Retailers raise IT spending in 2006

IT spending in the retail sector is expected to increase, with over half of retail IT executives surveyed expecting higher budgets this year, according to a report released by Forrester Research this month.

The projected rise in IT investments is fueled by positive retail sales and the economic growth experienced in recent years, the Forrester report said.

Retailers are looking to upgrade aging technology to gain customer insight and deliver customer-centric strategy called experience-based differentiation, wrote Nikki Baird, research analyst at Forrester in Cambridge, Mass.

“Retailers have finally figured out how to compete with Wal-Mart and are now organizing themselves to deliver differentiation,” Baird said.

Capturing consumer data based on demographics and psychographics, as well as tying together online and offline transactional behaviours will set the stage for technologies that allow effective data collection and management. The goal is to transform data into insights that will aid in the development of products, services and marketing programs, Baird said.

Point-of-sale (POS) systems will also take centre stage as retailers rollout POS systems that are more than just automated cash registers, according to Forrester’s Baird.

Canadian retailer Moores Clothing for Men, based in Etobicoke, Ont., recently rolled out a new POS system that the company said would enable better data collaboration in real time with Moores’ parent company in the U.S., The Men’s Wearhouse Inc.

Moores has installed between two and three POS systems in each of its 117 stores across Canada, according to Chris Jasztrab, IT operations manager at Moores. The company’s CRM system is built into its Java-based POS software, he added.

“The POS and our IT infrastructure enables our wardrobe consultants to better relate to the customers and figure out their needs and develop a relationship with them,” said Jasztrab.

Dell Canada provided hardware to run Moores’s new POS infrastructure, including Dell’s OptiPlex GX620 Ultra Small Form Factor desktop, 15-inch flat panel LCD Touch Screen Display, Epson T88III thermal receipt printer, ID Tech magnetic stripe card reader and handheld barcode scanner.

For Moores, IT exists to “support the business and not run the business,” said Jasztrab. That belief is echoed in the executive level, where Jasztrab’s father Daniel Jasztrab sits as vice-president of IT. “[IT has] a dual function,” said the senior Jasztrab.

“Our function is to maximize profitability and reduce loss and expense, at the same time provide good customer service to our employees.

“This in turn [translates] into better customer service for the people that shop in our stores.”

Business intelligence tools are also getting the attention of retailers for their ability to provide easy access to data from disparate applications across the organization.

AMR Research has reported a continuing trend among retailers that view BI as one of the most “vital and critical technology assets,” with 53 per cent of retailers surveyed citing it as a top IT infrastructure priority.

The main driver for retailers, according to AMR, is the increasing demand to harness data from disparate applications and data sources to “draw insight that optimizes replenishment, promotional strategy, pricing models and labour allocation.”

Organizations that have invested in various technologies in the past are not necessarily looking to replace their existing systems, according to Patricia Waldron, director of retail industry solutions at Cognos in Ottawa, a provider of business intelligence (BI) and performance management tools. They are typically deploying point solutions that help them in specific areas like pricing, customer loyalty and multi-channel retailing, she said.

“[Retailers] are also trying to stitch together an architecture that accommodate the various solutions that they have,” said Waldron, adding that service-oriented architecture is gaining popularity in the industry, especially in larger chains, because it allows retailers to leverage their existing applications.

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