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No time to innovate? Time to Automate

Over the last year the retail industry has started to see economic recovery with online retail sales in Europe alone forecast to reach £145.8 billion a year by 2016[1]. The U-turn in consumer spending over recent years can largely be attributed to technological innovations, with one of the greatest impacts on this progress and performance being innovations with regards to in-store technology.

As consumers are more comfortable with online shopping they have come to expect speed and ease-of-use, and as a result the traditional store format will no longer be sufficient to survive – indeed, in order to stay ahead, optimising, integrating and automating existing and future technology and processes will be key.

We continue to see turbulent times for retailers as consumer shopping habits keep shifting. Fundamentally, there is no time for complacency and retailers have to sharpen their offerings to stay ahead of the game. A direct impact of this it that retailers have, by necessity, integrated technological conveniences into stores – a popular example being expediting checkout experiences through mobile technology that allows shoppers to scan and pay, or letting consumers purchase products not available in-store.

eMarketer estimated that in-store mobile payments will add up to $640 million in transaction volume in the U.S. in 2013, up from $170 million in 2011.[2] Investment into in-store technology is expected to accelerate with John Lewis, Burberry and Marks & Spencer leading the way and transforming the retail industry by technology such as ‘Click and Collect’; services already proving popular with consumers. 

However, despite the fact the well-documented rise of ecommerce, almost 90% of sales still occur in physical stores and therefore retailers have to operate quicker and smarter if they are to survive and remain agile to competition.[3] The emphasis of offering the right product to the right customer through the right channel remains paramount.

Run the Business

Automation of control systems and underpinning information technology platforms is essential for optimising productivity, delivery of service and customer experience – in turn leading to minimising lost revenue while increasing sales. It also provides economies of scale, agility and flexibility for business growth. However, it is often the case that in the race to meet consumer expectations, retailers will turn to technology and often purchase disparate pieces of software and equipment with the hope of achieving such efficiencies.

The challenge for retailers is that by doing so, the disparate sources of data need consolidating in order for the same service to be available across multiple channels.  If a retailer is spending time and resource on administering processes and technology they are not spending time on innovation and strategy to drive the business forward.

Both bricks and mortar and ecommerce retailers face challenges in warehouse management, point of sale and other external systems such as mobile applications and to manage customer experience this needs to be fully integrated.

Build the Business

There can be a disconnect between what is considered to be development activity and operations activity which can lead to inefficiency.  DevOps is a cultural and professional movement which aims to break down these potential silos and is about culture, automation, measurement and sharing.  Common areas which would benefit from automation are release management of applications and codes, systems integration, monitoring and testing. A key element of DevOps is automating repetitive tasks using software development which frees resource from manual tasks, reduces error and increases speed to deployment.

A successful example lies with M&S, who recently announced the opening of a fully automated 900,000sq ft. warehouse in the UK that will eventually be able to handle over a million orders a day. As part of the announcement, M&S admitted that its current systems were ageing and inefficient and that it had outgrown its traditional business infrastructure as online sales continued to increase. M&S believe the new deployment will generate vast improvements to the way it serves online customers and aims to launch a "market-leading proposition" in the way it delivers online purchases to shoppers.

Transform the Business

With the continual shift in consumer behaviour both on and off line, retailers need to be able to deploy application and code changes quickly and efficiently. This is ever more challenging with the increased use of cloud technology and virtualisation, alongside deploying solutions across various business units and applications.

As a result, many retailers are now turning to utilising software featuring real-time, event driven and messaged based infrastructure integrating multiple applications.  This enables the access of data across hardware platforms, applications and operating systems where legacy systems, ecommerce, and CRM can be consolidated in a fast and cost effective way. Typically, data from a point of sale module can help a retailer with fulfilment, yet having the same data within a CRM application can create additional sales and marketing opportunities, something retailers can no longer afford to miss out on.

[1] http://internetretailing.net/2012/02/european-online-shopping-to-grow-by-12-a-year-predictions/

[2] http://www.businessinsider.com/bii-report-the-state-of-the-mobile-payments-race-2013-2

[3] http://adage.com/article/special-report-look-ahead-2013/trending-retail-industry-2013/239063/