Only 27% of retailers in the U.S. and U.K. say their IT environment is able to support an improved in-store experience.
As the customer experience will be a big factor in retailing moving forward, this stat seems troubling for many retailers.
Furthermore, according to research by software provider Zynstra, 20% of retailers have had to delay or not roll out new in-store applications due to IT limitation, costs or concerns.
While 98% of retailers would like to roll out new applications, it seems the capabilities are just not there.
So what's holding back the implementation of these new technologies? The no. 1 challenge cited was budget, according to 48% of respondents, followed by consistency of in-store versus online, 35%, and lack of local store IT skills, 35%. And yet another challenge was that 32% of retailers managed each store as a separate IT installation.
"There is a baseline experience that retailers need to achieve before moving on to more advanced and innovative customer experience initiatives—shoppers want to get what they want in store with convenience, and move through the selection and purchase process as quickly as possible," Nick East, CEO of Zynstra, told FierceRetail. "Current infrastructure does not always allow this to happen, either due to speed, reliability or flexibility. And just keeping this old infrastructure running can place such a burden on IT teams, that they don’t have the time to innovate."
East says that once this baseline is achieved, retailers want to deliver new levels of convenience to gain a competitive advantage. But the race to be in the lead and differentiate never ends.
"The issue is one of speed and efficiency of response. If each new customer experience application needs new infrastructure and management, then rollout of new apps is unresponsive, slow and costly," he added.
Therefore, retailers need to implement an in-store infrastructure that is flexible and able to launch new services on demand. And this requires new infrastructure to be this nimble. East says that many retailers are applying "edge scale" automation and virtualization software to extend the life of existing hardware.
"This will enable them to have a platform to implement efficient testing and deployment of new services and applications—as well as reducing the time to market of promotions in line with seasonal campaigns," East said.
But there is still the challenge of cost. So is the IT upgrade really as expensive as most retailers perceive it to be? East says that all IT investments have to be weighed against two key goals: improving service and driving down the cost to serve.
"Retailers rightly ask, 'How much product do I have to transact with customers to pay for this investment?' So it’s important that they look at the total cost ownership of technology in stores—in particular, whether technology can help lower the store’s bill of materials while improving the cost of helping customers to transact. Where technology is deployed, supported and updated across hundreds or thousands of sites, both IT costs and the impact of technology on the store teams are critical," East said.
East refers to the retail battleground as being on the edge of where retailers and customers meet face-to-face. And while in-store customer interactions are paramount to building loyalty, there is now new technology that needs to be implemented if retailers are going to move into the next era of the experience.
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"What it takes to win in retail is changing," he said. "Retailers now need infrastructure that allows them to become more agile and cost-efficient, monitoring buyer trends and processing transactions rapidly. These all require high volumes of data to be processed in real time at the retail edge. However, current approaches to computing assets fall short in achieving this. A new strategy is needed."
Early drivers of achieving this new strategy of using technology to drive the experience are C-store and quick-serve restaurants. He notes that these retailers are focusing on driving down transaction time, targeting the shortening of line lengths, and using technology to enable the delivery of great quick-serve food as part of an overall shopping experience. He also says that apparel retailers are breaking new ground, for example using RFID to keep track of all stock, including items left in changing rooms.
Moving forward, East says that the winners in retail will deliver a superior customer experience with more services and faster innovation in the physical stores as well as they do in the online stores.
He says that there are three major drivers that will lead to retailers wanting to revamp their in-store IT services:
1. The challenging business environment will drive retailers to seek new levels of efficiency and cost savings, beyond the levels that can be delivered by legacy systems.
2. The customer experience battle will continue, and legacy infrastructure can’t deliver.
3. Incumbent operating systems and hardware will be reaching the natural end of life, which will lead to challenges in maintaining security and compliance.
And it seems that the future is now. Adapt or die in 2018.
"2018 is a crucial year in laying down the infrastructure that will reduce costs today and provide a long-term platform for a consistent and intentional customer experience," says East. "In the challenging retail conditions that are predicted, those who don’t take this step are going to lose. New thinking is needed. Old IT solutions hold stores back from delivering the complete, high-quality retail experience their customers demand, and place real burdens on organizations in terms of operational cost, security and compliance. From a business standpoint, disparate and inflexible IT systems diminish the ability to act quickly to deploy new stores and new lines of business in response to rapidly changing customer demands. From an operational point of view, traditional solutions can lead to nightmares for the IT team, with expensive and laborious site visits, and high skill systems integration work. They need to be liberated to innovate."