While retailers woo cash-strapped consumers, solution providers and their
vendor partners are courting both brick-and-mortar and online etailers with
technologies and solutions designed to reduce back-office costs, and enhance
productivity and, therefore, the bottom line.
Generally invisible to consumers, these systems range from
back-end access to a plug-and-play global warehouse and on-demand shipping to
hosted applications, and from sophisticated retail analytics and business intelligence
to online inventory intelligence that unites shoppers with the product.
The $2.5 trillion retail market is experiencing no growth,
says Dan O’Connor, founder and CEO of
RetailNet Group, a Concord, Mass.,
analysis and consultancy for retailers. “In a zero environment, your goal is to
keep your existing stores productive. Conceptually and practically, what that
means is you move from an environment where management focus is on growth
strategies to an approach where people are really optimizing.”
Frequently, optimization means automation. Solution
providers, often the right-hand IT man for both large and small retailers, have
the opportunity to recommend, integrate and support solutions that better
manage inventory, spot shopper trends, detect shoplifting and shrinkage, and
tap the Web for accurate pricing.
“There is tremendous amount of supply-chain rethinking,
there’s a tremendous amount of collaboration going on between suppliers and
retailers, and they’re really changing the way products flow to the store,”
says O’Connor. “[Retailers are] using technology to help understand not just
how to reduce the number of SKUs in the [loss] category, but also from a
store-to-store perspective so they’re not carrying all products in all
locations.”
Transportation costs also are added into the mix, encouraging some large
retailers to move from a centralized distribution to a local distribution
model. While this cuts down on greenhouse gas emissions and fuel costs, it puts
more stress on local store managers to ensure they are buying and stocking the
products their regional customers want.
Theft, too, is costly, accounting for $41.6 billion in 2007,
according to a National Retail Security Survey released last year. With the
economy tanking even further, theft is expected to only increase without
retailers taking additional preventative steps, some of which involve
technology.
While they may not be as sexy as look-alike avatars or product information
booths, back-office IT solutions—and the solution providers that sell and
support these technologies—play an equally critical role in stores’ ability to
continue to combat the sagging economy and sinking consumer confidence facing
today’s shoppers and stores.
New technology is also playing a bigger role in getting
cash-strapped shoppers into the malls and stores. While store managers are
optimizing supply chains and inventory, retail marketers are turning to new
media to entice and attract consumers.
“We see retailers using new technology and new business
models to collect and organize both qualitative and quantitative insights about
the shoppers that are in the catchment areas around each store,” says O’Connor.
“The nature of data that retailers are going to collect around each shopper is
going to change more and more, and they’ll rely more on proprietary information
surrounding each shopper.”
Shopper-facing technologies run the gamut from smart
shopping carts to targeted marketing via mobile devices, promotional e-mails
that turn a company’s entire employee base into a partial sales force and touch-screen
kiosks that provide access to a live customer support specialist.
Whether a solution provider serves small brick-and-mortar
stores with limited or no Web presence, an exclusively online retailer, or a
multimillion-dollar and multilocation chain with both offline and online sales
efforts, there are plenty of available technologies to meet clients’ needs.
Many developers of these shopper-facing technologies are seeking partnerships
with solution providers, both in an effort to expand their own product sales
and to provide retail customers with a completely integrated solution. After
all, many of these vendors do not provide hardware, networking or integration
services, say company executives.
“There is physical hardware that has to be installed, bought
and maintained in retail locations. That is not our business. We are a software
and services business. We work with the on-site service providers,” says Joel
McConaughy, managing partner and co-founder of Displayware, a Seattle-based
provider of digital merchandising and media download services for retailers.
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