Home > 01.07.19 What Retailers Have In Common on IT Spending and Digital Innovation

What Retailers Have In Common on IT Spending and Digital Innovation

 

The holiday season gave retailers an unexpected gift: sales rose 5.1 percent between Nov. 1 and Dec. 24, a six-year high1. To put that into perspective, the National Retail Federation put the average annual increase at about 3.9% over the previous five years.

Even so, online sales accelerated even more rapidly, rising 19.1 percent2, according to the SpendingPulse retail report, published by Mastercard’s analytics arm.

According to Gartner’s research on IT strategy for retailers, “digital has surpassed revenue growth to become the new top priority for retailers.”3

At the upcoming National Retail Federation conference, everyone will be talking about the role digital transformation had in creating the winners this season. What separated companies like Kohl's, Macy's and Nordstrom from Amazon and Target? Who is taking best advantage of mobile commerce and loyalty programs? Will technologies like augmented reality to enhance the in-store experience move from the bleeding edge to the mainstream? Retailers know making the right digital strategy choices could make or break their future.

Yet, because many retailers operate on razor thin margins, digital business investments can seem impossible to fund.

Before I go further, let me say I'm wary of making sweeping generalizations about what retailers want and need. I know the demands are so much different for a chain of jewelry stores, compared with big-box stores or fashion retailers carrying the names of famous designers. In restauranting, fine dining is different from fast casual and both are different from running coffee shops and other QSR formats.

Most of what I know about retail comes from previous jobs marketing and selling network and managed services that were particularly useful to any business with lots of locations and few if any technical resources onsite at each. That describes a lot of businesses built around many stores or restaurants, and so we kind of stumbled into the retail market. Because our sales team was focused on the speeds and feeds of our products and services, we tended to talk as though all retail was alike - and got told otherwise in no uncertain terms by our prospective customers. Gradually, we got a smarter - or at least learned to ask more questions and make fewer assumptions about the needs of the retailers we spoke with.

I still don't consider myself a retail expert, which is why I will have lots of questions for attendees at NRF 2019, the annual conference of the National Retail Federation. But while I can't predict every detail of their answers, I am confident of a receptive audience for Rimini Street's message about the overhead "keeping the lights on" costs of IT getting in the way of innovation. In particular, we suggest switching to Rimini Street support for your ERP systems - as opposed to paying for an overpriced maintenance contract from the vendor - as a way to take charge of your own technology roadmap, rather than letting it be dictated to you.

Among my questions for NRF attendees:

  • What's the last time an ERP software update made a real, practical difference for your business? Boosted sales? Streamlined logistics? Allowed you to move into new markets or capture new buyers?
  • How often do you postpone implementing the updates you have been provided because of the need to test and validate them - or the absence of meaningful new features?
  • How responsive have you found your ERP vendor's support organization to be when you needed their help with a high priority issue?
  • How often have you been denied help because the issue you reported was related to a customization or an integration you added to fill gaps in the base product?

Certainly, ERP vendors are fond of talking as though whatever is in their latest release is the indispensable key to digital excellence. I suspect many NRF attendees will tell me the benefits are marginal or just not relevant to their top priorities. That's why it's so important to define your own business-driven IT roadmap, rather than accepting a vendor dictated technology roadmap as your starting point.

Yet however they may achieve it, retailers are recognizing that digital innovation is an essential priority - as much or more so than revenue growth. As Gartner says, "While revenue growth is still a highly ranked priority, [the research] shows that considerably fewer retailers (22%) listed it as the top priority compared to 2018 (44%)."

Ultimately, our research shows retailers aren't interested in technology for the sake of technology. They want to invest in digital innovation that will translate into growth and profitability - and that will ensure their survival amidst fierce competition.

Where Rimini Street can make a difference is in lowering the cost to operate ERPs and enterprise applications - allowing retailers to focus more of their budget on their top priorities.

This article was originally published on LinkedIn.

1https://cbs4indy.com/2018/12/27/holiday-retail-sales-surge-thanks-to-strong-economy-online-purchases/

2https://nypost.com/2018/12/26/holiday-shopping-season-sales-the-highest-in-six-years-report/

3Gartner, 2019 CIO Agenda: Retail Industry Insights, Robert Hetu, 15 October 2018.

Connect with us at NRF 2019, Retail's Big Show.

Find out why hundreds of Retail organizations and Consumer Goods manufacturers move from vendor support to Rimini Street, improving the level of service they receive, extending the life and value of their ERP systems and freeing up resources for game-changing digitalization initiatives.

Tim DeLisle

Tim DeLisle, GM, North America

Tim DeLisle oversees the expansion of the Rimini Street’s presence across North America, building out its customer base among companies seeking to extract more value from their existing business applications by leveraging more robust and cost effective support options. Before joining Rimini Street in 2018, he held senior leadership positions at technology companies including Black Box, EarthLink, EMC Corporation, and Sungard/Comdisco. He joined EMC after its acquisition of Corigelan LLC, a business continuity, advanced recovery and data management consultancy he cofounded.