulting
Packaged Apps
Custom Apps
App Maintenance
Telecom/Network
Data Center
BPO
Training
0 10 20 30 40 50
45%44%
41%39%
32%31%31%
21%16%
15%
IBM Microsoft Cisco Oracle Deloitte AT&T Verizon SAP JDA
Fujitsu0%
10%
20%
30%
40%
50%
60%
53%
31%24%
20% 17% 16%15%14%12%9%
9%Basic with critical limitations
38%Mostly basicbut someadvanced upgrades
35%Mostly Advanced
IT but lackingcomprehensive
integration
18%Advanced IT with deep integration
HOW ARE YOU USING THIRD-PARTY IT SERVICES?
TOP 10 IT SERVICES PROVIDERS
OVERALL IT MATURITY
rts_ITStrategy_0410_v2 3/19/10 4:52 PM Page 2
-
1 6 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
wo different butrelated technologiesdebuted in 1974
that radically changedretailing and led to the
modern concept of a logical group-ing of technologies called
store systems. The first one was barcodes, which most people
recalldue to a well publicized debut at aMarsh supermarket. Fewer
peoplerecall that POS also debuted thatyear in several Pathmark
andDillard’s stores.
Bar codes played a huge role inrevolutionizing checkout and
inven-tory management. But POS playeda much larger role by
revolutioniz-ing the ability to automate manage-ment and control
over a large net-work of widely distributed stores. Italso led to
the widespread develop-ment of the client-server model,local area
networks and ultimatelya broad suite of hardware and soft-ware
technologies making it eveneasier to centrally manage stores.
Both technologies took decadesto spread through the
marketplace.But while bar codes have achieveda high degree of
maturity, store sys-tems continue to expand into newfunctionalities
and evolve.
POINT OF INTERACTIONThe heartbeat of a store today isfound in
POS hardware and soft-ware, where store systems allbegan 36 years
ago with a modifiedmainframe connected to severalcash registers.
Today, POS is so
S T O R E S Y S T E M S B Y J O E S K O R U P A
Evolution of Store Systems
important that retailers risk losingcustomers and market share
if theydon’t refresh these systems at reg-ular intervals. An
out-of-date POS,
for example, may not have thecapacity to allow associates to
doreturns, access customer loyaltyaccounts or handle in-store
pick-up
TTHE HEARTBEAT OF THE STORE IS THE POS AND ALL OF THE
TECHNOLOGIES THAT CONNECT TO IT
0 20 40 60 80
Self-checkout terminals
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
10%2%
4%11%
Wireless fully functionalPOS terminals 12% 4%10% 14%
POS software 36% 24% 14% 13%
POS hardware 42% 16% 13% 11%
QUOTE: POS is so important that retailers risk losing customers
and market share if they don’t refresh these systems at regular
intervals.12%
Tokenization
Contactless payment
Chip and pin
Check imaging (e-checks)
Signature capture
Check MICR processing
EFT credit card
Gift or stored-value cards
Debit card processing
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
0 20 40 60 80 100
60%
57%
39%
36% 4% 5% 9%
18% 3% 9%
10% 5% 12%
15% 7% 9%
31% 16%
11% 6% 3% 10%
9% 16%
8% 13%
6% 6% 7% 9%
6% 4% 13% 5%
6% 8%
POINT OF SERVICE
TECHNOLOGIES AT POS
POS IS SO IMPORTANT THAT RETAILERS RISK LOSING
CUSTOMERS AND MARKET SHARE IF THEY DON’T REFRESH
THESE SYSTEMS AT REGULAR INTERVALS.
rts_storesystems_0410_v2 3/23/10 4:29 PM Page 1
-
1 8 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
of online purchases. As a result of these factors, POS
upgrades go through cycles thatebb and flow. There are periods
ofhigh activity among retailers whena sizable portion are
installing orplanning to install POS upgrades,which are followed by
periods oflow activity when retailers amortizetheir large capital
investments.
During the boom years, prior tothe Great Recession, there was
ahigh level of POS activity.Recessions always put the brakeson
large cap ex projects, but thedata suggests this would haveoccurred
anyway due to the cycli-cal, ebb-and-flow nature.
Right now a majority of retailerseither have up-to-date POS
hard-ware (42%) and software (36%) orthey are currently finishing
projectsalready begun – POS hardware at16% and POS software
24%.
