Consumers now make purchasing decisions differently than at any other point in the past, standing in stores while using smartphones to compare prices and read reviews, posting pictures of potential purchases on social media to get instant opinions of family and friends, and selecting among an ever-growing number of online retailers to deliver products to them. And while online retailing continues to grow, according to McKinsey & Co., brick and mortar stores aren’t going anywhere either, projecting they will still account for approximately 85% of all retail sales in 2025. Retailers continue to be put in a pressure cooker to differentiate themselves from competitors in this sales environment while making investments in IT solutions to keep pace with this rapidly advancing industry. There are a few potential “gotchas” retailers need to consider before implementing their next IT solution. Here are the top three:
- Omnichannel, omnichannel, omnichannel: Whether selecting a POS, CRM, or merchandising solution, or even an ecommerce platform, retailers need to make sure the solution providers are thinking omnichannel. For example, the CRM provider needs to be thinking that it will be interacting with an ecommerce platform, along with in-store interaction and maybe even call center interaction. In short, the solution must be thinking in an omnichannel fashion. Selecting a CRM solution that only considers store data is not a good choice. It needs to capture data from online, in store, mobile, and all other sales channels.
- Scalability or Flexibility: A lot of retailers select their solutions in a shortsighted way, without considering how the solutions they select today will work with the technology and situations of the future. When contemplating making a capital investment on new IT solutions, retailers must consider their companies’ three to five year plan, and select solutions that will accommodate future plans for growth. For example, an online retailer might only be selling through the Internet now, but in two years, the company may decide to experiment with pop up shops. If the POS solution the retailer selects today can’t handle processing sales in a pop up store two years from now, the solution isn’t scalable or flexible enough to meet the needs of the organization.
- Integration: Ease of integration is nearly everything. Solutions that have publicly accessible, open-ended integration are key for the modern retailer. The old custom integration days are over and are very costly. Today’s retailers should desire to have published APIs for their solutions. If this doesn’t exist, then retailers must find a solution provider that is willing to get to that point. With published APIs, there is no integration to pay for. That’s the biggest advantage. Should a business decide to change a solution in the future, the investment is minimal.
In addition to having a published API, solutions should also be designed from the ARTS model, or the Association for Retail Technology Standards. It’s one of the groups within the National Retail Federation that establishes the standards when developing a solution. If a provider creates solutions that are ARTS compliant, the integration of solutions going forward would be that much cleaner for the retailer. By being ARTS compliant, when a POS solution talks to a merchandising solution by a different provider, they will be speaking the same language.
A final element to consider is the possibility the developer of an IT solution might be acquired. The technology sector is all about mergers and acquisitions right now. When technology companies get acquired, it is not unusual for the acquired company’s solution to disappear from the marketplace. In recent years, at least four major POS players have gone the way of the dinosaurs because they were acquired. While it’s impossible to predict the future, due diligence around acquisitions and mergers is becoming more and more important when researching solutions.
Increasing sales and profits out of the current retail environment is becoming more challenging each year, as the retail landscape continues to grow more competitive and retail technology continues to evolve rapidly. However, the retailers who approach the current climate with a short-term strategy for driving sales as well as a long-term strategy for growing their businesses, keeping an eye fixed on omnichannel, selecting the right IT solutions for their businesses, and building customer relationships will come out ahead.
Contributed by Joe Dela Cruz