Over the past year Oracle and SAP have made moves to provide users in retail with a portfolio of enterprise software by acquiring companies to bolster their retail platforms.
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Users have benefited as a result, as their IT systems expand to incorporate customer relationship management and analytics, better database support and greater integration with the rest of the enterprise through service oriented architectures (SOAs). There has also been a trend towards building more sophistication into electronic point of sale terminals.
A Forrester Research report published earlier this month identified two emerging trends in retail applications that will continue through 2006.
It said platforms would increasingly use software to help retailers collect and mine more granular customer data on all aspects of their shopping. Forrester expects these platforms to use SOAs to link into enterprise applications which, it said, would break down application boundaries, eventually allowing retailers to use less software.
The second trend was large platform suppliers offering themselves as a one-stop-shop for retail, as both Oracle and SAP digest their recent retail IT acquisitions.
"With Oracle's acquisition of Retek and ProfitLogic, and SAP's acquisition of Khimetrics and Triversity, we will be watching their roadmaps closely for signs of a fuller integration of optimisation into core merchandising, as well as roadmaps that start to add consumer data to product and price data, said Nikki Baird, senior analyst at Forrester Research.
"No supplier will have this more holistic capability in 2006, but retailers can get ahead of the game by re-evaluating their merchandising and marketing processes in light of the powerful combination of product and consumer insights."
Oracle aims to offer a full set of retail software applications - a similar strategy to IBM and SAP. "Before Oracle Retail was created, each individual company [PeopleSoft, Retek, ProfitLogic, and 360Commerce] offered a compelling set of applications and technology for the industry. Now, retailers can team with Oracle Retail to address one particular business need or all of their needs with a common view of customers, demand, and inventory across the entire enterprise," said Duncan Angove, Oracle Retail general manager.
However, Oracle's longer-term strategy is to combine all its products into one modular Java-based framework, based on an SOA.
The company said the integration of Oracle and Retek products would occur in phases, starting with integration between Oracle E-Business Suite Financials and the Retek Xi application suite.
The plan is to continue by integrating Retek Xi with PeopleSoft Enterprise Financials, and eventually with select incremental Oracle E-Business Suite modules.
"We will, however, maintain standalone integration points so that customers continue to have the option of implementing point solutions or an enterprise system," the company said.
Retail software providers' focus on integration ties in with users' desire for more relevant business data.
As firms use scanners, in-store kiosks and more sophisticated CRM to capture data, Forrester Research predicts that software platform providers will offer retailers new master data management and datawarehousing tools to deal with it.
"The aim is to get integrated multi-channel views of consumers", said Baird. Better business intelligence will also be a requirement.
According to Forrester Research, the crux of the problem is turning data into insights. It expects users in retail to focus on marketing automation during 2006 as they look to build up their customer analytics capabilities. "Insights will need to be tested, leading to closer ties between online and stores," said Baird.
As database and middleware software platform suppliers add more features to their retail products, Epos suppliers are also developing their software.
Baird said Epos systems are becoming increasingly sophisticated and look more like mini- enterprise resource planning applications.
She said Epos terminals are being designed to holistically manage store operations, including fraud audit, inventory and order management, returns, labour management, CRM and loyalty, and back-office accounting.
"Epos replacements and upgrades in the first half of this decade have put a lot of these extended capabilities in stores, making Epos more of a store platform than merely a cash register application," said Baird.
IBM in particular has a huge range of retail products to sell alongside its Open Pos products. These include Business Intelligence for retail (a datawarehouse system for retailers), Customer Interaction and Channel Integration (which can pool data from Epos systems, store kiosks, websites, wireless devices and call centres), and IBM's own ERP system - ERP for Retail.
So, what does the future look like for retail software?
"Self-service, including self-checkout and kiosks, will see more experimentation and a few hardy retailers taking on roll-outs," said Baird. "But there is also potential to use more immature technologies like Bluetooth and SMS for engaging consumers in stores.
"More innovative retailers will explore what it takes to mesh all these interactions together with non-store channels to see if CRM, commerce platforms and content management can deliver consistently across all consumer touch-points.
"On the operations side, investment in workforce management will continue to be strong. In-store inventory management and tools to monitor store performance will grow in importance as stores feel the pressure from multi-channel fulfilment and granular assortment management."
SAP develops business process platform for retailers
As a result of SAP developing its business process platform for retail and bringing Triversity into the fold, retailers may be encouraged to use SAP's Netweaver platform as an alternative to IBM's competing Store Integration Framework.
Like Oracle, SAP is aiming to create a modular service oriented architecture-based framework using Netweaver as the application server platform, Forrester Research said.
One high-profile implementation of SAP Triversity is at Virgin Entertainment Group. In January, the firm chose an SAP Triversity point of sale system to automate and integrate its Virgin Megastores in the US.
Virgin said it expected the system to enable staff to efficiently manage inventory and pricing rules, apply discounts, add promotions and adapt to sales tax changes without the use of custom programming.
Another SAP user is clothing and accessories designer Kenneth Cole Productions, which is implementing SAP for Retail, SAP Apparel and Footwear and SAP Triversity to gain an integrated, end-to-end view of its businesses.
Kenneth Cole said the software would help it increase sales, streamline and optimise operations and improve customer service.
The products are designed to co-ordinate across all aspects of the business, including product development, merchandising, customer relationship management, supply chain and inventory management, store operations and labour optimisation, as well as financial reporting.