Retail Tech Must Catch Up With Consumers

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Retailers are responding by increasing their IT investments, particularly in key areas such as cloud and mobility.

Large retailers in North America plan to increase IT spending in 2013 by 5 percent, to more than $30 billion, compared with 2012, according to Technology Business Research's Retail SourceIT Report. The report is based on surveys and in-depth interviews with IT and business executives at 247 large North American retailers about IT spending plans for software, infrastructure and professional services in 2013. According to a prepared statement from TBR:

A shift in consumer buying behavior through the use of mobile and online purchasing and the use of price comparison apps and social product reviews is driving a business model transformation among large North American retailers. In response, these retailers are investing in mobile point of sale, customer analytics, and more agile supply chain and logistics systems to capture the renewed, but evolving, consumer spending.

Let's have a look at the customer demand that's propelling these retail IT trends. A survey of 5,000 shoppers in five countries -- the United States, United Kingdom, Brazil, Mexico, and China -- was conducted by the Cisco Internet Business Group and released January 14 in the company's third annual Catch and Keep Digital Shoppers report. Among the findings:

• Nearly eight in 10 respondents are digital shoppers who regularly research and purchase products using the Internet.
• More than half of respondents (54 percent) say they currently use or would like to use digital touch screens in the store.
• Almost half of respondents (48 percent) are currently using or would like to use a smartphone while they shop in stores or on the go.

In the US, a majority of respondents cross channels when they shop: Sixty-five percent say they research a product online using a PC and complete the transaction in a store, while 29 percent say they use a smartphone to research a product before purchasing it in a store.

According to the Cisco study:

[Shoppers] expect greater visibility into the information that enables calculations of value (product/pricing comparisons, access to promotions, and how-to insights), they want self service, and they are more interested in personalized offers and promotions. And, they want a constant connection to the endless information on the Internet.

JCPenney, Kohl's make IT investments
JCPenney is among the retailers working on IT solutions to meet these customer challenges in its 1,100 stores. The retailer announced on January 10 that it is rolling out Microsoft's cloud-based Office 365 throughout the company. The application will serve as JCPenney's communication and enterprise social platform. One of the goals, according to a prepared statement, is to ease communication between stores so that store employees can work seamlessly with their counterparts at other locations to assist customers. "We always aim to help customers at every touchpoint, from entering the store to finalizing a transaction," said Kristen Blum, CTO at JCPenney, in a prepared statement.

Meanwhile, Kohl's is tackling changing customer expectations from an infrastructure point of view, deploying Oracle Retail, Merchandising, Planning, and Supply Chain solutions across its 1,146 stores in 49 states. The goal, according to a statement released January 23, is "to streamline merchandising and planning while enabling its multi-channel growth strategy."

These examples indicate that retailers are taking the challenges seriously. But they're just small steps in a long overhaul process that is going to be required to meet shopper expectations. This is the year to watch retail IT, to see where the $30 billion gets invested, and how these solutions are put to use to serve customers. Where would you most like to see retail IT dollars invested? What do you think are the biggest challenges facing retailers, and how can these be addressed via IT investments? Discuss below.