Because so many retailers areup-to-date right now, the
outlooktwo years out is relatively low byPOS standards. For
hardware andsoftware we see about a quarter ofrespondents planning
futureupgrades. When POS is at the highend of its activity cycle we
typical-ly see future buying intentions at35% to 40%.
Something new to note here isthe early signs of
inexpensivemobile phone POS systems.Wireless POS systems have
existedfor years, but the technology is rapidly developing.
Although theinstalled base for Wireless FullyFunctional POS
Terminals is lowtoday, we can see that future buying intentions
show growinginterest.
TECHNOLOGIES AT POSAlthough it started out as an elec-tronic
cash register with automatedback up, the modern POS system is
S T O R E S Y S T E M S
now integrated with a cluster ofadditional hardware and
softwaretools. And like the cyclical naturenoted earlier for
deployment ofPOS, the cluster of technologiessurrounding POS has
cycles, too.
A great amount of recent workhas been done with Debit
CardProcessing and Gift or Stored-ValueCards, where a huge majority
ofretailers are either up-to-date orpresently finishing projects.
Thesame is true for EFT Credit Cards.
However, a big surprise is thejump in future interest in
SignatureCapture devices. The current installbase is large, with
31% up-to-dateand another 16% currently finish-ing projects, but
future plans arestrong, too, with 25% of respon-dents saying they
will upgradewithin two years.
Since signature capture devicesenable retailers to get lower
trans-action rates from credit cardprocessors we can assume
that
long-term cost savings are a bigmotivator here.
IN-STORE TECHNOLOGIESAs previously noted, store systemscontinue
to expand and evolve, andthere is more evidence of this.
Such relatively new technologiesas Store Pick-Up and Return of
WebGoods (27% over the next twoyears), Store Level Task
Management(32% over the next two years), andDigital Signage
Displays (28% overthe next two years).
These three are all leading-edgesystems that could conceivably
giveretailers an advantage over theircompetitors.
Older POS systems cannot easi-ly integrate with new
technologieslike this, and as a result manyretailers will have to
upgrade to beable to keep pace with the market-place. Also, helps
drive the nextturn of the wheel in the POSrefresh cycle. •
RECESSIONS ALWAYS PUT THE BRAKES ON LARGE CAP
EX PROJECTS, BUT THE DATA SUGGESTS THIS WOULD
HAVE OCCURRED ANYWAY DUE TO THE CYCLICAL,
EBB-AND-FLOW NATURE.
0 20 40 60 80 100
40%
26% 24% 5% 12%
17% 12% 13%
25%
19%
17%
16%
10%
6%
5%4%4% 9%
1%2%
13%
4% 7% 21%
12% 7% 17%
11% 17% 15%
11% 9% 18%
7% 13% 12%
Item-level RFID
Electronic shelf labels
Digital signage displays
Kiosks
Store level task mgmt
Store pick-up/return of Web goods
Shopper tracking
Loss prevention
In-store servers
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
IN-STORE TECHNOLOGIES
rts_storesystems_0410_v2 3/23/10 4:30 PM Page 2
-
2 0 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
id you notice that taskmanagement softwaremorphed into
execu-
tion management abouta year and a half ago? No?
You can agree or disagree with theshift, but one thing is
certain: thesoftware’s current evolutionary pathputs it squarely
into the store sys-tems category as opposed to theworkforce
management category.
Which is why we put the chartthat contains the datapoint
aboutexecution management in the storesystems chapter. However, it
isworth noting that while these solu-tions are relatively new to
retailingcompared to other technologies,they have matured quickly
andadoption rates are growing fast.
Much more mature than taskmanagement are tools for time
andattendance and labor scheduling.No retail chain can operate
withoutthem, so it’s not surprising to see51% of respondents are up
to datewith time and attendance solutionsand 34% are up to date
with laborscheduling.
