UK retail IT spending is stagnating at 1.3% of annual sales,
remaining at the same level as
last year, according to the latest figures complied by
Martec
International.
However, the industry is still willing to invest if it can
deliver in two key areas: operational efficiencies and getting more
of the right product, to the right customer, at the right time.
The Martec report questioned the top 100 UK retailers, and found
that store operations remained their top priority for IT
investment, cited by 24%. Merchandising systems in creased to 12%
from 7% last year. And website or e-commerce operations came in at
9%.
The report said: "For most retailers the investment in store
systems is due to an electronic point of sale (EPOS) replacement
project, but others are adding mobile technology in-store or
systems to better improve the customer experience with mobile tills
and enhanced functionality."
High Street shops are looking for ways to maximise their
investment. The Co-op is
collecting customer feedback through chip and PIN terminals. When
paying for goods by credit or debit cards, a sample of
The Co-operative Group's customers are now presented with a
multiple-choice question on the PIN pad asking for their views
on the store, the retail experience or aspects of their
lifestyles.
The Co-op has surveyed up to 300,000 customers across the
country. Responses are returned to the group's data centre within
24 hours, where previously, the retailer would pay up to £100,000
for customers to be surveyed at 24 stores with responses received
six weeks later. Lawrence Freeman, Co-operative Group development
manager said: "Extending the functionality on our point of sale
(POS) payment terminals to gather customer feedback has been an
extremely successful and satisfying project. Low cost and high
impact, we can reach more customers more quickly and remain in tune
with their feelings."
Since July, British Red Cross
has been updating its EPOS estate across 330 stores by taking on
hosted, software-as-a-service (SaaS) retail management till systems
from specialist provider, Cybertill. Paul Thompson, British Red
Cross retail general manager said: "It is time to move to a system
that will provide the accurate and in-depth information that will
enable British Red Cross to monitor and analyse its business more
thoroughly."
With system roll out expected to begin this autumn, the
Cybertill system will become the core system of each shop, and will
link to British Red Cross' finance system via a broadband
connection to the provider Glasgow data centre.
Mark Croxton, director of
retail systems provider
Aldata, says that "pressure on the economy is actually good for
end-to-end vendors like us. We've seen retailers wanting to run an
awful lot of promotions recently, but the issue is how they manage
the long tail of promotions." These requirements are also shaping
the trend towards deploying merchandising and inventory management
software, as well as an increasing number of mobile store
systems.
"They're not only looking at mobile computing for stock and
inventory management, product enquiries and item look-ups" Croxton
said. "When it comes to things like customer ordering, they are
looking to link up their web stores and shops to pool stock and
offer more joined-up customer service across channels."
His comments have been endorsed by a recent slew of mobile store
technology deals. FCUK has been rolling mobile handhelds out for
stocktaking, Woolworths and Apple for queue-busting and even
wireless broadband routers as network back-ups, in the case of
homeware and furniture retailer, The Pier.
In support of store system projects, particularly those
featuring mobile technologies, converged networking investment has
continued to be a feature of those retailers updating core
capabilities. But like
Tesco's £100-million deal with Cable & Wireless, managed
services are increasingly an option for the cost-conscious
retailer.
When the deal was signed at the end of May, Nick Foulkes, Tesco
UK infrastructure and operations IT director said even a retailer
of its size couldn't match the capital investment in network
capacity of a service provider. He added that the five-year
contract would enable new in-store kiosks, 'telepresence'
video-conferencing and fixed-mobile convergence (FMC), cutting call
costs and allowing staff to keep in closer contact. "We couldn't
have hoped to do telepresence or set up staff with FMC handsets,
with all the different networks and tariffs we would have had to
handle, on our own," he said.
Retailers seem more willing in tougher times to look at
alternate IT delivery models to sweat their assets - whether it be
part of core transactional or supply chain operations. A key area
that links with integration and mobile trends in-store is
compliance, or the
Payment Card Industry Data Security Standard (PCI DSS).
The payment data standard has been in force for over two years
but a survey conducted in June found that 88% of UK businesses were
not compliant. Many retailers have followed the example set by
JD Sports earlier this year, when
it signed a wide-ranging managed service deal to support it on its
journey towards PCI DSS compliance.
The five-year, £2-million deal with
IT services provider, Pasporte
includes the migration of JD's back-office applications and data
into a hosted environment the implementation of a 24-hour disaster
recovery programme and a managed wide area network (WAN) between
the retailers' four warehouses and head office.
Harry Willoughby, JD Sports IT manager said: "With our PCI DSS
compliance programme underway, the opportunity to achieve a better
foundation for our IT systems and accelerate our governance
strategy made for a very compelling business case." And
increasingly more retailers are looking at the value of their
payment data and weighing it against the operational risk of
becoming the next
TK Maxx or
Cotton Traders customer credit card data breach headline.
Natasja Bolton, head of assurance services at
dns, a specialist information security
consultancy in the UK, says, "Almost every week a new story
breaks of data loss from one organisation or another." She said the
amount of data held by retailers makes them an especially high
risk. And, with the introduction of customer loyalty cards, credit
card details and other financial and personal data files, the
amount of valuable data they hold means customers are at the mercy
of the company's security policy.
"We are seeing an increase in the number of organisations
requesting security advice and policy implementation which is
encouraging," Bolton added. "Bringing in a consultancy of security
experts is often the most successful and cost effective route,
which not only secures the data, but ensures compliance with the
increasing amount of regulation. "
Specialist vendors, including
The Logic Group,
Quova,
CyberSource and
The 3rd Man, have all launched
managed or hosted fraud monitoring services to accompany those that
promise to outsource the entire transaction lifecycle and remove
the retailer from the compliance loop completely.
The launch in June of an online, social network driven bookstore
by Borders UK says it all in
terms of trends. Geoff O'Neil, Borders UK head of supply chain,
said: "We've managed to develop a fully transactional, functionally
rich e-commerce site for around £100,000 by outsourcing design,
hosting, fulfilment and the contact centre, but in such a way as
can scale because we've really no idea how big it might grow:
although I know it's often the case that the web outperforms even
the most successful retailer's flagship stores."
Even the
ever-growing presence of e-commerce is evidence that retailers
are embracing new technologies and delivery models to explore new
opportunities.