Technology in Retail is one of the hot topics for discussion in the industry today. It has impacted our lives in a big way – all of us as consumers use technology in many ways. It is so intertwined in the way we live our life everyday that it has a big influence on our habits, behaviors and preferences.
When it comes to the retail industry, technology as a topic has gained currency, particularly the customer facing side – Digital interfaces, Artificial Intelligence, Face Recognition, Virtual Reality, Augmented Reality, Voice based Agents, Omni-channel and many more. It is very interesting to see the flurry of activity in the consumer technology side; many new ideas and retail organizations competing to make investments in what they think is the next big idea! We will spend some time discussing the developments on the consumer technology in a later blog. Let us pick up the other face of technology in retail which is often unseen and may be even ignored. Pause for a moment and think about what keeps the gears of an organization moving. I would guess the unanimous answer is people (I am not saying bots now, may be in the future!). But, considering we are on the topic of technology today, it would be right to say, it is enterprise technology that helps log millions of transactions across functions and is one of the key enablers of business.
Let us look at Enterprise Technology in retail, particularly physical retail environments – rewind a decade or two ago and you will see that retail was not one of the industry segments that invested heavily in technology. Most retailers barring a few had a smorgasbord of legacy applications that they had inherited from a generation prior, when computers began to grace the business environment. The variables of high real estate investments to buy or rent spaces and consumer expectations on low prices led to thin margins and this meant very little investment in technology solutions. This was further compounded by a distributed environment of retail stores that made technology implementations cumbersome to handle from a project management standpoint with very high roll-out costs. Imagine a retailer with 1000 plus physical stores, any change in technology on the enterprise side would be a big investment in cost, time and effort, not to mention the training of scores of retail employees who will eventually use the technology.
Of late, I see retail organizations willing to make investments in new and yet unproven consumer technology solutions with the desire to be seen as providing a unique and differentiating consumer experience but not being aware that the success of consumer technology often depends on a robust enterprise technology backbone. Some retailers have begun to realize that the step change in technology landscape to support the new solutions on the consumer side cannot happen overnight; there is a need to get the enterprise backbone right.
The story is different in the online retail context where the starting point was heavy investment in technology starting with the basic enterprise backbone. The need to make the online channel more consumer friendly and the challenge of not being able to touch and feel products, led to investments in the consumer technology side of things. For retail organizations in this reality, the key question is physical presence; the need for it and how to make it possible and what is the right level of physical versus online presence. We will look at this very interesting topic some time soon.
We can clearly see that most retail organizations with physical presence want to transform themselves into an Omni-channel retailer; this is not going to be possible with just a great front end, there is a need to clean up the back end and build a robust enterprise technology landscape in order to provide customers a seamless experience across the physical and digital channels. For a large organization, this could easily be a 3-5 year road map, with intense effort in project management and change management and the need to redefine processes and ways of working.
It is by no means easy but if organizations need to make the transition to Omni-channel, and meet the changing needs of their consumer base, there is no better time than now to start the journey.
Leave a Reply