IT departments feel the pressure as last-minute shoppers begin the countdown to Christmas

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IT departments feel the pressure as last-minute shoppers begin the countdown to Christmas

Christmas is the most important trading period of the year for retailers, with many firms achieving between 40% and 60% of their annual turnover between November and January.

This makes the festive season a tense time for retail IT departments, according to Richard Hull, consultant at consulting group Cap Gemini Ernst & Young. "When everything is going well, there is a lot of waiting - an air of expectation," he said.

"But if a system goes down, the IT department is virtually at the centre of a public inquiry. Diplomacy is one of the key skills required by a CIO."

The fact that the retail industry is customer-led means the pressure on IT departments at Christmas is huge, said David Southwell, head of media at the British Retail Consortium.

"Retail is a hugely pressurised environment because, as it is a consumer-led industry, feedback is immediate and that pressure is magnified at Christmas," he said. "Any IT problem that influences the consumer will affect sales and reputation."

According to Southwell, the main IT tasks in preparation for Christmas, such as bolstering the supply chain and adding flexibility to payroll systems, would have been accomplished in late summer. "December is about maintaining systems and making adjustments as you go," he added.

The IT department's preparation for Christmas is wide ranging, said Nigel Montgomery, director of European research at analyst firm AMR Research. Many retailers have invested heavily, for example, in online sales systems, but they are also rolling out back-up systems in case of failure, Montgomery said.

"Retailers have invested in automated systems, but they are also looking at systems for back-up because they are not convinced the automated systems will scale. The back-up systems are often 'quick and dirty' solutions such as event-management applications."

They also focus on systems that will allow them to be flexible with both store layout and the price of goods, Montgomery said. "They are looking at merchandising systems because they have to keep a close eye on store layout and be flexible. Advertising, marketing and promotion systems are an area that is getting enormous attention, as well as price-optimisation software."

Many retailers have changed their reporting cycles to ensure stock levels are maintained accurately. "To improve visibility, many are moving to short-cycle reporting - every hour rather than at the end of every day," he added.

High street retailer Marks & Spencer places considerable emphasis on Christmas, with numerous special gift selections and other offers rolled out in store in the run up to the festive period.

Stuart Senior, IT director at M&S, said the retailer's IT department is focusing its attention in three main areas during December, as part of its company-wide initiative called Cracking Christmas.

"Our in-store ordering for Christmas goodies sees a tremendous peak, so we have IT people in the stores helping to take orders," he said.

"We are driving a series of management information initiatives so that departments can track the things they need to. We are also getting out there and putting in additional tills [based on Fujitsu Global Store software] in."

IT staff carry out more than just technical duties when trading is at its peak, Senior said. "In the last few days [before Christmas], those not directly involved in keeping systems going will be out in the stores lending a hand."

Tesco, the UK's largest retailer, has boosted its point-of-sale capability ahead of the festive season by buying 125 mobile checkouts from supplier Cashbases. The tills, designed speci-fically for Tesco, should help to reduce queuing time. They incorporate wireless data links and carry their own power supply.

As well as bolstering supply chain systems and adding extra point-of-sale terminals, retailers are looking to IT to help to cut internal fraud-related losses over Christmas. UK retailers can see their stock shrinkage more than double in the six weeks before Christmas as they take on extra temporary staff, according to the Centre for Retail Research.

To reduce this risk, fashion retailer USC has upgraded its loss-prevention software system supplied by Intelliq. The company, which has 40 stores across the UK, has rolled out the latest version of the application, Profit Protection Solution, to improve its fraud investigations, said Mark Bastable, general manager at the retailer.

USC has identified a number of benefits since it started using a version of the Intelliq system, which analyses data from its Anker point-of-sale systems.

"The system helps us to determine the extent of internal fraud, looking at issues such as discount abuse and overriding. It also gives us an audit trail, with full visibility of till operations, and lowers investigation times," Bastable said.

The latest version will allow USC to export data straight to Microsoft Excel applications and will cut the length of time needed to add the system to a new store, he said.

"It can also be used as a business intelligence tool, allowing us to analyse average basket spend and the average spend per store per month," he added. "We can then feed this into our marketing information."

Christmas is one of the most challenging times of the year for retailers' IT departments, but the increase in demand can also prove the value of systems, Southwell said.

"The groundwork that has been put in, in terms of systems, will stand retailers in good stead. They can see the pay-off on systems such as intelligent stock-ordering applications that, at other times of the year, they may have questioned the value of."

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This was first published in December 2003

 

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