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The Changing Face of Retail Technology
Anurag Goel
Monday, August 1, 2011
Businesses that remain static die. Traditionally, retail has been a business that has always been slow to evolve but certain accelerating world changes are forcing retailers to adapt to these changes in order to remain relevant and profitable.

A distinction must be drawn between small or independent retailers and the “big-box” retailers. Small size retail operations are typically started by enterprising individuals who find niche markets or underserved locations. These retailers mostly stay as a single unit operation run by individuals or at most grow to a few units if successful and depending on the ambitions of the owners. These operations are typified by the owner’s vision and their customer service ethics. In contrast, big-box retailers are run on a very large scale – a large retail chain often having hundreds to thousands of outlets. The mantra for the big retailers is to take a formula that works and replicate it on a large scale multi-fold. Economies of scale and supply chain efficiencies are the driving forces. All big retailers start out with customer service as one of their prime commandments, but that sometimes gets lost over time, buried under spreadsheet math driving efficiencies and profits.

When discussing the state of retail, the big elephant in the room must not be ignored: i.e. the politico-economical state of the World. Without going into long-winded details and analysis, the obvious conclusion can be stated: uncertain and changing economies require retail to be nimble to survive and to thrive. Small retail will be the most nimble, yet most susceptible to the demands of fitness. Hence some small retail will die and some will evolve and thrive at the expense of others. No need to invoke Darwin explicitly here. Axiomatically, even though having greater staying power, the big retail could be The Titanic, slow to change direction and therefore vulnerable in a fast changing world.

Cultural changes are also afoot in the consumer world. Where not driven by the ubiquitous internet serving up information and affecting buying decisions, more and more consumer purchasing is driven by emotional appeal and a feeling of being catered too. Changes in economy notwithstanding, this consumer purchasing is a hallmark of rising living standards and increased expectations. Consequently, shoppers are increasingly drawn to retailers that present a more intimate boutique type of shopping experience without the accompanying higher prices.

Creation of an intimate but exciting shopping experience requires creation of small sized groupings of merchandize arranged by unique points of interest. Grocery stores are moving in this direction by breaking up the center of the store into islands of categories. Department stores are creating “markets” within their expansive floor areas to generate excitement. In addition, dynamic promotions and pricing are instituted to showcase and spotlight different merchandize every day or even during different times of the day. Store associates are being freed up from mundane tasks that can be automated and being assigned as expert stewards of these “islands” to greet and mingle with the customers.

All of the above has created challenges for the retailers – both big and small. Freeing up of store associates from manual chores and reassigning them for customer service has called for greater availability of automation and information at the POP and the store floor. Dynamic pricing presents further challenges requiring more frequent update of information at the POP. Fortunately, wireless and display technology has caught up to this increase in demand for dynamic information in Retail and a myriad of solutions such as Electronic Price Labels, Digital Signage, Stock and Temperature Sensors are now possible. Dynamically changing assortments and merchandize placement has created the need for real time inventory tracking and real time Planogram generation. A myriad of other applications to garner real time business intelligence inside each store and the ability to affect it in real time as well as to assist the customer support personnel and shoppers alike, are also needed.

To meet the new technology challenges presented by the new demands from the changing face of retail requires a new breed of technology companies who are not afraid to get their “hands dirty with retail” and can jump in to provide complete vertically integrated solutions. This new breed of company would have to integrate disparate expertise under one roof: Digital/RF mixed chip design, Firmware/Network Management/Systems/Enterprise Applications Software, Mechanical/Industrial Designs, Display/Display Driver Technology, Operations and Manufacturing, Retail Domain knowledge, Retail Relationships, Deployment and Customer Support, and Marketing and Finance. For not providing an integrated solution would mean throwing individual technology components over the wall at retailers and expecting them to perform the arduous task of integration – and the job will not get done, the new challenges facing retail will not be met and an opportunity will be lost.

The author is CTO, Altierre

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