Marks & Spencer adapting to the challenges
This was the message conveyed by Matt Horwood, CTO at Marks & Spencer, at the Fujitsu Forum 2015 in Munich: "Like a lot of traditional retailers we are facing channel shift and have a large store estate that we have to run. But every store is profitable and we must not lose sight of that."
As sales move online this is forcing retailers to utilise their store estates to better compete against online-only rivals. "We need to leverage our bricks and mortar with our online capabilities and have things like pick-up points. Some of the work we've done is around exploiting our stores and using new ways to connect with customers through examples like smart mirrors. We need to spot trends [like this] that could be used in all channels," he explains.
Such digital devices were one of a number initiatives being undertaken at M&S as it seeks to adapt its business model to take into account the myriad trends impacting the retail market. He highlighted the move to greater personalisation as shown by the recent launch of the Sparks loyalty programme. "People now expect personalised offers and pricing maybe," suggests Horwood.
Intelligent machines and cognitive learning is also something he recognises as potentially benefiting M&S through delivering cost-efficient automation to some tasks: "We could make systems that automate answers to questions from employees and customers. We need to build the capability to analyse things beyond the current realm of our [IT] team's capabilities."
This could happen alongside voice recognition and smart shop assistants whereby searching could be done by customers on their phones by voice rather than text-driven search engines, which Horwood says will involve a "different strategy" to the existing one.
One area M&S is leading on is its use of RFID, with 98% of its general merchandise items now tagged. Although this is presently used mainly for stock management he foresees it translating into offering the customer much more value in the future through various developments.
In order to deliver technological change across the business Horwood says he brought in "agile teams" who enjoy working with some of the more innovative service providers and technology vendors in the market but that this has to be aligned with the arrangements M&S has with some of its long-standing partners like Fujitsu.
"Our strategy is to engage with innovative companies but we also like to talk to our larger partners to see how they'd react. They normally have an [equivalent] offering but it's usually one year behind. I try to accelerate them and not lose any value," explains Horwood.
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