News Feature | November 23, 2015

Tech Investments And Challenges For Your Retail IT Clients, By Tier, In 2016

Christine Kern

By Christine Kern, contributing writer

Tech Investments And Challenges For Your Retail IT Clients, By Tier, In 2016

A Retail Solutions Providers Association (RSPA) webinar examined IT trends and plans among retail tiers, presented by Greg Buzek, founder and CEO of IHL Group.

Buzek said key retail technology trends are:

  • EMV. With most retailers not prepared for the transition, Buzek asserts that it is really a tax on all retailers that only benefits a select few. He added that EMV is also having a significant impact on communications technology, which must be addressed.
  • Unified Commerce Is Driving System Purchases. Buzek explained, “Retail systems need to work in harmony, but retailers have set up disparate IT silos for each channel.” This inhibits proper communication.
  • Consumer Demand. 87 percent of consumers believe that retailers need to create seamless customer experience.
  • Wallet Share Increases With More Channels. Buzek pointed out that a two-channel customer spends four times and a three-channel customer spends eight times the dollars in a lifetime.

IHL research has found top store priorities are advanced CRM/loyalty (This ranked first for tier-one retailers); unified commerce (first for tier-two); and mobile for store associates (first for tier-three).

Core areas of investment for retailers are centralized order management solutions and EMV technology. Tier-three retailers are moving to cloud-based solutions. Buzek commented that digital signage is also seeing resurgence, although the ecosystem is missing to support its widespread adoption.

The research also shows tier-two and tier-three retailers are replacing point of sale (POS) with iPads and tablets, marking a huge transition for these retailers. Mobility raises the issue of security as well — since surveillance cameras traditionally are trained on static POS stations and now must be able to track devices throughout the store.

IHL found that the traditional POS market has been extremely strong in recent years, with double-digit sales in 2015, trending higher than predicted.

And when it comes to emerging technologies, Buzek said predictive analytics and beacons are the big area of investment for tier-one. There is a delay in implementation of predictive analytics, however, due to a shortage of data base architects, and beacons also suffer from a general lack of understanding about their use and limitations, and there are privacy issues that must be addressed before they can be used effectively. Buzek commented, “Beacons show great opportunity, but also represent the great unknown for most retailers.”

IHL also reports, with regard to retail growth plans, there are increases in store counts and remodels, especially in tier-three stores, with IT hiring increases across all three tiers. With this escalated hiring, however, also comes fierce competition to hire appropriate technology talent. IT budgets are also increasing, with tier-three heavily investing in IT.