Right technology, right time

Data, mobile, multichannel and payment – the topics might not be new, but there was a sense of urgency among retailers at this year’s National Retail Federation conference in New York.

Not only are the fastest-moving retailers starting to deliver new services and pilot cutting-edge technology, but customers increasingly expect it.

“There’s a perception that you’re falling behind if you don’t have the latest technology,” said Waitrose retail services director Graham Heald. “The challenge is to choose the right technology at the right time.”

NRF is certainly a good place to go for ideas. There was no shortage of snazzy gadgets on show in the exhibition hall – from robots to interactive mirrors, technology suppliers pulled out all the stops in an attempt to encourage retailers to part with cash. But away from the buzzing crowds in the expo hall, the discussion was focused on how to finally make multichannel a reality.

Embracing multichannel

The last five years have been full of discussion about multichannel, but 2011 was the year retailers really started to act on it. At this year’s conference, this meant real-world examples of everything that multichannel engenders – from better back-end systems to mobile point of sale, and from social commerce to the use of technology in brand building. “A year or so ago, the chief executives and chief information officers we talk to finally said we have to do something in this space,” said Rick Chavie, vice-president of marketing at technology supplier NCR Retail. “We have now got a number of companies embracing it and pushing it forward.”

Tesco chief information officer Mike McNamara was one speaker, explaining how Tesco’s new IT architecture – worth about $100m (£64.3m) – will help the retailer in years to come. The Retalix platform will be rolled out internationally and will make services such as ‘order online, pay in-store’ easier for the grocer to provide. The system means all applications that process payment or promotions at Tesco will run in exactly the same way, and allows the grocer to connect in-store tills to the outside world.

McNamara said: “Architecture is everything. It’s the most important thing to all of us. If we get a good architecture we will be able to do all the things we want to do for years to come. If you get it wrong it becomes impossible. We have a tremendous amount of cross-channel activity going on and this kind of till will make it a lot easier for customers.”

McNamara said the flexibility of the architecture was useful for Tesco’s convenience store estate, as it enabled smaller stores to connect to central servers instead of needing their own.

McNamara added that 60% of Tesco’s online orders in general merchandise over Christmas were picked up in-store instead of delivered to customers’ homes, and this rose to a massive 80% in the final Christmas week. The internet may only account for 8% of total sales in the UK retail industry, but evidence like this is starting to trickle through, showing how strong the links between stores and web have become. Product research, click-and-collect and price comparisons mean about 40% of purchases are influenced in some way by the web, according to former J Crew chief information officer Steven Dee, now chief information officer at home decor etailer Hayneedle.com

Going mobile

Every retailer has a different agenda, but use of mobile in store was a particularly popular topic. Heald reported that he was looking into the use of tablets in Waitrose stores, saying the devices could be helpful in arming store staff with knowledge in the health and beauty or wine aisles, for instance.

US fashion retailer Guess is one business trying mobile point of sale, piloting Google’s contactless payment project Google Wallet in a handful of stores. “There’s a lot going on and we feel like we should be piloting things,” said chief information officer Michael Relich. “Mobile represents a small market right now but as the technology matures it will become more relevant.”

Republic multichannel director Jo Molineaux said the fashion retailer was also looking into how tablets could be used in-store and it is working with Torex to decide the best way forward.

Data was another big topic, with retailers finding it increasingly necessary to know as much as possible about their customers. Macy’s chief marketing officer Peter Sachse outlined the work it has done on developing its analytics with Dunnhumby, which he said had improved loyalty and customer retention.

He said the department store’s focus is on boosting the money spent by existing shoppers through more effective marketing rather than trying to attract new customers, adding that highly loyal customers are worth far more to the company than new consumers.

It’s not all about customer data either – use of data is creeping ever further into retailing as computing power and speed increases, and retailers such as US grocer Winn-Dixie explained during the conference how it was using it to improve everything from merchandising to brand building.

“Eight years ago people weren’t talking about analytics,” said Diana McHenry, director of global retail at analytics company SAS. “It’s definitely changed. Retailers have long had the data but have maybe not felt the necessity of leveraging it.” Getting started can feel overwhelming but all agree on one thing – analytics projects need support from the very top of the organisation. “It needs to start at the top. It made our journey so much easier,” said Sachse. And he warns that, while the spoils of data analytics are worth the effort, it’s no mean feat – the process can need lots of tweaking, regular reviews, and take a while to see measurable results.

Each retailer is approaching this year’s challenges in its own way, but NRF made one thing clear – the issues the industry faces are the same across the globe. With demanding customers, fast-changing shopping habits and a flood of options on the market, it’s set to be a interesting year. As retailers start to try out new technologies and decipher their own route through a multichannel world, an open mind and a willingness to learn will be useful attributes to cultivate.