Investing to Meet Rising Challenges
The rate of technological advancement in retail continues to increase exponentially. In order to keep pace, savvy retailers are doubling down on IT spend to ensure their tech stacks are on par with, or ideally exceed, the competition.
Sixty-two percent of retailers report that IT spending will increase this year, with an impressive 19% claiming the increase will clock in with double-digit growth. Thirty-four percent report modest, yet noteworthy, increases of less than 5% annually.
Where is that increase in IT budget headed? It is being allocated to address foundational obstacles: aging legacy systems (43%), application integration (34%), and store bandwidth and infrastructure issues (32%), as well as to tackle ongoing data security concerns (30%) and the volatile labor market (28%).
Top 10 Technology-Driven Strategies For the Next
18 Months
Network and IT Security
Unified Commerce
Mobile Commerce
Advanced Analytic Tools
Digital Transformation
Personalized Marketing
Mobile Enterprise
Pricing Optimization
Advanced Payment Capabilities
Cloud Services/Infrastructure
42%
36%
36%
34%
30%
30%
30%
26%
26%
25%
State of the Store
The store remains the epicenter of the retail experience. But that experience is rapidly changing. It is becoming more digitally-powered, data-driven, and customer focused, facilitating a tech reboot designed to attract and retain fickle shoppers.
Savvy retailers are always updating and enhancing the store environment and continue to do so at an accelerated pace as digital competition for shoppers’ hearts, minds and wallets intensifies. But when it comes to which solutions and experiences to implement in their stores, retailers are increasingly relying on analytics-fueled insight to make their decisions.
In fact, when asked which in-store technologies they are currently upgrading, three of the top four answers were analytic solutions: real-time store monitoring (25%), shopper tracking (23%) and in-store video analytics (22%).
Within the next two years retailers are planning major foundational investments in their
POS including mobile (57%), peripherals (44%), software (43%) and terminals (42%). Interestingly, many of the next-gen POS enhancements that are monopolizing headlines — grab and go, cloud POS and self-checkout — are of little interest to survey respondents,
with more than half reporting no immediate plans to implement.
IT Budget Compared to Last Year
Increase By More Than 10%
Increase 5%-9.9%
Increase .1%-4.9%
No change
Decrease .1%-4.9%
Decrease 5%-9.9%
Decrease by More Than 10%
19%
9%
34%
19%
13%
4%
2%
A quick glance at the top technology-driven strategical imperatives over the next year and a half and it is clear that retailers are preparing to tackle these challenges head on. Network and IT security tops the list of tech-driven strategies, as retailers look to secure all payment, shopper and enterprise data flowing throughout their expanding digital networks. Just as interesting are those technologies that were left off of the top 10 strategies list. New tech like robots, drones and driverless vehicles (6%), computer vision (4%), and microservices/ container infrastructures (2%) have yet to rise to the level of strategic necessity.
Currently Involved in a Major Upgrade
Mobile Devices for Employees
Real-Time Store Monitoring
Shopper Tracking
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
Computer Vision
Up-to-Date Foundational Workforce Management Software
61%
60%
52%
50%
50%
Human Resources
and Benefits
Time and Attendance
Recruitment
and
Onboarding
Scheduling
Education
and Training
Started or Will Start a POS Upgrade in the Next 24 Months
Terminals
Peripherals
Software
Mobile
No Deployment Plans
Grab and Go
Cloud-Based POS
Self Checkout
Point of Sale
Putting Data to Work
In addition to pricing optimization, retailers have another vital pricing technology on their immediate roadmaps that allows them to put vital insights into action. Around one in five (21%) retailers have up-to-date pricing management and execution software in place; 31% are actively working on an upgrade, and an additional 21% are planning to do so in the next 12 months.
25%
25%
23%
21%
21%
17%
In-Store Pickup/Return of Web Goods
Digital Devices (Signage, Kiosks, Smart Mirrors, etc.)
Location-Based Sensing for Marketing/Communication
23%
21%
19%
As retailers increasingly depend on real-time data insights to inform their strategic decision making and investment plans, there is one piece of technology that they can be certain needs to be upgraded — the POS. The point of sale is the heart of the retail enterprise, and as such, it is constantly being upgraded and enhanced to ensure payment collection is reliable, seamless and secure.
Item-Level RFID
Digital Devices (Signage, Kiosks, Magic Mirrors, Etc.)