It’s a different story for work-force management, which is
anadvanced system that helps labormanagers achieve the best
possibleschedules by using rules engines toincorporate labor
engineering stan-dards, budgetary targets, state andfederal
regulations, union rules,employee restrictions, input
fromstore-level managers, year-over-yearsales and more
Workforce management systems
W O R K F O R C E M A N A G E M E N T B Y J O E S K O R U P
A
Workforce management
Labor scheduling
Time and attendance
Started but not finished Will start this year Will start in 2
years
0 20 40 60 80
51% 13% 11% 7%
34% 13% 15% 12%
27% 13% 18% 12%
Up-to-date tech
Human Capital SMART INVESTMENTS IN WORKFORCE AND HR PRODUCE
SHORT AND LONG-TERM BENEFITS
are high-priced projects thatrequire change management
initia-tives before, during and afterdeployment. So, despite case
stud-ies that show strong ROI and deliv-ery of increased customer
satisfac-tion just a little more than a quar-ter of respondents
have up-to-datetechnology in place and another13% have started but
not finishedimplementations.
However, the real story is infuture deployment intentions. Wesee
18% plan to start a workforcemanagement initiative this yearand
another 12% plan to begin intwo years. So, nearly a third
ofrespondents plan to upgrade theirworkforce management tools
withintwo years.
In the human resources realm,we find future buying intentions
forself-service HR/benefits tools is32% over the next two years
(14%will start this year and 18% willstart in two years).
The more a retailer can shift toself-serve automation the more
itcan increase productivity. Thesame is true for
education/training,which actually has the largest cur-rent install
base of the tools meas-ured here (17% for up-to-datetechnology and
18% for started butnot yet finished). Education andtraining are
keys to increasing pro-ductivity, reducing turnover andimproving
morale. Investments inthese tools produce immediate andlong-term
benefits. •
Education/training
Recruitment/hiring
Self-sevice HR/benefits
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
0 20 40 60 80
20% 15% 14% 18%
19% 10% 13% 17%17% 18% 16% 13%
D WORKFORCE MANAGEMENT
HUMAN RESOURCES
rts_workforce_0410_v3 3/23/10 4:31 PM Page 1
-
2 2 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
s a core technology inretailing merchandis-ing has been the
sub-ject of a great deal of
investment over the pastfew years. We can see evi-
dence of this in the study by look-ing at the high numbers in
up-to-date technology in place. For athird of respondents four
majorcomponents are up to dateincluding Item
Management,Replenishment, Allocation andForecasting and
Planning.
As a result, installation workbeing done right now is at a
lowebb. You can see this in the catego-ry for
started-but-not-finished,where the numbers are mostly inthe single
digits.
However, the picture changesdramatically when looking
atinvestment plans one and two yearsout. Here we see high
intentionrates, especially for Forecastingand Planning (27% in one
year and12% in two years) and Price/Mark-Down Optimization (23% in
oneyear and 18% in two years).
Even Promotion Managementand Shelf and Space Planning,which have
the lowest installedbases in the merchandising catego-ry, show high
rates of future invest-ment. Merchandising systems aretoo important
to performance andcompetitive differentiation to letthem get out of
date.
Equally important are applica-tions that deliver customer
analyt-ics, but there is a big difference in
M E R C H A N D I S I N G B Y J O E S K O R U P A
their installment cycles. While mer-chandising deployments
currentlyunder way are at a low water markour findings show
customer analyt-ics apps have twice the activity forprojects
started but not finished.
This means a high rate of invest-ments were made to improve
capa-bilities in such areas as TrackingCustomers, Segmenting
Customersand normalizing CustomerRecognition Across Channels. •
Allocation
Replenishment
Forecasting and planning
Category management
Item management
Assortment planning
Product lifecycle management
Price/markdown optimization
Campaign management
New product/privatelabel development
Shelf and space planning
Promotion management
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
0 20 40 60 80 100
35% 11% 19% 12%
34% 9% 19% 14%
33% 11% 20% 14%
33% 10% 27%
26% 9% 17% 15%
25% 11% 21% 5%
23% 12% 21% 13%
23% 7% 22% 16%
22% 11% 23% 18%
22% 12% 15% 11%
21% 14% 20% 13%
21% 5% 18% 15%
12%
40%A
Customer-CentricityMERCHANDISING SYSTEMS ARE TOO IMPORTANT TO
LET THEM GET OUT OF DATE
MERCHANDISE MANAGEMENT TECHNOLOGIES
Tracking customers
Centralizing customer data
Customer recognition across channels
Segmenting customers
Frequent shopper/loyalty program
Started but not finished Will start this year Will start in 2
years
0 20 6040 80 100
37% 13% 15% 13%
33% 23% 16% 14%
24% 26% 16% 19%
21%
20% 26% 17% 17%
24% 16% 14%
Up-to-date tech
CUSTOMER ANALYTICS
rts_Merchandising_0410 3/23/10 4:31 PM Page 1
-
2 4 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
etailers neglect coreIT systems at theirperil and few arewilling
to risk it.
