Focus on: Innovation

The retail industry may have been in survival mode for the last two years, but chains finally are loosening purse strings and allocating capital to new technology projects. At the top of their lists: innovative solutions that drive value among shoppers.


Global enterprise information technology spending is expected to increase 3% in 2011, the equivalent of $2.5 trillion, according to Stamford, Conn.-based Gartner. However, focusing on organic projects is too costly, time-consuming and just plain risky for many retailers. Instead, these companies are looking at a more reliable source: consumer technology adoption trends. 


“Rather than introducing new solutions they hope shoppers will adopt, retailers are learning how to leverage the technology consumers already use in their daily lives,” said Jeff Roster, VP research for Gartner. “They just need the right applications that will make sense for the consumer and simultaneously will improve the shopping experience.”


Among top priorities are solutions that can differentiate the shopping experience even as the marketplace becomes more fragmented.


“The marketplace is more diverse than ever before, but all shoppers have two things in common: Everyone is time-starved and receives an overload of information from their favorite brands,” said Renee Sang, Chicago-based global director of the Customer Innovation Network at management consulting company Accenture. “All shoppers use different technologies to interact with retailers, but chains must know how to scale IT investments to support these solutions and sustain relationships with all customer bases.”


While this sounds like a monumental task, it is possible with the help of emerging technology innovations. Overwhelmed IT executives may get a few ideas from the following trends that are gaining traction within the retail industry. 


MULTICHANNEL INTEGRATION


The number of omni-channel consumers, or shoppers who use a mix of retailing channels to make a purchase, is growing by leaps and bounds. And make no mistake, these are the consumers who will make or break a retail company going forward. Cross-channel shoppers are so powerful that they are 39% more profitable than single-channel customers, according to “The Cross-Channel Wake-up Call: Benchmark 2010,” a study from Miami-based Retail Systems Research. 


At this stage, the picture looks similar cross-industry: most chains are connecting with shoppers in brick-and-mortar stores, online and, for some, through catalogs. And this holiday season proved that shoppers are utilizing every one of those channels before making a purchase decision. 


“Omni-channel shoppers may rifle through a catalog and then go online to read customer reviews and further educate themselves about a product before making a purchase,” Gartner’s Roster explained. “The Web has become the key supporter for the in-store experience. However, all channels must work together to support that omni-shopper and the multichannel experience.”


Too many chains still do not offer a truly multichannel experience. They continue to operate separate business divisions, each one supporting separate databases, inventories and other silos behind the scenes. If chains want to deliver a seamless shopping experience regardless of the customer touch point, then integration is a must.


“Chains that learn to share resources among all channels will be successful going forward,” 
said Paula Rosenblum, managing partner, Retail Systems Research.


Retailer Solstice Sunglass Boutique made its debut in the e-commerce world last fall, and integration was priority one. By adding the Demandware Commerce platform from Woburn, Mass.-based Demandware, the chain offers online visitors a shopping experience that mirrors those at store-level. Customers also have access to the chain’s entire available inventory, as well as detailed product information. 


“We needed an e-commerce platform that would mirror our dedication to providing a unique, tailored shopping experience, and that was scalable to the broad range of inventory we offer to our customers,” said Rick Talmage, COO, Solstice Sunglass Boutique, Short Hills, N.J.


In addition to integrating store-level kiosks into the site, the chain’s online presence also incorporates many top social-networking sites, allowing shoppers to share information and photos with friends on Facebook, Twitter and even e-mail.


For those chains that have not yet thought of integrating their disparate channels, it’s not too late. Chances are an integration project could be right around the corner. 


“A perfect storm is brewing. Retailers still using first-generation technology want to interact with shoppers across all retail touch points. Meanwhile, new channels are emerging and changing the multichannel game,” Roster explained. “Upgrading infrastructure and integrating existing and new channels will eventually take cost out of operations and help build revenues as shoppers have more options to interact with brands and increase their overall spend.”


MOBILE RETAILING


Between growing consumer adoption of smart phones and shoppers’ need for instant information, mobile is becoming a force that can bring value back to the shopping experience — and help chains create the intimate, one-to-one shopping experiences they have been yearning for. 


More than 85% of new handsets available as of 2011 are designed to access the mobile Web, according to Gartner, making the timing ripe for chains to make a push toward mobile commerce. 


Consumers are already reaching for their phones to compare prices, read product reviews and make impulse purchases at home, in-store and even, heaven forbid, while shopping at a competitor.


“This device is a portal into a consumer’s world,” explained Accenture’s Sang. “It is the perfect catalyst for retailers to say the right thing at the right time to spur a purchase and sustain a relationship with the shopper.” 


Where retailers will rise above their competition however, is in how they can manipulate the technology to help their shoppers make purchases with them versus competitors. Plano, Texas-based J.C. Penney, for example, launched a mobile commerce platform and enhanced mobile apps for iPhone and Android users during the holiday season. 


When smart phone users type JCP.com into their browsers, the platform from New York-based Usablenet detects the mobile device and redirects them to a mobile-friendly site. Dedicated apps let shoppers browse circulars, bookmark items to create an electronic shopping list, receive mobile coupons and make purchases. 


Still a little gun shy? Consider this: 69% of smart phone users know that large retailers offer smart phone apps, and 48% have already downloaded at least one app, according to an Accenture study. 


“Mobile will explode when retailers offer two-way dialogue through the device versus simply pushing information,” Sang reported. “This is a powerful tool, and shoppers need to ‘let’ retailers in. Once the relationship is established, let her tell you when and how she wants those messages. These parameters will help chains rebuild loyalty and drive revenue.”


MOBILE PAYMENTS 


When gift cards were introduced more than a decade ago, retailers were giddy with the opportunity to have a mini billboard — and constant brand reminder — sitting in their shoppers’ wallets. With 1 billion more mobile phones in the marketplace than there are credit cards, according to Richard M