2008: The Year of the Shopping Experience

The perception that a CIO merely manages information-technology systems to support enterprise goals is dead. Today, a CIO must be an innovative business leader who can use technology to support efficiency, and uphold innovation.

As executives evaluate their IT priorities for 2008 and beyond, it is not surprising that CIOs are allocating IT budgets for core retail solutions that will support an innovative shopping experience, regardless of the retail channel shoppers utilize.

Retailers have been steadily increasing their IT budgets year-over-year, and this trend shows no sign of slowing. As more companies loosen their IT purse strings this year, “retailers’ technology spending could possibly grow at twice the rate of 2005,” according to “Big Thinking on Small Caps: Big Retailers Look to Small Software Vendors for the Next Leg of Earnings Growth,” a report from Bernstein Research, New York City.

IT budgets may not be as tight as in years past; however, the lean years taught CIOs how to evaluate a company’s business needs, and still keep a keen eye on emerging technologies. Staples Business Depot, the Canadian division of Staples Inc., Framingham, Mass., is harnessing this strategy as it readies to expand an item-level RFID project.

“There has been big buzz around RFID for a long time. We initially looked at the technology when we wanted to achieve 100% accuracy levels within our inventory,” Joe Soares, director of process engineering, for Staples Business Depot, told Chain Store Age.

When the chain embarked on a one-store pilot, however, “We quickly learned that counting inventory is only the tip of the iceberg,” he said.

The office-supply chain installed the intelliTRACKER product suite, from AbsoluteSKY Inc., Montreal, in one 37,000-sq.-ft. store last May. Staples added active RFID tags to 1,500 SKUs across 13 classes of its capital-goods category, including electronics, computer monitors, MP3 players, memory chips and calculators. Small long-range readers were installed in the store’s ceiling, and a SKU hierarchy file was downloaded to a Web server on a daily basis.

As tagged merchandise is checked out at point-of-sale (POS), the tag’s beacon transmits each individual item’s identity through the antenna to the server. Staples’ inventory-management system electronically matches the POS’ transaction file with available inventory and instantly removes the purchased item from the on-hand merchandise. Exception reports are generated and managers can view discrepancies via a Web portal.

After a three-month test, the retailer reduced out-of-stocks by 21%, and reported a 0% shrink rate.

Recently, the retailer added the program in four more stores. “Once we successfully tested the solution, we knew we could scale the project with very little programming,” he said.

Staples is also considering how to use the solution “to monitor technology that is shipped in and out for repairs, including details about those repairs,” Soares explained.

Touching the customer: Building stronger customer relationships sits at the top of Marsh Supermarkets’ list of priorities this year. While many retailers are using kiosks and POS peripherals to deliver targeted messages to shoppers, “These [mechanisms] are not the only way to engage the customer and retain their loyalty,” said Chris Collier, Marsh’s director of marketing and customer analytics. “It also cannot only happen at the front of the store.”

A long-time user of the Copient electronic marketing tool from NCR, Dayton, Ohio, Marsh successfully distributes targeted-marketing messages to shoppers via e-mail, text messaging and online promotions. By upgrading the platform last year, Marsh uses a Web portal to create offers in real time and distribute them down to store level.

Now the retailer is evaluating how the solution will support “a golden point-of-entry when distributing targeted messages,” Collier explained.

That said, Collier is exploring how consumer handheld devices will play a role in Marsh’s direct-marketing efforts moving forward. It is too early to tell if the optimal delivery mechanism will be a PDA, cell phone, or even a handheld device that Marsh develops in-house. The ideal solution, according to Collier, will be chosen based on the consumers’ needs.

“We are currently reviewing all technologies, and we have yet to see only one device that the consumer accepts over all others,” he said. “The ideal solution will truly help consumers make better shopping decisions.”

Marsh will continue evaluating options this year, and hopes to begin implementing a solution by 2009.

David’s Bridal Inc. is also focused on improving its customer interactions this year. The Conshohocken, Pa.-based specialty retailer dedicated to bridal gowns and accessories operates more than 275 showrooms nationwide. Realizing that most brides are relying on the Web to research what they need to fulfill their dream wedding, however, the retailer recently transitioned its Web site, www.davidsbridal.com , into a one-stop wedding resource.

By clicking on a “Wedding Planning” icon, brides can browse more than 10 category portals that link them to strategic-partner sites, such as 1-800-Flowers.com and photo-services site Shutterfly.com .

These additions have been such a hit with brides that “customers are requesting more content and services to complement their wedding planning,” said Veronica Smith-Katz, David’s Bridal’s VP, strategic alliances and interactive marketing. “That said, we will continue to expand our online wedding-planning content and tools this year to make it even easier for brides to plan their special day.”

David’s Bridal first step was to add online product ratings and reviews that enable brides to evaluate the entire David’s assortment. “Customers can enter product reviews and upload associated photos or videos,” she explained. “These features allow all Web-site visitors to share opinions and gain insight from real brides’ experiences.”

While these features are well-received among shoppers, there is still plenty of work to be done, according to Katz. “We want to continue to engage and delight our customers,” she said. “To accomplish this, and to support the growth of our e-commerce business, our top priority this year is to select a new e-commerce platform.”