The paradox of becoming more customer-centric while holding the line on costs is a core challenge for 21st century retailers. Technology-Enabled Customer Centricity (TECC), a term we use at Retail Systems Research (RSR), is a method retailers can use across their enterprise to help break this paradox.
TECC in the store is more than just a new acronym and more than a hodge-podge of applications scattered around the physical plant. It is a series of building blocks working together to improve the in-store experience for customers, employees and managers. It provides feedback loops to the home office to hone and improve elements of constituents' experience.
AN INTEGRATION FRAMEWORK
Clearly the baseline requirements for retail store technologies have changed. The days of dial-up connection from stores to the home office are essentially behind us. RSR's research shows that 86 percent of all retailers have some form of persistent connectivity.
With persistent connectivity established, the next logical move for retailers has been stepping up to in-store wireless. Our data tells us wireless penetration has reached 65 percent across all retailing segments. Uptake has been rapid. The smallest retailers still lag behind, with just 50 percent using wireless, but among larger retailers, penetration has reached 80 percent.
A modern POS system is the next critical building block for Technology-Enabled Customer Centricity. Retail winners (those whose year-over-year comparable store sales increases exceed three percent) agree, with 75 percent in late 2006 identifying POS as a key technology enabler.
While it is not impossible to extend points of service out into the store with an old-generation POS system, a retailer will definitely incur greater costs and complexity in doing so. Duplication of programming efforts to replicate functionality across the body of the store and more complex and redundant integration points will create additional burdens on technology vendors and in-house IT alike. This, of course, translates directly into additional project costs.
Differences in user interfaces from POS to extended points of service will create the very obstacles to learning that retailers fear. In effect, without a modern POS system, a retailer will create a self-fulfilling prophecy of onerous expense, time and effort.
Of course, some technology enablers identified as important by retail winners, such as dual displays at POS, point-of-purchase digital displays, integrated payment systems, personalized promotions and biometric payment devices can be implemented with older POS systems, but the resulting tangle of "spaghetti programming code" becomes harder and harder to manage and maintain.
Just as homeowners have to consider reinforcing the foundation of their house when they decide to re-model or build a second story, retailers also have to think about underlying architectural components of their in-store infrastructure as they contemplate moving points of service out into the body of the store. This can be frustrating and difficult to explain to line-of-business users.
But the bottom line is that without a scalable and extendable integration framework that ties disparate architectures together, retailers will be scrambling to integrate the "next big thing" into their in-store system portfolio.
EXTENDING STORE TOUCHPOINTS
Research has consistently shown there is top-line value achieved by getting store managers back onto the selling floor.Too many spend their time tethered to back office computers, overseeing a plethora of portals, dashboards, alerts, e-mails, instant messages and reports.
This is the critical value of mobility or wireless systems within the body of the store. Arming store managers with information and making it available to them on the selling floor provides the best solution for retailers. Store managers can wait on customers, mind their employees and communicate important information back to the home office without returning to the back room.
Customer-facing technologies in the store are still in their infancy, but hold enormous promise for the future. In particular, RSR believes delivering information to customer-owned devices will become a critical requirement. Witness the excitement around the introduction of the iPhone. Can anyone doubt that more disruptive technology waits in the wings?
The seemingly intractable challenge of employee churn demands that retailers find ways to make employees more productive faster. Providing technology-based training, product information and customer information to employees can only serve to improve the employee and customer experience alike.
REAL-TIME WEB-BASED ANALYTICS
Once the in-store infrastructure is built and tied to the home office, retailers begin to make sense of the data they receive in near-real time. They move from a reactionary mode to a sense-and- respond model. Analyzing current performance can help retailers create more accurate predictions for the future. The sense-and-respond retail organization can work in concert both with its internal and external suppliers to reduce out-of-stocks and also ensure that customer expectations on pricing and promotions are met.
Along with creating a more customer-centric environment, real-time Web-based analytics can help solve other major challenges retailers face, including the problem of shrink (through real-time sales audit and digital video surveillance), and evaluating and improving consistency of store performance. Real-time analytics also are critical to solving the challenge of returns management in a customer-friendly way.