Electronic Shelf Labels
In-Store Video Analytics
In-Store Pickup/Return of Web Goods
Shopper Tracking Capability
In-Store Shipping
Location-Based Sensing for Marketing/Communication
Mobile Devices for Associates/Manager
WiFi for Customers
Clienteling/Guided Selling
Real-Time Store Monitoring/KPIs
Computer Vision
13%
19%
4%
22%
19%
23%
12%
8%
25%
15%
18%
25%
13%
Started But
Not Finished Major Upgrade
13%
11%
4%
8%
17%
23%
27%
11%
28%
38%
6%
19%
2%
Up-to-Date
Technology in Place
8%
15%
15%
8%
17%
11%
10%
17%
21%
13%
12%
21%
9%
Will Start Upgrade Within 12 Months
8%
21%
15%
16%
13%
19%
8%
19%
6%
6%
14%
10%
23%
Will Start Upgrade Within 12-24 Months
58%
34%
62%
47%
33%
25%
43%
45%
21%
28%
51%
25%
53%
No Plans
Real-Time Store Monitoring
Mobile Devices for Employees
Full In-Store Technology Data Set
42%
44%
43%
57%
66%
58%
52%
Other key areas of current supply chain investment include drop-shipment management (20%), distributed order management (17%) and transportation management (17%).
More Than Half of Retailers Have Started or Are Planning a Key Analytic Upgrade
Customer Behavioral Segmentation
Frequent Shopper or Loyalty Tracking
Pricing Intelligence & Optimization
Markdowns
Inventory Optimization
In-Store Shopper Tracking
Campaign Analysis and Forecasting
Prescriptive/Predictive Capabilities
•
•
•
•
•
•
•
•
20%
17%
Started Upgrade
Drop-Ship Management
Distributed Order Management
17%
14%
13%
8%
Real-Time Inventory Visibility
Returns Management
Will Upgrade in 12 Months
Will Upgrade in 24 Months
RFID
Drop-Ship Management
Supply Chain Investments
VIEW Full Data Set
Merchandise Financial Planning
Core Enterprise Resource Planning (ERP)
Merchandise Assortment Planning
Category Management
Replenishment
Allocation
Price Management/Execution
Macro Space Planning
Micro Space Planning
Item Master Data Management
Campaign SKU/Product Management
Trade Promotion Management
Product Lifecycle Management
New Product or Private Label Development
12%
20%
27%
25%
29%
19%
31%
10%
10%
23%
21%
15%
13%
23%
Started But Not Finished Major Upgrade
17%
16%
10%
8%
10%
12%
21%
20%
17%
15%
15%
12%
8%
12%
Will Start Upgrade Within 12 Months
10%
12%
12%
10%
6%
8%
6%
12%
12%
12%
10%
6%
12%
2%
Will Start Upgrade Within 12-24 Months
23%
29%
25%
27%
23%
31%
21%
31%
44%
27%
23%
44%
31%
29%
No Plans
Up-to-Date
Technology in Place
38%
24%
27%
31%
33%
31%
21%
27%
17%
23%
31%
23%
37%
35%
Merchandise Management Full Data Set
ANALYTICS
VIEW Full Data Set
MERCHANDISE
MANAGEMENT
VIEW Full Data Set
IN-STORE
TECHNOLOGY
Half of retailers plan to invest in item master data management software in the next two years.
Have Up to Date
Tech in Place
Have Begun
a Major Upgrade
Will Upgrade
Within 12 Months
21%
31%
21%
Pricing Management & Execution
of retailers report they have up-to-date artificial intelligence software in place
9%
Just
Big data insights are the fuel that powers the modern retail engine, and retailers are investing heavily in their analytic capabilities to ensure their future is operating at maximum horsepower.
More than half of retailers are either currently deploying new analytics solutions or will be in the next two years. Of greatest importance now and in the future are inventory optimization (64%), multi-channel loyalty tracking (62%) and price optimization (60%).
While feature-rich pricing software ensures retailers can compete with the pricing leaders and simultaneously keep their margins healthy, supply chain analytic engines keep product flowing throughout the enterprise at breakneck speeds. As shoppers increasingly turn to online shopping for both convenience and assortment breadth, retailers must supercharge their supply chains with analytic firepower to ensure product is where it needs to be, when it needs to be there.
The supply chain can simply not run without high powered analytics, which are embedded in every application from sourcing to in-store fulfillment and everything in between. Currently, retailers’ supply chain technology is pretty well established, with nearly 30% reporting up-to-date technology in every supply chain module examined for this report. RFID is the exception, but even in that still re-emerging tech, 30% are either upgrading or plan to upgrade in the next two years.
Expanding
Digital Capabilities
The respondents to this year’s survey are certainly some of the most digitally savvy in the retail industry. They report that 23% of their current sales comes from digital channels, which is significantly more than the 10%-15% industry average.
With such a deep commitment to digital, the investment plans of this group provide a glimpse into where the smart money is headed and where retailers looking to compete in these vital areas need to invest.
