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THE SUNDAY BUSINESS POST SEPTEMBER 2 2012
As long as there has been money there has been retail - and at a fundamental level, little has changed since the days of shekels and denarii.
But in a very real sense, retail in the second decade of the 21st century has evolved hugely from its more primitive roots; technology has become simultaneously a challenge and an enabler, and in an economy marked by increased competition, it is the retailers who can best leverage the newest technologies which will have the most competitive advantage.
The fragmented nature of the retail environment, with the arrival of multiples and particularly the advent of online shopping, is forcing retailers to look closely at how best to manage the various channels that shoppers now use to purchase goods.
Additionally, customer loyalty has been massively tested by the increased ease and opportunity for shopping anywhere in the world, which is why retailing has had to take on many of the attributes of marketing to offer the consumers what they want, when they want it.
This trend is set to increase with the proliferation of smart phones and other devices which allow for a more targeted and seamless blend of marketing and retailing. Technology has for years been a driver of accuracy and efficiency in the supply chain side of retailing and wholesaling, from bar code scanning to voice picking; but progressive retailers are beginning to understand the advantages that the newest technologies can bring to the shop floor.
"Retailers need to recognise the influence that the web has had on retail," said Peter Minogue, managing director of BearingPoint Ireland, a business consulting company and SAP channel partner which seeks to align and optimise processes, IT and operating models with business strategy in leading public and private companies - including retailers.
"They need to realise that even though only 10 per cent of goods in Ireland are bought online, 60 per cent of the decisions to buy are made on the internet."
While some retailers will flounder in the rough waters of technology, others will embrace the newest trends that are changing the face of international retail. An example of this new approach can be seen in a recently-launched technology from software giant SAP.
Recognising the increased mobility and tech savvy of consumers, as well as the need to provide retailers with a consistent system to support retailers in this changed environment, SAP has introduced a new in-memory database technology - SAP HANA - which could significantly change the retail experience for businesses and consumers by bringing real-time analytics closer to the point of sale, either online or in-store.
Mark McAleer, SAP Business Development Manager, BearingPoint.
The amount of data generated within the retail industry continues to grow," said Mark McAleer, SAP business development manager at BearingPoint Ireland. "The challenge for the retailer is how to convert this data into meaningful information. But given the amount of data people are generating these days, it is almost impossible to do things the older way."
"So it is critical for retailers to have the right enabling technologies." According to McAleer, HANA’s in-memory technology gives users two capabilities which they probably would not have had before; it allows them to execute transactions many times faster (up to 1,000 times, he claimed); and it allows them to perform tasks, such as real-time demand planning and forecasting, which would be impossible without the technology.
"The high volume of information offered by HANA allows retailers to better predict customers’ buying patterns, which in turn allows them to better understand what promotions to offer, to whom and when," he said. "And ultimately, we will see coupons, tailored to individuals, being made available when that customer walks into the store."
Utilising the speed and accuracy of a system such as HANA will, in theory, be able to significantly increase consumer loyalty and customer capture. And while there have, as yet, been no HANA deployments in Ireland, BearingPoint (which employs 3,500 people across 15 countries) has carried out a HANA pilot around customer loyalty in France.
If all of this seems to be the future of retailing in Ireland, the reality is that the present is no less interesting.
"Many of the innovations in retail today are about changing the way the retailer interacts with the customer," said Minogue.
"And in the economic environment, many of these innovations will be around trying to reduce costs, and improve the speed at which the customer gets into the store and makes a purchase. It’s not so much about changing the processes, but it is about speeding them up.”
Thus, the potential for improving processes is out there - and, said McAleer, it is now up to retailers to exploit the technologies.
In addition to the general trend, spearheaded by companies such as SAP, for a migration to the cloud, most retailers will have some form of ERP system at the back end, and even the smallest shops will be able to avail of supply chain solutions offered by their larger suppliers.
But the future of retail technology will be about creating a different experience for the customers, increasing brand visibility, promoting customer loyalty and improving efficiencies.
"Retailers certainly have to have capabilities to better understand their customers," he said. "But they also need to be able to offer better levels of service. They need to define their business strategies, and then pick the right technologies to enable things to happen. But the real challenge for retailers is to balance all these requirements."