IT will play a key role in helping retailers cope with increasing economic pressure in 2010, say industry analysts.
UK retail sales are expected to grow by 1.1% this year, with non-food industries experiencing negative or zero growth until 2011, according to Verdict Research.
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In this difficult environment, retail CIOs are expected to use their IT budgets to reduce costs and build stronger relationships with their customers.
Retailers should prioritise spending on systems to improve store services, the efficiency of retail staff, and infrastructure to analyse customers' behaviour, whether they buy from a store or online, says the Ovum report, 2010 Trends to Watch: Retail Technology.
Retailers will be forced to cut staff as the recession continues. High levels of unemployment will hurt consumer confidence as well as customer service levels.
To counteract this, retailers must improve employees' product knowledge and workforce efficiency through the use of mobile handsets and automated management processes, says Ovum.
"Software which helps to manage the workforce and talent so that experienced, trained or knowledgeable members of staff are available when the customer needs assistance should be areas for technological investment," says the Ovum report.
Retailers are expected to invest in systems such as Torex Workforce, recently implemented by retailer Mills Group, to allow staff to interact more with customers.
"Retailers also see a reduction of store costs and thus deliver better customer service," says Torex chief marketing officer Doug Hargrove.
Mike Davies, retail vice-president at IT services supplier Wipro, says the recession has seen more retailers investing in business analytics systems to help cut costs. However, money is still tight and retailers are weighing the immediate returns on investment with long-term costs for every installation.
"Retailers are suffering because the general public is being more cautious with its money," says Davies. "Anything retailers can do to get closer to customers and influence their spending patterns and behaviours has to be beneficial."
Automated processes, such as Marks and Spencer's inventory planning system from Quantum Retail, give retailers a better understanding of customer trends on a store-by-store basis rather than by region.
Retailers should invest in customer relationship management (CRM) technology in 2010 to build stronger relationships with their customers, says Ovum.
Retailers that record customer information separately for each avenue -online, catalogue, or store - are at a disadvantage, it says.
The first step is to create different routes, such as web, catalouge, and in-store, for customers to buy products. The second step is to consolidate the data, as John Lewis has done, so that retailers can recognise a customer no matter what channel he or she buys from.
"The most progressive retailers, instead of treating catalogues, the internet, and shops as multiple channels, are focusing on the consumer," says Davies. "The customer is the most important asset. The retailer has to provide a good relationship and experience, whichever channel is used."
Doug Hargrove, chief marketing officer at retail IT specialist Torex, says, "Customers who shop online or in a bricks-and-mortar store should see the same products and the same pricing. The issue is now to harmonize e-commerce into mainstream business processes."
According to Hargrove, e-commerce lacks the efficiency in delivery and returns that would provide the same experience as an in-store visit. This, along with social networking and mobile phone purchases (m-commerce), are two large focuses for the future.
"Countries like Thailand are really embracing mobile shopping," says Hargrove. "Even in the UK, all the pieces of the jigsaw are there, so I wouldn't be surprised if mobile technology is adopted within the next 12 months."