Currently, retailers are well equipped to handle the digital experience basics, reporting up-to-date marketing/messaging capabilities (46%), customer reviews/ratings tech (40%) and product recommendations (37%). In addition, 34% report that the foundation of the entire digital experience, the e-commerce platform, is up-to-date, and another 29% are currently upgrading.
When it comes to digital enhancements retailers are extremely bullish on personalization. The technology is the single greatest investment point on the digital front over the next year, by a wide margin, with 23% planning a major deployment. The commitment to personalized interaction with consumers allows retailers to communicate effectively with them and provide meaningful offers and promotions tailored to their particular interests and needs.
When the investment timeline is stretched to two years we see 13% of retailers plan to upgrade their dynamic pricing and product/catalog management capabilities, demonstrating a commitment to not only pricing their product appropriately, but providing customers with vital product information. In addition, the e-commerce platform upgrade cycle will start to heat up, with 11% planning to upgrade.
Mutli-Channel Customer Behavioral Segmentation
Multi-Channel Frequent Shopper or Loyalty Tracking
Market Basket Analysis
Pricing Intelligence
Price Optimization
Markdown Optimization
Inventory Optimization
Space Optimization
In-Store Shopper Tracking Analytics
Campaign Analysis and Forecasting
Artificial Intelligence
Prescriptive/Predictive Analytics
Location Analytics
37%
32%
24%
21%
23%
15%
36%
17%
21%
26%
15%
28%
15%
Started But Not Finished Major Upgrade
10%
19%
16%
23%
17%
19%
15%
19%
11%
15%
13%
11%
13%
Will Start Upgrade Within 12 Months
4%
11%
6%
8%
21%
23%
13%
13%
21%
11%
17%
13%
21%
Will Start Upgrade Within 12-24 Months
25%
15%
24%
36%
25%
28%
21%
38%
34%
26%
45%
38%
36%
No Plans
Up-to-Date
Technology in Place
25%
23%
31%
13%
15%
15%
15%
13%
13%
21%
9%
9%
15%
Full Analytics Data Set
Top Obstacles for the Next 3 Years
34%
32%
30%
28%
Application Integration
Store
Bandwidth and Infrastructure
Customer
Data Security
Employment
Engagement
and Wages
Retiring
Legacy
Systems
43%
Retailers Currently Upgrading Their Digital Firepower
E-Commerce Platform
E-Mail, Mobile, Text Messaging
Distributed Content Management
Product Recommendations
Product Management
28%
28%
25%
21%
20%
Where Is the Smart Money Going In the Next Two Years?
31%
26%
25%
23%
23%
CRM/
Personalization
Product
Management
Dynamic
Pricing
Customer Reviews/
Ratings
Community
23%
Sales
From Digital Channels
Who Took the Survey?
More than half of study respondents (54%) work for retailers that have revenue greater than $500 million. Of these, 43% have revenue in excess of $1 billion. Responses by large scale retailers are considered the cream of the crop in retail technology research since they are valued as industry pacesetters.
In addition to focusing on the industry’s biggest chains, the Retail Technology Study collects data from retail's most powerful executives, with 40% of respondents coming from the c-suite. No field-level or store-level respondents were included.
Key Findings and Recommendations
1.
2.
3.
Continue to invest heavily in your tech stack — your competition is. Sixty-two percent of retailers report that IT spending will increase this year.
Retailers still struggle with foundational-level technology obstacles and expect to do so for the foreseeable future. They named retiring legacy systems (43%), application integration (34%), and store bandwidth and infrastructure (32%) as major challenges over the next three years.
While the shocking headlines may have dissipated, data breaches continue to plague retailers. Network and IT security (42%) tops the list this year for key tech-driven strategies over the next 18 months, up from last year when just 25% named it a top priority.
4.
5.
6.
The store is becoming an analytics battleground. Savvy retailers are looking to win the insights arms race with upgrades to real-time store monitoring (25%), shopper tracking (23%) and in-store video analytics (22%) already underway.
Personalization is the single greatest investment point on the digital front over the next year, by a wide margin, with 23% planning a major deployment. Personalized interaction with shoppers allows retailers to communicate meaningful offers and promotions tailored to their particular interests and needs.
More than half of retailers are either deploying new analytics solutions or will be in the next two years. Of greatest importance now and in the future are inventory optimization (64%), multi-channel loyalty tracking (62%) and price optimization (60%).
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PRESENTED BY
2020 RETAIL TECHNOLOGY STUDY SPONSORS
enVista is a leading retail software solutions and consulting services firm enabling enterprise commerceTM for the world’s leading retail brands. enVista uniquely delivers both physical and digital commerce solutions, from order capture through fulfillment to end consumer. Our agile, Unified Commerce Platform enables us to rapidly unify commerce and significantly improve profitability and the customer experience.
