Retail experts share their advice on the most significant trends facing retail IT VARs in 2014.
Due to the size and technological needs of retailers, this market stands as one of the most lucrative, exciting, and also frustrating verticals for those solutions providers working in this space. With so much happening driving innovation, opportunities abound.
“The shift to omni-channel commerce is one of the most important trends in 2014,” says David Gosman, CEO of pcAmerica. “Consumers are rapidly shifting in their shopping habits, with an increasing number of product purchases being either initiated or outright purchased online. Omni-channel commerce includes the ability to shop online, on mobile devices, in-store, and even through third parties. VARs are in a great place to advise on the shift to omni-channel commerce and provide the technology solutions enabling retailers to get there.”
Adnon Dow, vice president, Global Mobility Solutions for SYNNEX Corporation, agrees. “With more than $42.8 billion sold over the Internet this past holiday season, there’s no more sitting behind the counter in retail,” he says. “In order to fight the shift from bricks to clicks, stores need to be armed with the latest handheld devices so they can approach each customer and make sure they buy in-store.”
Of course, you can’t talk about retail without talking about payments and payment security. “With the recent large retailer security breaches in the news, the spotlight has once again focused on card-holder information security,” says Chester Ritchie, SVP, head of strategy for WorldPay. “These events, along with the upcoming industry liability shifts, easily justify the replacement cost of current credit card hardware and solutions with EMV-certified solutions.”
“Loyalty is also a real opportunity area for many retailers, especially as new integrated and digital offerings enter the marketplace,” says Henry Helgeson, CEO of Merchant Warehouse. “While so many business owners focus the majority of their efforts and corresponding investments on customer acquisition, recognizing and rewarding existing customers is actually a much more economical strategy.”
Additionally, there’s a trend in leveraging IP video cameras in retail settings. However, the use case isn’t simply to capture incidents of loss. “Video content analytics are becoming more mainstream, and retailers are now planning and budgeting for those resources,” explains Jackie Andersen, retail business development manager for Axis Communications. “Analytics give retailers the ability to get valuable data, such as conversion rates, and identifying heavily trafficked areas for optimal merchandising and staffing.”
Act On Retail Market Indicators
It’s not simply that these opportunities exist. They’re quite attainable. “The growth rate for IT spend in retail has been roughly 3 percent and is expected to double between 2014 and 2016,” says Dow. “Although these aren’t high percentages compared to some verticals, it’s important to consider how huge the retail industry is — these percentages will make a big impact.”
Terry Cruikshank, senior marketing manager, industry marketing for OKI Data Americas, says that, according to a recent study, 75 percent of retailers are planning to open new stores, and 60 percent are planning to increase IT headcount and increase their IT spending by 5 percent in 2014. These are all indicators of a healthy market.
So, all signs point to easy pickings for retail IT VARs, right? Not so fast. First, those VARs need to avoid making some common mistakes and be open to change.
“Some VARs make the mistake of ‘staying the course’ and not experimenting and learning every day — and those VARs will face challenges,” says Gosman. “The ones that are innovating and learning every day are in a better position to succeed.”
“Instead of keeping their head down to carry out day-today tasks, VARs need to broaden their focus and embrace the verticalwide solution and services-led revolution,” Dow adds. “While getting the immediate cash from selling products is great, solutions provide recurring revenue that will continue to build. Patience and adaptation are critical for successful selling in retail.”
Terry Zeigler, president/CEO of Datacap Systems, also believes in the power of recurring revenue. “Solutions providers that sell a system for a lump sum and dismiss the opportunity to generate recurring revenue via SaaS programs and on-going support/maintenance contracts are doing themselves a remarkable disservice,” he says. “ISVs and VARs should be cooperatively engaged in protected recurring revenue programs that serve to extend the life of the account, leading to more income for all parties.”
Helgeson cautions VARs about future-proofing the solutions they sell today. “VARs and ISVs need to be conscious of how easy or tough it is to upgrade the systems that they’re selling today and be cognizant of future cross-sell and upsell opportunities within their own merchant base, particularly opportunities that can drive recurring revenues.”
Regardless of your situation, Will Atkinson, president of CAP Software, does a great job of summing up the retail landscape. “There is so much hype and misinformation about the new breeds of solutions and so many different ways to pay for them, that a reseller can provide a truly valuable service in helping retailers find the right solution for their needs, rather than the trendiest thing or the cheapest,” he says. “The spotlight is shining on this space like never before, leading to many new players with many different agendas, and not all of them are good for retailers.”