From PDAs to B2B to CRM, Canadian retailers increasingly depend on the alphabet soup of information technology to stay competitive in today’s marketplace, according to a recent study.
The study, completed this summer for the Retail Council of Canada (RCC) by the J.C. Williams Group, found that retailers are planning to increase their IT budgets this year by 45 per cent over 2000, form an average of 1.3 per cent of sales volume to an average of 1.8 per cent.
The largest per cent increases are from smaller retailers who are doubling IT expenditures to two per cent of sales, while large sellers are holding steady at 1.2 per cent of revenues.
One of the surprising findings is the way that evolving corporate structures are starting to demonstrate the prominence and clout of IT departments within retail organizations, said Randy Scotland, an RCC spokesperson.
“Previously, IT was typically used as a way to cut costs and finance (departments) would sort of dictate the use of IT within the retail organization. Now that’s changed. According to this survey more and more retail organizations are opening the executive boardroom table to the IT department, and more and more IT heads are reporting directly to the president and CEO. We see that as a fairly significant shift. It means that IT has now got a seat at the table in terms of setting strategy and policy,” he said.
With the proper use of technology there are both cost and efficiency savings to be had, said Scotland, noting that when improvements in these areas occur, both retailers and consumers win.
“By minimizing all the things that are associated with operating expenses, whether it’s how you properly stock your store shelves, or inventory management, or how you get people through the store quickly with computerized point of sale systems that minimize wait in the checkout line . . . technology has become omnipresent,” he said.
Although the Beau Chapeau Hat Shop, a small boutique in Niagara-On-The-Lake, Ont., can function without its computers – and did recently when its system crashed for a couple of days – owner Kevin Neufeld said his store’s small IT infrastructure is very important for saving both dollars, and his valuable time.
“We spent a tonne of money on computers in the last few years (but now) we waste much less time. I used to do inventory by taking piles of price tags from items that had been sold, then at the end of the day I’d go through my binder of invoices, find the item and put a tick beside it. When you are doing that with 100-plus items per day it takes forever – it used to take me an hour each day to keep up with my inventory,” Neufeld said.
As well as its scanned inventory system, the Beau Chapeau also maintains a Web site, employs a Web-based bookkeeping system so that Neufeld can check sales data from his home office or any remote location, and has a $700 per year tech support contract with the company that supplies its point-of-sale system.
In seeking some outside help with its IT the Beau Chapeau is a bit ahead of the retail curve, since according to the RCC, IT outsourcing – other than for Web site and network maintenance – has not really caught on.
“There’s been a lot of talk about the attractiveness of outsourcing, but the perception in the marketplace is that outsourcing is expensive and not necessarily the most efficient use of available dollars. There’s a recognition that outsourcing can be beneficial, however, because it allows the retailer to do what they do best – which is retailing – and it leaves (technology matters) in the hands of the experts,” Scotland said.
Another that has yet to reach its potential is the use of customer relationship management (CRM) applications, said Scotland.
“There’s been a lot of hype about CRM, and those applications are meant to be the Holy Grail of retailing and doing business in the 21st century. What we’re finding so far, based on the survey results, is that retailers are less than impressed at the whole CRM movement – it really hasn’t taken hold,” Scotland said.
“A lot of the technology vendors (in the United States) have produced applications that are appropriate for that marketplace but aren’t necessarily transferable – because of the economies of scale – to the Canadian experience. And this is especially true for smaller retailer who feel oftentimes shut out of this because there isn’t enough vendor attention being played to their needs … A lot of the feedback we got was that some of these systems, though terrific in principle, are prohibitive in cost,” Scotland said.
Despite these concerns, Scotland said that the RCC was very pleased to discover that “Canadian retailers have realized that to maintain a competitive edge they do have to invest in IT as a strategic part of their marketing arsenal.”