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DemandTec by Acoustic is committed to taking AI pricing to new heights, addressing retail pricing challenges today and into the future with relentless focus and ongoing investment. For over 20 years, DemandTec has enabled retailers to deliver optimal pricing to expand margins and increase sales, while protecting price image, driving customer loyalty, and growing market share.
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Revolutionizing business through data science and analytics, Alteryx empowers everyone in an organization to experience the thrill of getting to the answer faster. The modern, end-to-end Alteryx analytics platform enables analysts and data scientists alike to discover, share and prep data, perform analysis – statistical, predictive, prescriptive and spatial – and deploy and manage analytic models. Thousands of people in enterprises all over the world rely on Alteryx daily to deliver game-changing results.
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Panasonic delivers purpose-built mobile technology solutions designed to keep workers more connected and efficient. Engineered to stand up to challenging retail environments, Panasonic TOUGHBOOK devices are part of an ecosystem of hardware, services and software designed to help workers go anywhere and achieve anything. To learn more, visit toughbook.com.
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Toshiba Global Commerce Solutions is a global market share leader in retail store technology and retail’s first choice for integrated in-store solutions. Together with a global team of dedicated business partners, we achieve brilliant commerce by advancing the future of retail with innovative commerce solutions that enhance customer engagement, transform the in-store experience, and accelerate digital transformation.
VIEW Full Data Set
DIGITAL
E-Commerce Platform
Remarketing
CRM/Personalization
Product Recommendations
Customer Reviews/Ratings
Community
Dynamic Pricing
E-Mail, Mobile, Text Marketing/Messaging
Product/Catalog Management
Distributed Content Management/Repository
Chatbots
28%
15%
15%
21%
17%
11%
15%
28%
21%
25%
11%
Started But Not Finished Major Upgrade
8%
9%
23%
17%
11%
13%
12%
11%
13%
11%
6%
Will Start Upgrade Within 12 Months
11%
9%
8%
4%
11%
9%
13%
2%
13%
9%
11%
Will Start Upgrade Within 12-24 Months
19%
42%
31%
21%
21%
30%
40%
13%
21%
30%
51%
No Plans
Up-to-Date
Technology in Place
34%
25%
23%
37%
40%
36%
19%
45%
32%
25%
21%
Full Digital Data Set
17%
15%
Top Job Titles
Director (Non-IT)
Director of IT
C-Level (Non-IT)
CMO/VP Marketing
CIO/CTO
15%
13%
12%
42%
28%
15%
8%
Retail Segment
Food/Drug/Convenience
Apparel & Accessories
Specialty
13%
30%
11%
21%
25%
Annual Revenue
> $5 Billion
$1 Billion to $5 Billion
$100 Million to $500 Million
< $100 Million
8%
30%
48%
9%
6%
Increased 5%-9.9%
Increased .1%-4.9%
No Change
Decreased
Revenue Change Over the Past 12 Months
Dept.
Store
$500 Million to $1 Billion
Increased
More than 10%
Retiring Legacy Systems
Application Integration
Store Bandwidth and Infrastructure
Customer Data Security
Employment Engagement and Wages
43%
34%
32%
The store remains the epicenter of the retail experience. But that experience is rapidly changing. It is becoming more digitally-powered, data-driven, and customer focused, facilitating a tech reboot designed to attract and retain fickle shoppers.
Savvy retailers are always updating and enhancing the store environment and continue to do so at an accelerated pace as digital competition for shoppers’ hearts, minds and wallets intensifies. But when it comes to which solutions and experiences to implement in their stores, retailers are increasingly relying on analytics-fueled insight to make their decisions.
In fact, when asked which in-store technologies they are currently upgrading, three of the top four answers were analytic solutions: real-time store monitoring (25%), shopper tracking (23%) and in-store video analytics (22%).
As retailers increasingly depend on real-time data insights to inform their strategic decision making and investment plans, there is one piece of technology that they can be certain needs to be upgraded — the POS. The point of sale is the heart of the retail enterprise, and as such, it is constantly being upgraded and enhanced to ensure payment collection is reliable, seamless and secure.
Within the next two years retailers are planning major foundational investments in their POS including mobile (57%), peripherals (44%), software (43%) and terminals (42%). Interestingly, many of the next-gen POS enhancements that are monopolizing headlines — grab and go, cloud POS and self-checkout — are of little interest to survey respondents, with more than half reporting no immediate plans to implement.
Infor is a global leader in business cloud software specialized by industry. With over 68,000 customers worldwide, Infor is transforming the way businesses operate through best-in-class technology, expertise, and customer-centricity. To learn more,
please visit www.infor.com.
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