I had the opportunity to attend the National Retail Federation Conference this year. Attending sessions and meeting with a variety of retailers and technology vendors I came away with some observations about the requirements for retailers in the future to be successful. My overriding observation is that retailers who are successful in the future will be those companies that are able to get creative in their use of technology. Retailers need to focus on the intersection of cloud, analytics, customer experience, and security. It is a difficult challenge. First, margins for retailers are quite low so that investing in technology can cause heartburn. Second, retailers are used to buying packaged software with packaged reporting and therefore aren’t ready for technology innovation and change.
Here are five observations about technology requirements for successful retailers
One. Retailers need to focus on security. I was fascinated by the lack of discussion about security. In fact, I did not see a single vendor focused on security on the show floor. Without a well-planned security software strategy, it will be difficult for retailers to succeed in a world that is increasingly moving online.
Two. Retailers don’t understand how to build customer loyalty on and off line. The retail market is in turmoil with the advent on online giants such as Amazon. Retailers are struggling with how to provide a great customer experience and intimacy so that customers don’t buy only on price.
Three. Flexible cloud-based solutions will be the key for the future. Technology products for retailers tend to fall into two categories: packaged turnkey solutions that cannot be easily modified and updated as new modular technology advances; or completely customized offerings from systems integrators. Customers need a combination of both to be future proofed. Software as a Service offerings that are configurable are the answer.
Four. Advanced Analytics is a requirement for retail success. I saw a lot of focus on packaged reports rather than analytics. Analytics is difficult to achieve but mandatory if retailers are going to understand how their customer’s buying patterns are changing. Leveraging cognitive computing and machine learning will be imperative and will separate the retailers that are prepared for the future and those that are left behind.
Five. Customization will be the important to the new generation of retailers. Many CEOs of emerging retailers are focused on providing customized offerings to customers. This is especially true for clothing where one size doesn’t fit all. One of the biggest problems for clothing retailers is that they can’t anticipate how well their clothing will fit those consumers walking in the door or ordering online. Technology solutions are the only answer and it is still quite early. Marrying computer vision combined with excellent customer experience and advanced analytics may hold the key to success.
Vendors selling products and services into the retail market need to help management understand the value of emerging technologies. They need to be able to demonstrate that advanced analytics and cloud services can lead to disruption and transformation in a highly competitive market. There is a clear need to educate this market and explain the value of emerging technologies with a step by step approach needed to gain buy-in. Retailers need to think outside the box and understand how they can keep ahead of the competition. It is no longer enough to simply buy a rigid software package. Retailers need to pay attention to the opportunities to beat the emerging retail players with technology weapons.