Which is why supplychain, like merchandis-
ing, POS and workforce systems, gothough regular cycles of
investmentto ensure they are as up-to-date aspossible
In this section we can see a greatdeal of recent work has been
done inseveral key areas of the supplychain. Up-to-date technology
is inplace for Warehouse Management(40%), Order Management
(34%),Returns Management (33%) andSourcing (32%).
As a result, there are few areasin the supply chain that show
big levels of current work underway or planned for one and two
yearsout. The big exceptions areTransportation Management,
whichshows 26% percent of retailersplan an upgrade within two
years,and Warehouse Management,which shows 24% have
upgradeintentions in 24 months.
Warehouse Management is aninteresting exception because somuch
investment has already beendone there, but with rising salescoming
from the e-commercechannel many retailers are discov-ering the need
to reorganize theirwarehouse and DC operations toaccommodate
greater levels ofstore-to-store shipping and in-storepickup/returns
of online goods.
Looking at the RFID installed
S U P P L Y C H A I N B Y J O E S K O R U P A
Warehouse management
Sourcing
Returns management
Real-time inventory visibility
Transportation management
Order management
RFID item level
RFID case/pallet
Up-to-date tech Started but not finished Will start this year
Will start in 2 years
0 10 20 30 40 50 60 70 80
40% 13% 10% 14%
34% 9% 11% 17%
33% 10% 10% 9%
32% 9% 10% 10%
28% 11% 9% 15%
27% 4% 12% 14%
7% 3% 4% 12%
5%2%2%
11%
Inventory Ready
based of up-to-date technology andfuture plans some might be
tempt-ed to say it is at extremely low lev-els. “But this is not an
accuratereading of the data,” says JeffRoster, retail technology
analystwith Gartner. “The data shows ahealthy level of investment
inRFID. In fact, RFID is picking upinterest and is still on track
for anormal adoption pattern for a five-year-old technology. It
appears tobe a niche play, similar to self-serv-ice POS, for
example, but it is mov-ing ahead both in stores at the itemlevel
and in warehouses at the case
and pallet level.” Clearly, the supply-chain data
indicates that broad IT spendinghas given way to highly
focusedprojects. For some technologies,like Forecast Planning
andWorkforce Management, invest-ment plans remain high. But
forothers, including those in the sup-ply chain, pent up demand
remainslargely pent up.
These plans could change quick-ly, however, if consumers
beginspending again, unemploymentdrops, and the economic
recoverypicks up steam. •
RMANY SUPPLY CHAIN SYSTEMS ARE UP-TO-DATE, BUT RFID MAKES A
SURPRISING RETURN
RFID APPEARS TO BE A NICHE PLAY, BUT IT IS MOVING AHEAD
BOTH IN STORES AT THE ITEM LEVEL AND IN WAREHOUSES AT
THE CASE AND PALLET LEVEL.
SUPPLY CHAIN SYSTEMS
rts_supply chain_0410_v2 3/23/10 4:32 PM Page 1
-
2 6 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
emember when aretailer’s e-com-merce revenue was
smaller than a singlebrick-and-mortar store?
Those days are long gone. Howlong? Consider this. Since
e-com-merce accounts for 9% of totalrespondent revenue (see the
ITBudget chapter for more details),then only those retailers with
ninestores plus an e-commerce divisionhave a single-store revenue
equiva-lent. In this scenario, all stores pro-duce similar annual
sales and e-commerce contributes one-tenth tothe total.
But respondents with just ninestores are the exception in
thisstudy. The typical respondent toRIS studies (as observed over
mul-tiple years) has an average of about400 stores, which means the
e-commerce revenue contribution isthe equivalent to several
dozenstores. And this figure is growingeach year.
This kind of success has raisedthe profile of e-commerce
withinretail organizations, and compelledmany to leverage their
online divi-sion to promote sales in otherchannels. This
sophisticatedapproach is called cross-channelretailing, and it
refers to strategicalignment of goals and synchro-nization of
technologies on boththe front-end (customer-facing)and the back-end
(order manage-ment and fulfillment).
