Future of Retail Innovation & ITtgcs04.toshibacommerce.com/cs/groups/internet/documents/docum… · VP Research & Principal Analyst. EKN confidential | Do not distribute 3 Source:

EKN confidential | Do not distribute

Future of Retail Innovation & ITSahir Anand

VP Research & Principal Analyst


3

Source: EKN Future of Retail IT Survey, 2015

Agenda

Serial # Topics

1 Technology Challenges & Budget

2 Technology Performance & Spending Patterns

3Technology ROI & What will Shape the Future of Retail?

4 Consumerization of IT

5 Grocery/General Merch. Vs. Specialty Retail


Figures are percentage of total respondents

4

Top 5 IT Challenges

Managing legacy systems

Lack of skilled resources

Lack of sufficient budget

Implementing new systems

Difficult to measure ROI

61%

49%

45%

45%

42%


IT systems are legacy…

$


5

Source: EKN Future of Retail IT Survey, 2015; EKN New IT Cost Structure in Retail study, 2013

… and retail IT budget is only marginally up

Figures are average percentage of annual revenue, spent on IT annually

2%

2013

3%

2015


6

Figures are percentage of IT budget

… as well as somewhat lopsided

2013 2015

32% 33%

14% 13%

Developing new systems Maintaining existing systems R&D and Innovation

54%

Source: EKN Future of Retail IT Survey, 2015; EKN New IT Cost Structure in Retail study, 2013


7



25%Software

20%Hardware

15%External Service

Providers

23%Internal Personnel

16%Network and Telecom

Capex vs Opex


8


Agenda

Serial # Topics



3 Technology ROI & What will Shape the Future of Retail?




9


Y-o-Y improvement in tech. KPIs

5.7%

4.5%

4.0%

3.7%

3.2%

2.7%

2.3%

1.8%1.6%

0.6%

Total sales Consumersatisfaction

Customer traffic Business end-usersatisfaction

IT cost of operations Application uptime IT outsourcing as % tobudget

IT budget attainment IT staff/laborturnover

Data breachincidence rate

Business Metrics IT Metrics


10


41%At par with competitors

26%Better than competitors

33%Lagging our competitors


Retailers at par or lag competition in technology

innovation


11


Strategic areas of importance & IT budget split

Better At Par Laggards

Strategic Areas of Importance

Data management Information security Information security

Information security Data management Mobility

eCommerce enablement/Mobility

Overall cost optimization/ eCommerce enablement

Data management/Overall

cost optimization

Percentage Distribution of IT Budget

Developing new systems

33% 34% 29%

Maintaining existing systems

47% 52% 61%

R&D and Innovation 20% 14% 10%


12


Agenda

Serial # Topics



3Technology ROI & What will Shape the Future of Retail?




13

Top 3 Drivers for improving ROI from technology investments

Enhance end customer

satisfaction

67% 36% 33%

Reduce cost of technology

Facilitate Omni-channel

transactions



Retail IT is entering a new wave of customer engagement

focused IT spending


14


Consumer-focused solutions to shape the future of

retail

Likely adoption of digital

technologies

Mobilepayments

Online/social customer feedback/satisfaction tools

Social commerce platform

Interactive digital signage

Guided selling tools

Unified commerce platform

Real-time digital messaging tools

Internet ofThings

Digitalshelf labels

In-store beacons

Interactive virtualstores

Augmented reality Automated store trial rooms

3D printingWearable devices

3D virtualreality stores

High Medium Low


15


1 2 3

4 5

eCommerceInventory

Management

61% 42%

Customer Loyalty

39%

Analytics/Consumer Insights

34%

Store Operations

33%

eCommerce is most disruptive…

Top 5 technology application areas where retailers possesses the most disruptive technology initiatives


16


1 2 3

4 5

Security (network/app) IT Architecture

62% 49%

Network Management

46%

Payments

45%

Application Integration

38%

Security is another strategic focus area for IT

Top 5 technology infrastructure areas where retailers possesses the most disruptive technology initiatives


