NRF 101st Annual Convention & Expo latest report
As channels converge it is mid-tier retailers that are under the most pressure to adapt.
By Glynn Davis in New York
They face increased competition from newer, smaller tech-savvy merchants and from the larger operators who have the firepower to invest in changing their businesses.
Speaking at the NRF 101st Annual Convention & Expo in New York Fred Studer, general manager of Dynamics product management at Microsoft, said larger retailers are “turning the crank” on adapting their businesses to the new climate and meanwhile newer companies have the benefit of only knowing a world with the internet and Facebook.
But for mid-tier retailers he suggests there are big challenges now being faced. “I hope they take the time to get ‘modern’. They see small retailers bumping up against them and the big ones putting pressure on prices and therefore their margins,” he explained.
Interestingly, Studer said the newer operators are choosing to buy technology out-of-the-box: “They want it just to work straight away and will therefore take it out-of-the-box. They are willing to accommodate the solution in their businesses with only 10% of it bespoke.”
This move towards having less proprietary elements within core IT solutions is also a route being taken by Brazil-based retailer Grupo Pao de Acucar. Hugo Bethlem, vice president of corporate relations at Grupo Pao de Acucar, said the SAP system first implemented within his business in 2009 has a bespoke proportion of only 3.25%, compared with what he says is an industry average of more like 20%.
“We’ll not do any customisation that we don’t need. This allows us to have all the latest [upgrade] releases. We have decided to get the people in our organisation to adapt to the system rather than adapting the systems to the people,” he said.
Studer recommended mid-tier retailers consider implementing the latest generation ‘omni-channel’ solutions such as ‘Dynamics for Retail’ that can replace their existing legacy systems. Although such a move might well be painful and costly he said the capex can stack-up on the basis of the new software eradicating the onerous maintenance charges relating to a retailers’ old solutions and the end of the heavy costs involved in them adding any new functionality.
