In 2004, retailers will aggressively use technology to sharpen their consumer value propositions and improve their net margins, predicts a Forrester Research document by analyst Kate Delhagen with Joshua Walker, Carrie A. Johnson and Esther H. Yuen. Released in January, Ten Retail Technology Predictions For 2004 cites anything data-related, store technologies, e-commerce and RFID as four hot areas where vendors will battle for budgets.
Here is their list.
1. Internal use of data will dominate the IT agenda. They point out that many retailers suffer from a lack of clean, well-organized data and/or the skills or tools to take advantage of whatever good data they have. They report that 47 per cent of retailers expect to purchase portal server software and 31 per cent plan to buy business intelligence software.
2. External data sharing will become a higher priority. “By year end, companies embracing data standards like the electronic product code (EPC), Global Location Number (GLN) and Global Trade Item Number (GTIN) will begin to see results from better data sharing, although data pool interoperability issues will stretch ROI out over a few years.”
3. Retailers will squeeze more from their stores. Retailers will focus on four store areas: merchandise optimization; store performance measurement; POS upgrades; self-service technologies like kiosks and self-checkout systems.
4. Associates will go wireless to help shoppers. The report predicts that 2004 will be the year of smarter store associates as frontline employees are deployed into the aisles where they’ll use wireless to better serve shoppers and boost customer loyalty.
5. Shoppers will use a growing array of technologies to help themselves. “The trend toward store automation will accelerate as retailers take advantage of declining hardware costs as a way to offset rising labour costs.”
6. E-commerce will enjoy its tenth Christmas and 25 per cent growth. Retailers, manufacturers and travel suppliers will pump more money into their sites with the focus on key multi-channel technologies; broadband enhancements; site usability and analytics; and digital marketing programs.
7. Fraud and e-mail issues will frustrate e-commerce groups. E-commerce faces two escalating issues: smarter and more aggressive fraudsters and increasing difficulties with e-mail delivery.
8. RFID will become R-E-A-L-I-T-Y. But it won’t be easy. Hardware vendors will struggle to produce readers that support multiple protocols and frequencies; tag makers will race to beat production deadlines; software vendors will step all over each other to win the application business as the frenzy builds.
9. Tier two and three retailers will be an unexpected IT sweet spot. 2004 will bring a surprising wave of tech investments with many midsize retailers upgrading POS systems, and others investing in new merchandising systems, customer databases and Web sites to fuel growth.
10. Technology M&A will heat up in the retail sector. With 91 per cent of retailers expecting to spend at least as much – or more – on IT in 2004 as in 2003, vendors will find lots of revenue opportunities but tons of competitors. Smart vendors will acknowledge gaps in their solutions and cherry pick smaller companies to fill those gaps.