Top IT Concerns for 2017

As 2017 gets underway, digital disruption continues to drive — and transform — the industry.

Besides creating a more consumer-centric, web-enabled shopping experience, digital innovations — from the Internet of Things to mobility to social media — are altering retail operations. They are also generating new challenges that retailers are unaccustomed to, or worse, still unprepared for.

Simultaneously, IT teams are evaluating how to evolve existing IT strategies to coincide with these innovations, and of course, how to prepare themselves for more changes going forward.

Here are four IT challenges that retail tech executives should be looking to get a handle on this year:

Harnessing Big Data

As retailers add new digital touch points, the volume of data flowing between devices and corporate databases is at an all-time high. In fact, 40 zettabytes of data will be created by 2020 — an increase of 300 times since 2005, according to IBM.

Overwhelmed and drowning under so much data, too many companies find it easier to syphon information into a data warehouse where it remains untouched and forgotten. But more than ever, retailers need to harness the information in order to remain relevant in an increasingly digital marketplace. The fact is that data is entering retail enterprises so fast that traditional reporting solutions can’t keep up the pace or produce the best results. This requires a new level of analytics.

To deal with the issue, some retailers are pursuing more sophisticated reporting options (see sidebar). For example, some companies are opting for predictive analytics, a solution that leverages nuggets from big data sets to determine patterns and predict future outcomes and trends.

Other companies will try their hand at artificial intelligence, a platform designed to harness big volumes of information at a more efficient and accurate level than humans are capable of. Specifically, retailers are turning to machine learning, an AI process where computers have the ability to “learn” when exposed to new data — especially high levels of information like those produced by big data.

BCBG Max Azria Group added an analytics tool when it realized its basic, static “one-size-fits-all” e-commerce site didn’t optimize the overall shopping experience or allow it to engage with specific omnichannel shoppers. It is now acting on insight from its data (see sidebar for more).

Tackle online security

As the shopping experience has become more digital, retailers and their customers have become vulnerable targets for an increasingly savvy group of cyber criminals. This has put new pressure on retailers to protect sensitive mission-critical and customer-specific data.

“With every new report of a data breach, it becomes increasingly challenging to keep data secure,” said Ben Woolsey, president and general manager of CreditCardForum.com. “It puts retailers in the hot seat to present a consumer-friendly, convenient digital experience, while ensuring that all data flowing online is protected.”

Encryption, a process that transitions customer-specific information into a code or algorithm unintelligible to unauthorized users, must top all retailers’ online security efforts this year. By adding a layer of tokenization, a process that encodes sensitive data only decodable by authorized users, retailers are further protecting the enterprise against unexpected cyberattacks. While a mere 20% of retailers have already adopted tokenization, another 52% overall plan to adopt the strategy within the next 12 to 36 months, according to Boston Retail Partners’ “2016 POS/Customer Engagement Benchmarking Survey.”

Without this simple strategy, “information sent over the internet is easily stolen while in transit,” Woolsey said. “It is up to retailers to protect data to the greatest extent possible. This requires locking down any database where personal information is stored.”

Blending online and offline experiences via social media

To remain relevant in an increasingly digital marketplace, retailers struggle with how to merge the online and offline experiences in a transparent way. Worse, they often fail to understand consumer needs and behaviors throughout the buying process.

The easiest way to gain valuable insight is to leverage social media.

Whether spending time on Facebook, Instagram or Snapchat, among others, consumers rely on social media when planning and making purchases. In fact, 75% of consumers visit Facebook during their pre-shopping planning, especially in search of recommendations and advice from friends and family. Once in the store, more than 80% of consumers use their mobile phones to compare prices on other retail sites and social networks, according to Crowdtap’s report, “Social’s Influence on the Path to Purchase.”

Post-purchase, 47% of consumers will use the retailer’s site or social networks to write a review. Of those shoppers, 68% will purchase from the same brand again within three months, the report said.

Birchbox, a pure-play-turned omnichannel retailer, is bullish on the power of social media not only to connect with shoppers, but to build its “community.” The cosmetics retailer has a brand presence via Instagram, Facebook and Snapchat, but that is only one piece of its social media strategy.

“It is critical to have a presence where our shoppers are so we can share our stories and announce new launches, but it is equally important to check in on what shoppers are saying about you — and to you,” said Katia Beauchamp, Birchbox CEO and co-founder.

“We check in on our social handles several times a day to understand what our members are talking about, why they are excited, the brands they like, and their comments about our company and service,” she added. “This helps us improve our products, highlight merchandise, respond to their inquiries and concerns, and most importantly, learn from them.”

Supporting device management

Mobile devices are becoming commonplace — and mission-critical — across the retail experience. However, too many retailers are caught up in the glamour of the devices and their functionality — an issue that jeopardizes the security of the units, and the data flowing through them.

These factors became a priority for Neiman Marcus Group, especially as its mobile fleet began expanding chainwide.

“At the early stages of our mobile journey, we were focused on our network and the devices’ computing capabilities,” said Scott Emmons, head of the Neiman Marcus Innovation Lab. “It soon became clear that we needed to be equally mindful of monitoring the ‘health’ of devices, as well as the safety of mobile data flowing across the network.”

For Neiman Marcus, this meant adopting a mobile device management system. However, managing a diverse fleet of handhelds required a robust solution.

In addition to a platform from Mobile Iron that secures, manages and monitors the chain’s smartphones and iPads, the upscale retailer also uses a customized solution to monitor proprietary rugged handhelds used for inventory management operations. Neiman Marcus also uses Aruba AirWave network management platform to monitor the “health” of its network, and how and when handhelds use bandwidth.

“In the end, one size does not fit all,” Emmons said. “Rather, it is