Comment: The state of retail technology
In today¬ís competitive retail environment, the onus is on retailers to make sound planning decisions based on the information that comes in from existing data. By Mike DotsonPlanning is critical when retail sales are falling, and the data it provides proves valuable when forecasting for seasons ahead.
Retailers are struggling, not only from a sales perspective, but also where their margins are being heavily eroded. They are being forced to go to sale earlier, and are having to mark down to clear old product and increase the cash flow, in order to buy in next season's stock. In times where banks are reluctant to lend money, cashis king.
During these difficult economic times, it is vital for retailers to sustain profitability while achieving sales. In certain shops there may be more of a planned assortment strategy, whereas a flagship store will have a much wider selection. It's about tailoring product lines to maximise sales across the different grades and/or types of stores.
Armed with an effective planning tool, which charts last year's history along with seasonal trends for example, retailers can make better decisions. They can plan the assortments, the flow of goods and merchandise into the business as well as promotional activity. Stock, sales and intake can all be planned and forecasted to manage open to buy, the overall objective being to maximise profitability whilst increasing stock turn and sell through.
Vast numbers of retailers still use Excel-based spreadsheets for planning; manually inputting data, which slows up the entire process - inevitably resulting in a longer decision making process. Retailers need solutions to replicate what a spreadsheet can do, but to bring in dynamic updates and free up staff for more effective analysis.
Having the right systems in place provides retailers with the tools to analyse data. And embracing technology will automate processes, which is simpler than manual updating. This will also maximise their ability to sell the merchandise that has been sent to relevant stores.
Exception analysis via a planning system enables a retailer to focus on where the opportunities lie, and where margins are currently being eroded. They can analyse on a line by line basis, as well as by store grades and types of stores.
Commenting on Island Pacific's Planning Module, Alistair Cossins, Systems Manager for The Perfume Shop, said: “Our previous system would involve one or two days of someone's time each week inputting the relevant data.
“We were keen to develop an integrated and automated solution, which would create significant time and cost savings for the business. And, indeed this system has saved us somewhere in the region of two days per week.”
When it comes to the technology and systems retailers currently have in place, there is a tendency towards them working to improve and maximise their existing systems wherever possible, to avoid financial outlay. And, we are seeing a trend where retailers are looking to add on to their existing solutions rather than start over. This potentially will mean upgrading core systems where practical and cost effective whilst quite possibly adding to the solution by adding point solutions like planning and/or allocation.
It's clear to see that the vast majority of retailers are less inclined to invest in new technology. However, I would argue that now is the time to stay ahead, to establish and maintain a competitive edge in this harsh climate. Retailers that invest in the right technology and systems have the potential to maximise customer satisfaction and therefore sales. A reasonable investment in technology will also work towards maximising customer experience both online and in-store. Retailers cannot afford to stand still.
Mike Dotson is Vice President of Global Sales, at Island Pacific
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