17


Agenda

Serial # Topics







18


33%

32%

9%

26%

Yes

Maybe

No

Don’t know

82%

64%

63%

52%

45%

41%

41%

39%

39%

34%

34%

32%

User and device authentication

Mobile device management policy

Centralized device monitoring

Robust data encryption tools

Security breach and threat scenarios and codify responses to those

Use of tokenization in storing and accessing data

Monitor server data movement

Published standards for capture, storage and use of data

Automated system alerts

Monitor web activity including social chatter

Monitor email content sharing/web or phone downloads

Secured and controlled file sharing via cloud

Is consumerization of IT a threat? Steps taken to overcome these threats

Consumerization of IT is a threat from an information

security standpoint


19


Agenda

Serial # Topics







Figures are percentage of total respondents20

68%

36%

24%

36%

20%


Different challenges…



Customers exp. greater tech than they can keep pace with

Lack of updated adequate security infrastructure

Delivering projects within budget

59%

59%

26%

15%

4%

Delivering projects on time 41%

24%



Customers exp. greater tech than they can keep pace with

Lack of updated adequate security infrastructure

Delivering projects within budget

Delivering projects on time

Grocery/General Merchandise Speciality Retail


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Top drivers for improving ROI from tech. investments


Grocery/General Merchandise

Drivers Speciality Retail

48% Reduce cost of technology 28%

33% Drive innovation 24%

30% Enable cross-enterprise collaboration 16%

26% Increase business user satisfaction 32%

22% Drive mobile/social applications 8%

22% Address Big Data 8%

11% Facilitate Omni-channel transactions 48%

7% Improve payment applications/infrastructure 24%


22


IT Budget as a % of Annual Revenue

2.9% 3.0%


$ $ $ $$ $Grocery/General Merchandise Specialty Retail


23


Distribution of IT budget


18.8%

25.1%

23.7%

15.0%

17.5%

Hardware

Software

Internal Personnel

External Service Providers

Network and Telecom

20.5%

28.3%

22.6%

13.9%

14.7%

Hardware

Software

Internal Personnel

External Service Providers

Network and Telecom


Specialty Retail


24


Maintaining existing systems cost half of IT budget

37%

52%

12%


30%

57%

13%

Specialty Retail

Developing new systems Maintaining existing systems R&D and Innovation

Source: EKN Future of Retail IT Survey, 2015;


25


Technology application areas with most disruptive

technology initiatives

44%

37%

33%

30%

15%

11%

32%

76%

24%

20%

4%

36%

Customer Loyalty

eCommerce

Pricing

Merchandising

Social commerce

Order Management

Customer Loyalty

eCommerce

Pricing

Merchandising

Social commerce

Order Management



26


Technology infrastructure areas with most disruptive

technology initiatives

59%

48%

44%

41%

30%

26%

44%

20%

60%

32%

60%

48%

Payments

Outsourced IT services

IT Architecture

Cloud delivery model

Network management

Application integration

Payments

Outsourced IT services

IT Architecture

Cloud delivery model

Network management

Application integration



27


Influencers and decision makers in technology decisions

70%

67%

44%

19%

11%

7%

32%

20%

88%

72%

40%

4%

CIO or VP of IT

CEO

CFO

SVP or Head of Supply Chain

CMO or VP of Marketing

SVP or Head of eCommerce

CIO or VP of IT

CEO

CFO

SVP or Head of Supply Chain

CMO or VP of Marketing

SVP or Head of eCommerce



28


20%

36%

34%

9%

Apparel & Accessories

General merchandiseand grocery

Specialty retail

Others


Distribution by primary retail format


29


9%

15%

22%

54%

< $100 million

$100 million to $500million

$500 million to $1billion

$1 billion +

Distribution by annual revenue

More than half of respondents have US$

1billion+ annual revenue



30


9%

3%

22%

38%

28%

CXO

SVP or EVP

VP

Director

Manager

Distribution by job role



31


51%

16%

9%

8%

7%

5%4%

IT

Stores

Marketing

Merchandising

Corporate

Multi-channel/Omni-channel

Supply chain

Distribution by business function



32


18%

18%

13%

33%

5%

5%

5%

3%

CXO

VP/SVP

Manager

Director

System engineer

IT analyst

IT architect

Other (please specify)

Distribution by IT job role



33

Thank You

For more information contact:Sahir Anand, VP Research & Principal Analyst, EKN

[email protected]

mailto:[email protected]

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Future of Retail Innovation & ITtgcs04.toshibacommerce.com/cs/groups/internet/documents/docum… · VP Research & Principal Analyst. EKN confidential | Do not distribute 3 Source: