CW500: Retailers jostling for position in world’s biggest shop window

Consumers are beginning their shopping journeys online and increasingly finishing them there too

Consumers are beginning their shopping journeys online and increasingly finishing them there too.

Not many industry sectors have avoided being shaken up by the web, but arguably the most shaken has been retail.

There is online-only retail, multi-channel and now omni-channel retail and you will struggle to find a high-street brand that is not increasing online sales by percentages not seen since the dawn of the first glass-fronted stores arrived.

This is both an opportunity and a threat. Today retailers must invest heavily in technology to ensure they can serve customers right through the buying journey. They must at least be as good as their competitors in a world where customer loyalty means less and less. If a retailer does not connect to a consumer on his or her buying journey it doesn’t have a chance of making a sale, even if it had the best product at the best price.

A recent CW500 Club event on Retail IT: The high street vs the internet and the lessons for other sectors, brought together three IT leaders from very different organisations to share their ideas and experiences within retail IT.

They agreed that a straightforward IT implementation will not sort out your online sales strategy. And it is not even your own salespeople that are influencing sales. It’s about having the best technology, user experience and managing the online image. 

Businesses must ensure they are seen in a good light in the virtual world as social media has changed how people get advice about everything. In the past you might ask a friend if a product is good, but today you have millions of “friends” online telling you what is good.

IT departments have changed too. They must now use agile development techniques to have apps up and running quickly and not be afraid of every small iteration working perfectly first time, rather they should be able to test things out and fix bugs quickly.

Everything online

Graham Benson, IT director at MandM Direct, an online-only clothing retailer said people are living digital lives, which means retail has fundamentally changed: “Digital has ripped up the rule book.”

He said almost everything can be bought online these days and it is becoming more and more the norm for consumers to buy a broader range of goods and services: “The only thing I don’t buy online is diesel and that’s because they won’t deliver.”

Benson, who has worked in retail IT for 12 years, said IT departments must react quickly to the changing demands of consumers. “The pace of change is now more relentless – people in IT feel the pressure of pace all the time,” he said.

He said technology is evolving at such a pace in retail IT: “Technology changes so regularly there is no longer expertise in technologies.”

As a result of the pressure on IT teams, CIOs must find ways to motivate staff, said Benson: “As IT leaders we have to go more into leadership than management. You need to capture hearts not heads. Make people believe in what they are doing so they go the extra mile.”

And the methods used by IT developers must also change. He said developers cannot analyse everything and must trust their instinct: “If it feels right it probably is. Pick a route quickly but put checks and balances so you can stop quickly if it is not working.”

He added: “People flog a dead horse for far too long. If it is wrong you should can it and move on. You will still have time to get to market.”

He said the focus should be on agile software development. “Make projects quick and iterative and don’t go for perfection – get something to market quickly and refine it,” said Benson. He said, when asked by business for developments, IT departments should have the attitude, “we can if...” rather than “we can’t.”

A different breed of CIO

CIOs in retail are a bit different these days. Mariano Albera, CIO at Thomas Cook, is at heart a software developer, he said. He is one of two CIOs at Thomas Cook. He concentrates on the customer-facing IT while a colleague is the CIO in charge of the traditional IT infrastructure.

Working in the travel sector, which has also been disrupted by the internet, for a large supplier has been a change for Albera. He was used to smaller companies and startups. “To be honest I am just a software developer who has worked in retail my entire career,” he told the CW500 Club.

He said big companies can learn a lot from startups and their development product methods: “I am an agile software developer and have been doing it all my life and I deliver software quickly.”

He said processes like steering committees at big businesses are not really relevant when things change so much: “The customer is the steering committee. It is about the customer telling you what they want by the way they use.

“Be pragmatic and be very fast. Don’t focus on five-year roadmaps. Focus on small deliverables,” said Albera.

Once the IT department has convinced the business that it needs to develop quickly it then has the challenge of doing it. “Competitors are moving quickly and the customer is connected to everybody through the same browser,” said Albera.

His team are not only focused on online sales because, unlike MandM Direct, Thomas Cook still has a bricks-and-mortar presence. This multi-channel operating model brings advantages and challenges.

Three gears for tech development

Like Thomas Cook, John Lewis is multi-channel or omni-channel, according to Sarah Venning, head of IT relationships at John Lewis. 

She said consumers do not really see online and high-street shopping differently: “They see brands and they buy in different ways. They want to interact with exciting retailers or just transact with them if they want to do it quickly,” she said. John Lewis’s website is now 12 years old and 25% of all sales are made online.

Venning’s role sees her sit between IT and the business and she said that in the retail sector the last few years has seen these two parts of the organisation work closer together than ever.

“Retail technology is in a totally different place now to where it was 10 years ago when it was seen as a necessary evil and as little was spent on it as possible and IT were the backroom boys,” she said.

“But today IT is the strategic differentiator in retail. The business as a whole has had to become a lot more tech savvy, partly because of the consumerisation of IT.”

She said consumerisation is a great opportunity but it brings with it the challenge of managing the expectations of the business, because people in the business use technology and expect the IT department to be able to do everything.

John Lewis is a large company with the IT infrastructure to match, but its legacy brings significant IT challenges. The combination of the need to develop IT to meet customer demands quickly and support the legacy core IT means the John Lewis IT team has to work at different speeds in tandem, said Venning.

Customer-facing systems can be developed quickly and simply but when you have to link to lots of other core systems it can be difficult. “Unless we can develop at multiple speeds we are dead in the water,” she said.

“We need to continue to invest in major systems of record underpinning core business, such as financial reconciliation, supply chain, and customer data systems.” These are the slower developments that IT does. “But if we continued just doing this kind of development we would be dead in the water.”

The second speed is developing systems to meet customer demand, using agile methods: “We have put a lot of effort in agile software development and delivery.” She said this has involved John Lewis’ IT department “learning to fail fast.”

The third speed development method is around innovation, said Venning. This comes through activities like crowdsourcing and hackathons, where John Lewis is calling on the brains of many outside the IT department and not even within the organisation. 

“The experts of the past are not necessarily the experts of the future," said Venning. “We need to be flexible to do IT developments at multiple speeds.”

No end in sight

Retail has probably been more affected by IT developments than any other sector. The consumerisation of IT has accelerated change in a sector that was already moving from bricks and mortar to online. The biggest challenge facing retailers and their IT departments is being able to offer customers what they want and how they want it, at least as quickly as the growing number of competitors.

There is no end in sight for any retail IT department – just a continually changing landscape with new technology and customer demands popping up on a daily basis. While this puts pressure on IT professionals it is an exciting environment to work in.

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