Cross-channel retailing enables
C R O S S C H A N N E L B Y J O E S K O R U P A
Using first-generation, no plan toupgrade
Using first-generation,plan to upgrade within 2 years
Using first-generation,plan toupgradein 1 year
Using first-generation,and currentlyupgrading
Using second-generationsystem withadvanced capabilities
15%14%
0
5
10
15
20
25
30
35
20% 19%
31%
Leveraging Channels
retailers to effectively meet con-sumer demand for shopping
onmultiple channels, and maximizingsales for the company as a
whole.In addition, cross-channel strate-gies enable retailers to
betterunderstand customer preferencesand patterns so they can fine
tuneinventory management and fulfill-
ment. In this view, all customers inall channels get the
products theywant whenever and wherever theywant them.
E-COMMERCE PLATFORMSFor the past few years, retailerswent on a
buying spree to upgradetheir e-commerce technology plat-
RAS CHANNELS PROLIFERATE ALIGNMENT BECOMES MORE IMPORTANT THAN
EVER
CROSS-CHANNEL RETAILING ENABLES RETAILERS TO MORE
EFFECTIVELY MEET CONSUMER DEMAND FOR SHOPPING
ON MULTIPLE CHANNELS, AND ALIGNING STRATEGIES
ACROSS CHANNELS TO MAXIMIZE SUCCESS OF
THE OVERALL COMPANY.
BENCHMARKING E-COMMERCE SOFTWARE PLATFORMS
rts_crosschannel_0410_v2 3/23/10 4:33 PM Page 1
-
2 8 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
forms, and evidence in the databacks this up.
In last year’s study we found26% were still Using a
First-Generation E-Commerce Platformwith No Plan to Upgrade.
Thismeans all but a quarter of respon-dents either had an advanced
e-commerce platform or they wereplanning to upgrade. By itself,
thisis a strong indicator of upgradeintentions. But this year the
num-ber is just 15% for those who haveNo Plan to Upgrade. The
continu-ing rise in e-commerce sales andthe pace of technology
develop-ment are likely to keep e-commerceupgrade activity on the
front burn-er for some time to come.
Those Using a First-GenerationE-Commerce Platform who Plan
toUpgrade Within One Year com-prised just 13% of respondents
lastyear. This year the figure is up to20%. So even as many other
tech-nologies show a trend toward cau-tious restraint,
e-commerceupgrade plans are on the rise.
Finally, those already Using aSecond-Generation System
withAdvanced Capabilities comprised21% of respondents last year.
Thisyear the number jumps to 31%,which indicates that a great deal
ofwork was done last year to enable alarge number of retailers to
get up-to-date with their e-commerce plat-forms. Going forward with
futurestudies it will be necessary toreword this question to
normalize itwith our other technology statusquestions. The days of
first-genera-tion or second-generation e-com-merce platforms are
coming to aclose. Online evolution is occurringin cycles measured
in months andnot years.
M-COMMERCEDespite all the hoopla about the
C R O S S C H A N N E L
48%35%
11%
6%
Planning under way
Not planning any activity
Pilots in progress
Fully functioningstrategy in place
0 10 20 30 40 50
mobile commerce explosion thenagging question remains: Is
itmostly hype right now? Many obsta-cles still need to be overcome
forthe vast majority of retailers alreadyinvolved in the m-commerce
chan-nel to clear a dime on their invest-ment. And beyond ROI,
manyretailers worry about lack of tech-nology standards, security
and con-sumer trust.
However, we’ve seen all thisbefore. Remember the dot-comboom?
It’s never a good idea to waituntil a new channel is packed
withcompetitors to launch a me-too pro-gram.
The indisputable fact is thatsmartphones are a retail
marketer’sperfect storm, because they arealways carried, always
connectedand location aware. Last year174.2 million smartphones
weresold worldwide to Internet-connect-ed consumers. Four times as
manymobile Internet devices have beenshipped worldwide during the
lasttwo years compared to shipmentsof PCs.
Mobile Internet devices are sup-planting desktop and laptop
com-puters as gateways of choice forconsumers. The implications of
thisshift are enormous, both culturallyand for the future of
retailing.
Still, with mobile purchasing lev-els still so low (compared to
otherchannels) and limited to a narrowrange of products that
generate note-worthy sales (flowers, digital mediaand food
ordering, for example) manyexecutives won’t be able to refrainfrom
asking: Where’s the ROI?
