Retail CIOs indicate specialists are their changing IT priorities to compete more effectively
Retail CIOs indicate specialists are their changing IT priorities to compete more effectively
Midsized retailers are being affected much more than larger retailers by the economic downturn, according to the Aldata Solution 2011 global retail chief information officer (CIO) survey.
To combat this threat, the survey also found midsized retailers were reacting fast by investing more to get closer to their customers. Nearly a quarter were prioritising IT spend on store and enterprise resource planning (ERP) systems, as well as cloud computing, to address this challenge.
Economy keeps retailers awake at night
The research of more than 130 retail CIOs globally, conducted by retail research specialist Martec International, reveals that almost double the amount of midsized retailers (38%), consider the economy to be the biggest issue affecting their business, compared to only 22% of all retailers.
Allan Davies, executive vice president of market development at Aldata Solution, commented: “Being a midsized retailer has never been harder than it is today, but a key differentiator is the close relationship they can have with their customers by being more local and this is where the larger retailers are trying to play catch up. The old 80-20 rule is still valid and retailers able to pinpoint the 20% of customers generating 80% of their revenues will be able to serve better and make more money.”
Specialists embrace new technologies
As rising costs threaten specialist stores, it seems that they are turning to new systems to drive efficiencies, with almost double (20%) planning to invest in ERP and cloud computing (15%), compared to 11% and 5% of all retailers respectively, in a bid to improve store-based customer service and to reduce their existing IT costs.
Dilip Popat, Microsoft Business Solutions industry principal for retail and distribution, added: “Midsized retailers are looking at a new generation of connected IT solutions because their existing software is not giving them the visibility, integration, or ROI [return on investment] that they need to compete effectively in these tougher times.”
Proof is in the investment
One example of a midsized retailer serving and retaining its customers is exclusive Finnish retailer Veikon Kone. The 20-strong electronics chain recently implemented Aldata’s new digital loyalty systems, which enabled it to focus tailored offers to specific customer groups via their preferred communications channels (email, SMS, direct mail and phone). IT saw a major upswing in sales from both existing and new customer introductions.
Davies concluded: “The survey clearly shows that specialist retailers are prepared to take on the ‘major players’ in the fight for customers and while they are being hit hard by the economy they are finding new and different ways to retain and win new customers. The next phase of retail IT innovation is being driven by necessity and mid-size retailers are leading the way.”
The 2011 Global Retail CIO Survey incorporated the views of 136 CIOs and IT directors in category-management-style retailers from 26 countries generating from $50 million (£31m) in annual revenue, whose combined sales represent $555 billion (£345bn) from more than 117,000 stores. This equates to 8% of the total retail market in the Americas and Europe by sales.
