the changing face of the retail sector blog

The changing face of the retail sector

Andy O’Kelly


The past few years have been difficult for the Irish retail sector. The economic downturn meant consumers scaled back their spending, but there’s light at the end of the tunnel. Andy O’Kelly assesses the sector – its use of IT to overcome the challenges it’s facing, and the opportunities that exist for retailers to innovate.

There are nearly 40,000 retail firms in Ireland employing around 275,000 people – 75% of those jobs are outside Dublin. Almost 90% of firms in the sector are Irish owned, which makes retail Ireland’s largest indigenous economic sector. The Retail Ireland Strategy 2014-2016 highlights two key objectives: the need to increase the scope and pace of innovation in order to benefit from any upturn in consumer spending, as well as the promotion of retail as an exciting, progressive sector that is at the forefront of design and innovation.

State of IT play in retail sector

Some retailers still depend on a server at the back of the shop, standalone or supported and batch updated remotely, for basic IT services. Larger retailers (62% of the sector) are increasingly supported by IT service that seeks to integrate former islands of technology into a coherent centrally-controlled system, accessed by a variety of people and devices across a business critical network. This system manages CRM, inventory, point of sale and payments and pricing, and is accessed by people in different roles and locations using diverse devices, including consumer mobile and Wi-Fi devices supporting real-time information display, response and communication.

A Peru Consulting report Delivering the Retail Technology Experience highlights poor performing legacy network infrastructure as the most frequently cited IT barrier facing the more than 100 retail IT directors surveyed: “Why is legacy network infrastructure such a problem? According to IT directors it means that the retail operation lacks performance and prevents them from providing latest generation customer services such as in-store Wi-Fi. The majority of retail IT directors have already seen the light about the benefits that free Wi-Fi in-store could deliver to their business. More than two thirds (69%) either already offer free Wi-Fi or plan to in the near future, demonstrating that the aspiration is clearly there to move forward.”

Know your customer, grow your business

Over 2.6 million people in Ireland regularly shop online and spend €8.5 million a day with foreign online retail chains, so Irish retailers are missing out on a growing portion of the Irish consumers’ wallet. Visibility and control is fundamental to having an effective multi-channel capability, where the customer experience is consistent across all sales channels.

A truism in sales is that you need to know your customer. The deeper this knowledge, the more you can meet their expressed and unexpressed needs, the more you can differentiate your offerings. Loyalty card schemes, generating actionable intelligence by tracking spend and profiling the customer, has been part of retail since before the span and velocity of data became something called Big Data. Retail has increasingly been focussed on analysing interactions, particularly online and in customer care. Frequently there is little comparable digital information around behaviour in retail outlets other than till transactions. Numbers of buyers versus visitors, dwell times, age and gender of shoppers, footfall passing and stopping at different displays – are all of interest in determining the value of the physical retail network of shops. These metrics become actionable as consumer behaviours are compared across different shops to determine what influences and improves the shopper experience and those till transactions.

The span of IT increasingly includes machines too – environmental sensors in refrigerators and trackers for valuable assets. Formerly standalone systems like video are moving out of their facilities silo, where a localised video recorder sits at the back of the shop. The outsourcing of alarm management and remote security monitoring is improving customer and staff safety. Video is also extending out from this primary asset protection and security focus through to more shopper-centric innovation. Tesco got a lot of ‘Minority Report’ referencing attention when they deployed a digital signage solution in their UK petrol stations that measures shopper demographics and presents engaging tailored content based on, for instance, the local weather conditions. (Google want to take the same concept and make it planet-wide, by ‘democratizing’ access to satellite through the Skybox Imaging acquisition, using satellite feeds to, for instance, count cars in retail carparks on Black Friday as an indicator of a competitor’s economic activity).

Your network is at the heart of your ability to innovate

All of the above is underpinned by a network that needs to be secure, flexible and reliable, and capable of catering for an increasingly diverse range of data traffic type and velocity, from tiny sensor alerts to HD marketing video streams. It’s time to look again at networks that have limped through the recent downturn, and get the right foundation in place for retail innovation.

There’s no doubt that the next few years will be an exciting time for the retail sector. New technologies and applications will offer retailers opportunities to get closer to their customers, streamline their back office operations, communicate more effectively with suppliers, employees and customers, and implement cutting-edge solutions to manage inventory.

What new IT developments are you considering implementing?