Magazines Archives - 2009 July

Study shows retailers’ changing perceptions towards IT
Story 10 - Retail Technology

NOTING that more and more successful retailers are outsourcing their IT needs to third-party solutions providers, a new study also confirms that retailers who use IT in their businesses “have the opportunity to turn technological advantage into real long-term market gains”.

According to the study, IT and Business Alignment in Retail — Benchmark Study 2009, released by Retail Systems Research last May, retail winners, defined as retailers with an average store sales growth of over 3%, are not only embracing IT as a necessity in their organisation, but also progressively moving towards commercial solutions rather than developing their own systems.

“Savvy business leaders must have an understanding of what IT can do for them”, the study advised, with 83% of retail winners placing actionable information into the hands of decision makers. Based on findings, retailers who outperform their peers depend more on these business leaders to help set the technology agenda.

In contrast, at only 33%, laggards had lesser regard for the right people making the decision to implement IT.

Another stark difference between retail winners and laggards was that 75% of the latter perceived IT’s capacity to lower costs as the most important, while only 28% of retail winners considered this a priority. The study reflected that laggards did not seem to grasp that by getting the right information to the right people, they would actually be able to lower costs.

In addition, it pointed out that in order to win in retailing, “delivering information assets in a way that informs decision making processes is critical”.

“Times have changed. Today’s decision makers also work at the point of interaction between the retailer and the customer. This means the information asset has to be delivered in whole new ways to a much larger group of people than ever before,” it said.

Retail winners, however, are not without their hurdles. About 48% of winners revealed that one of their main challenges remained in maintaining their legacy portfolio, which consumes a great deal of IT human and financial resources, while 38% said that a lack of strategic direction posed another challenge to their businesses.

In contrast, 71% of laggards stated that their businesses lacked direction, with their IT departments struggling to maintain their legacy portfolios.

Still, the study maintained that, based on the response, a change is taking place in the industry today. Gradually, retailers are moving towards commercially available software solutions that can be deployed throughout the organisation without complex modifications and can be easily integrated with other software, the study maintained.

Over 50% of respondents revealed that they have recently replaced, or are planning to replace, their legacy applications, with 45% stating that they have been “driving user involvement for more than a year” — factors that are indicative of change of perception towards IT in recent years.

However, one of the challenges, albeit less than 20% of respondents consider this to be, is to reflect the return of investment for such solutions, as it still takes a considerable amount of time and money to launch new technology within the company.

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