Go Boldly Where No Retailer Has Gone Before

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Go Boldly Where No Retailer Has Gone Before

By Joe Skorupa - 04/23/2012
By Joe Skorupa

Two megatrends emerged from the just released RIS/Gartner Retail Tech Trends Study that will have a major impact on retailers. They are sharp growth in retail IT budgets, which is higher this year than other industries tracked by Gartner, and the rising influence of marketing on IT spending, which is driving big investments in mobile, social and cross-channel technologies. Find out about these and other key trends in the industry’s leading IT study.
 
Dramatic developments like the ones tracked by Gartner’s Jeff Roster in the 2012 Retail Tech Trends Study, “Embracing Change,”  clearly point to an environment that is fast-moving, risky in many ways, and yet filled with new opportunities for those willing to make smart, bold moves.  
 
These developments are so dramatic, in fact, that I can’t help but think of the mission statement written for the voyages of the starship “Enterprise” as it moved through the many iterations of Star Trek on TV: to explore strange new worlds where old rules no longer apply, to seek new opportunities and business models, and boldly go where no retailer has gone before.
 
I think even Captain Kirk, if he were a retailer, would be hard pressed to cope with all the changes unleashed in such a short period of time by the consumerization of technology and empowerment of the shopper. You can see why in the findings from this year's Tech Trends Study below.
 
2012 Tech Trends Takeaways
 
The 2012 Tech Trends Study had a live debut on April 12 at the Retail Technology Conference, where Gartner’s Jeff Roster presented the key findings to 130 retailers gathered in Orlando, Florida. For a copy of the full study click here.
 
Highlights from the findings include:
 
·         The top action item selected over the next 18 months is leveraging social media. This option was just added to the list last year when it came in fourth place. This year it is the number one action item, no doubt because it is a platform that delivers content directly from shoppers and it has a low barrier of entry. Also, there is a clear risk for retailers who ignore it.
·         Two other action items of note are: Developing a mobile enterprise and/or store strategy, which is second highest on the list, and developing a mobile commerce strategy, which is farther down. Last year Developing a mobile enterprise and/or store strategy was in seventh place, so it made a big leap up the chart this year, while developing a mobile commerce strategy stays in about the same position. This indicates that retailers have a clear picture of their priorities. Mobility in retail will be a game changer, which is why it jumped so high. But mobile commerce, although important, is still a tiny fraction of revenue. Better to spend money on IT where it will have the most bang for the buck.
·         What is the top technology for 2012? Mobile POS. This is an interesting datapoint because of how it is derived. We didn’t pose a question that asked retailers to name their top technologies for 2012. Instead we asked a series of questions about specific technologies that had consistent wording. These questions covered about 50 different applications, everything ranging from allocation planning to workforce management. Then we looked at the technologies that had the highest number of retailers who said they were either implementing it right now or they plan to begin implementation before the end of the year. Mobile POS came out on top.
·         Two thirds of retailers report revenue increases in the last 12 months with only 21% saying they had a revenue decrease. Overall, retail had a pretty good year in 2011 and most retailers feel upbeat about prospects for 2012.
·         Since IT budgets are based on a percentage of revenue, we asked retailers to tell us what the percentage figure is. As usual, the typical answer is pretty low, mostly in the 1% to 2% range with a fair number in the 2% to 3% range. But this year is a watershed year on the upper end of the spectrum. For the first time we see a big jump in the number who say their IT budgets are 3% to 5%, which doubled year over year, and those who say their budgets are greater than 5%, which tripled year over year.
·         How does this translate into a year-over-year change in IT budgets? A big majority of retailers are either increasing their IT budgets or they say they have no change over last year, which is a built in increase if total revenue is increasing.
·         If you add up all of these revenue and spending datapoints the cumulative picture is of robust IT spending by retailers in 2012. Jeff Roster reported at the Retail Technology Conference that for all the year’s he has been at Gartner the retail sector has always been among the lowest in IT spending compared to other industries. However in 2012, Gartner projects retail will have the highest year-over-year IT gain.
·         The number of retailers who say they have no m-commerce plans – it is less than 20%. This means that 80% of retailers already have some involvement with mobile commerce.
 
For a copy of the full RIS/Gartner retail tech trends study, “Embracing Change,” click here.
 

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