By Chris Lee
A recent study into the retail industry by on-demand digital commerce enabler Demandware found that near 40 per cent of retailers want a single platform to manage consumer interactions and transactions across all channels. The report’s author also said that twice as many retailers plan to leverage ecommerce (38 per cent) over traditional point-of-sale (POS) systems (19 per cent) to support this strategic direction.
NMK caught up with Rob Garf, Vice President of Industry Strategy and Insights at Demandware, to find out how retailers could address some of the opportunities and challenges presented by omni-channel enablement as well as some of the drivers encouraging retailers to make the change.
Bring online and offline onto a single platform
Garf believes that the new retail reality would be better served by a single platform at the centre of the consumer shopping experience. He believes that a single platform simplifies the technology environment, serving as the bridge between the virtual and physical shopping worlds.
“This capability enables retailers to move at the speed of consumers, while also consolidating and managing key data elements, business rules, and functionality that historically lived in multiple systems,” he told NMK. “As a result, retailers can deliver a seamless shopping experience across channels. And this aligns with what retailers are looking for.”
According to the study, retail leaders stated a single platform should enhance customer service, standardise business processes, and increase store associate productivity.
In-store technology has a key role to play
Garf argues that there will be significant store investments as retailers aggressively break tradition by launching new store formats, revamping aging locations, testing new concepts, and bringing digital capabilities into the four walls. Demandware says that 80 per cent of retailers surveyed expect to maintain or increase store technology investments over the next three years.
Many of these investments are targeted at the traditional POS system, with 70 per cent of retail executives reporting that their organisation is currently deploying or planning to refresh its existing software in the next three years.
“This POS refresh cycle – which historically occurred approximately every 12 years – has prompted technology leaders to rethink traditional store-centric software, along with other consumer-facing technology, and consider a single commerce instance across channels,” Garf added.
POS will be supplanted by ecommerce technology
Since the advent of the electronic cash register in 1974, Garf argues that traditional store-based POS systems have managed nearly all retail transactions.
“It took 30 years and the emergence of the Internet for another technology – and channel – to chip away at the status quo,” Garf said, citing that Forrester Research predicts that ecommerce will reach $371 billion by 2017 in the US alone, when it will account for a tenth (10 per cent) of all retail sales. Forrester also estimates that half (49.5 per cent) of total US retail sales today are impacted by the web in some way.
Garf believes that during the past 15 years, ecommerce functionality, architecture and extendibility designed for online shopping have surpassed store POS applications. As a result, traditional POS, call centre and mobile technologies that directly interact with consumers are increasingly being supplanted by ecommerce to establish a single consumer platform.
Tips for driving change
Garf warned that retailers must proactively address key technology imperatives.
“Before retailers can truly reap the benefits of investments made in a single platform to connect the online and offline world, they need to consider the following three overarching imperatives to take advantage of this unprecedented change the retail industry is experiencing,” he recommended:
1. Understand Market and Internal Landscape: Retailers must understand the broader marketplace and current state of technology solutions, as well as the internal structure of their organisation and key stakeholders
2. Establish Technology Roadmap: Retail executives we surveyed highlighted the challenges involved with complex migrations of legacy systems to a new environment and the need for significant capital investment for a ‘big bang’ approach. The transformation to extend a singular platform across channels—particularly into physical stores—won’t and can’t happen overnight. Retailers need to develop their own technology roadmap that defines success, supports business initiatives and defines a path with clear milestones
3. Drive Continual Innovation: Consumer demands are changing at a rapid pace and innovation is currency in the shopping experience. Innovation and speed are not one-time events. Instead, they must become standard operating procedure, made possible by a flexible and scalable platform
Garf concluded: “With simplified architecture, synchronised data and real-time intelligence, a single platform presents great opportunities for retailers to deliver a seamless and consistent consumer experience across any channel. But there are steps a retailer must take to ensure the evolution of the store is done at the retailer’s pace, in a manner that makes sense for their organisation.”