Despite legitimate concerns theevidence in the study indicates
thewait-and-see period is quickly com-ing to an end. Nearly half of
therespondents say that m-commerceplanning is currently under
way(48%). Only about a third (35%)actually do not have planned
m-commerce activity. These numbersdemonstrate how fast m-commerceis
spreading through the retail mar-ketplace.
At this early stage 6% of respon-dents already have a fully
function-ing m-commerce strategy in placeand another 11% are in the
pilotproject phase. Combined these twocategories represent 17% of
therespondent pool, a number thatcorresponds to those who
definethemselves as leading-edgeadopters of technology. Right
nowthese retailers are acquiring newskill sets in a promising new
chan-nel. Study data indicates a largeportion of the retail
industry willquickly follow. •
CURRENT M-COMMERCE CHANNEL DEVELOPMENT
rts_crosschannel_0410_v2 3/23/10 4:34 PM Page 2
-
RETAIL2 0 T H A N N U A L
T E C H N O L O G Y S T U D Y
A S S O C I A T E S P O N S O R S
T I T L E S P O N S O R
®
®
P R E S E N T E D B Y
C A T E G O R Y S P O N S O R S
T H A N K Y O U T O O U R S P O N S O R S
rts_pg29_0410 3/24/10 2:25 PM Page 1
-
ne executive who filledout the RIS/GartnerTech Trends form a
fewyears ago called it
exhaustive. Not becauseit was overly long — this
year’s version had 26 questions —but because it has several
multi-part questions that require deepknowledge of the company
youwork for.
It also may seem exhaustivebecause the executives most
qual-ified to fill out the survey are thosewith the least amount of
time.
Fortunately, the Tech TrendsStudy is well established after
20years and RIS has strong relationswith many senior-level
retailers. Ofthose who filled out the survey17% were C-suite
executivesexcluding CIOs, which in their ownsegment accounted for
30% of therespondent pool. This means thatfindings in the study are
based ona 47% participation level by C-suite executives.
Decision Makers
Business Leaders
CIOC-Suite
Director/Manager of IT
30%
22%
17%
31%
The remainder of the respon-dent pool includes business lead-ers
(22%), who are senior levelexecutives without technologytitles but
who have significantresponsibility for IT, and directorsor managers
of IT (31%).
Vertical segmentation in thestudy is a good cross section of
theretail landscape. The largest cate-gory is specialty retailing
(59%),which is as it should be. Itincludes both hardline and
softlineretailers. Grocery is another largegroup, and at 24% it is
probably abit higher than in the marketplaceas a whole. But since
grocers arelarge, tier-one companies theyhave a big footprint.
Their outsizepresence is actually a bonus forgetting a better peek
into technol-ogy created and used by retailers.
Although one of the smallestsegments in the study, it is
inter-esting to see that 6% of respon-dents consider their major
busi-ness model to be in e-commerce or
catalog sales. This could be anearly sign that
non-brick-and-mor-tar retailers are growing largeenough and
maturing to the pointwhere they are beginning to openup physical
stores and/or operatein ways that are increasingly similar to their
brick-and-mortarcousins.
The retail group that movestechnology forward the most is theone
that has the resources toinvest in technology deployments,upgrades
and innovation. Andthese are typically the large retail-ers. So, it
is a good sign to see thatthe largest respondent category inthe
study is the group retailerswith revenue greater than $1 bil-lion
(45%). The second mostimportant category from this per-spective is
the group that acts likea tier-one organization or aspires tobecome
one. This is the revenuecategory ranging from $250 mil-lion to $1
billion, and it represents17% of the respondent pool. •
W H O R E S P O N D E D
OFINDINGS ARE BASED ON A 47% PARTICIPATION LEVEL BY C-SUITE
RETAIL EXECUTIVES
6%E-commerce/Catalog
8%General Retail/Mass
3%Pharmacy
24%Grocery
59%Specality
45%$1 billionor more
17%$250 million to $1 billion
22%$50 million to $250 million
16%Less than $50 million
3 0 R E T A I L T E C H S T U D Y A P R I L 2 0 1 0 R I S
JOB TITLE RETAIL SEGMENT ANNUAL REVENUE
rts_Who Responded_0410_v3 3/23/10 4:35 PM Page 1