No Time for Victory Lap
The retail companies that make up the STORES Hot 100 are an elite group, and that’s more true than ever this year. These merchants managed to grow their business in fiscal 2010 despite a sluggish economy that continues to keep skittish consumers on the sidelines.
The Hot 100 retailers collectively posted year-over-year average sales growth of 9.3 percent — an impressive feat no matter the angle from which you choose to come at the data. Still, as retail history has taught us — sometimes in the most painful fashion — this is no time for those at the top to take a victory lap.
Retail is in the throes of a revolution. Innovation is no longer an opportunity; it’s an imperative. And the innovation battle-cry should resonate louder than ever in the wake of Borders’ bankruptcy and liquidation. You can’t wait until things get better to invest in technology; you can’t assume that shoppers are going to forgive you for not meeting their expectations.
I’ll be the first to acknowledge that the need to innovate can be daunting, but at the same time it’s not something retailers can afford to ignore or merely dabble in. Leslie Hand, research director for IDC Retail Insights and the author of several reports that are part of a Motorola-sponsored thought leadership project dubbed the Innovation Paradox, has been studying today’s omnichannel shopper for some time, and she’s convinced that satisfying this customer requires allocating investments in innovation.
The good news: IDC’s annual Vertical Group Survey indicates retailers intend to allocate an average of 20 percent of their IT budgets for “innovation.” In Hand’s words, this makes “absolute sense” — particularly since investments are needed to “support richer in-store customer experiences.
“Retailers will rise above their peers in the industry by making critical investments in technology, including wireless infrastructure, mobility platforms, customer-facing applications and fulfillment and distribution systems,” she says.
Specifically, Hand notes that retailers are investing in bandwidth upgrades, video surveillance and wireless LAN deployments — indicative of the realization that shoppers want to interact with other channels while in the store. “The new paradigm is mobile, and this manifests in several ways to enable customer and associate interactivity, as well as improve store operations. Mobile devices are showing up as line-busting POS, inventory and product assistants and as workforce productivity enablers.”
The less-than-good news: Shoppers are a fickle, impatient bunch. And if retailers don’t jump on the mobile bandwagon and mash the pedal on innovation quickly, they’re likely to find that consumers can cool to even the hottest of retailers.