Essay About Favorite Color And V E S Umma Ry

Trends 2006: Retail It
Essay Preview: Trends 2006: Retail It
Report this essay
March 1, 2006
Trends 2006: Retail IT
E X E C U T I V E S UMMA RY
The retail IT spending outlook is positive: Retailers have finally figured out how to compete with
Wal-Mart and are now organizing themselves to deliver differentiation. Many retailers have tackled
aging POS platforms, with most initiating a POS upgrade or replacement in 2004 and/or 2005. So
where will 2006 take us? Two places: Experience-based differentiation — whether an explicit strategy
or a reactive move to be more customer service-oriented — will drive technology activity beyond the
store; and service-oriented architecture will break down application boundaries, putting infrastructure
questions — and investments — back on the road map. Is the retail IT renaissance finally here? It might
be just around the corner — but only if sales stay up, IT finally learns how to talk to the business, and
the business finally learns that architecture investments pay off in the end.
TA B L E O F CO N T E N TS
Retailers Tackle Experience-Based
Differentiation And Architecture
Experience-Based Differentiations Ripple
Effect
The Platform Wars: Round One
WHAT IT MEANS
The Retail IT Renaissance Is Almost Here
N OT E S & R E S O U R C E S
This document is based on interviews with
a number of retailers and technology vendors
and data gathered at several industry conferences
during 2005.
Related Research Documents
“Smarter Stores: Are We There Yet?”
October 4, 2005 Trends
“The State Of Manufacturer And Retailer
Collaboration”
November 21, 2005, Market Overview
“Consumer-Focused Innovation”
March 16, 2005, Forrester Big Idea
RETAILERS TACKLE EXPERIENCE-BASED DIFFERENTIATION AND ARCHITECTURE
The sun is beginning to shine on retail again. After a difficult first half of the decade, the second half
is looking much better. Whats happening with retail IT? Retailers:
* Plan to increase IT spending in 2006. The IT spending outlook is positive, with the majority of
retailers we surveyed predicting higher IT budgets in 2006, and few looking at smaller budgets
(see Figure 1). Whats driving this increased investment? A couple of years of positive sales and
economic growth, plus a focus on delivering differentiation in the consumer experience — and
finally learning the lesson about how to compete with Wal-Mart.
* Will spend on innovative technologies to differentiate. Besides organizational overhauls,
retailers seeking to deliver experience-based differentiation find they need to upgrade aging
technology alongside investments in innovative ones to tailor consumer experiences. This
doesnt mean POS, as the majority of retailers tackled their aging POS platforms by at least
initiating their upgrade or replacement in 2004 and 2005.1 Rather, retailers seek differentiation
by tackling price and revenue optimization, merchandise optimization, demand forecasting, and
product information management — right alongside upgrading more established technologies
like warehouse management, inventory management, and order management and fulfillment
(see Figure 2).
So where will 2006 take us? To two places on the technology front: the experience-based
differentiation landscape — now more familiar thanks to consumer centricity — and new frontiers
in technology architecture.
Experience-Based Differentiations Ripple Effect
Experience-based differentiation — whether an explicit strategy or a reactive move to be more
customer service-oriented — will drive a lot of technology activity in 2006.2 While the store remains
the crux of the shopping experience, experience-based differentiation is sending waves of IT
implications rippling back through the enterprise (see Figure 3). A sampling of retailer activity and
investment:
* Collecting consumer data. All kinds of consumer data are up for grabs, and all of it is
becoming increasingly important. This includes identifying the consumer and tying all online
and offline transactional information together with behavioral information — how they surf
the site, how they shop the store — demographics, psychographics, and even preferences like
favorite color, birthday, and favorite coffee flavor.
How will retailers get this information? In 2006, retailers will add more vehicles to capture
consumer data, whether through handheld-equipped employees or kiosks that capture
consumer requests or preferences. And theyll follow that data all the way to the back end via
master