KI Retail 2011

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Industry ResearchPublication Date: 4 February 2011 ID Number: G00210384

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Key Issues for Retail, 2011Gale Daikoku, Mim Burt, Hung LeHong, Van L. Baker, John Davison

Gartner retail research will continue to provide advice on issues spanning customer,business and IT topics most relevant to large retailer businesses, as well as IT roles anddomains.

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Publication Date: 4 February 2011/ID Number: G00210384 Page 2 of 8

2011 Gartner, Inc. a nd/or its Affiliates. All Rights Reserved.

TOPIC DESCRIPTION

Retail is a broad and diverse industry. It encompasses many sectors and includes very small tothe largest international businesses. Our retail research agenda is focused on key segments ofretailing, and on the business and IT needs of large retailers with more than $1 billion in revenue.

In 2011, leading retailers will be faced with:The continued emergence of new shopping patterns as consumers increasingly seek tointeract with the retailer through a variety of touchpoints

The increasing use of new technologies by consumers and employees in the retailworkplace

Balancing the need to deal with continued budgetary pressures and the increasing needto grow the business at the same time

Much of our technology-specific research will also be presented in the context of softwareapplications and the retail consumer and business processes in which those applications aredeployed in large retailers.

WHY IS THIS IMPORTANT

Leading retailers face continued budgetary pressures while looking to tap into emerging shoppingpatterns that place an even higher emphasis on customer processes. Online access toinformation such as prices, promotions, stock availability and store location has put customers ingreater control of the shopping process. Retailers that fail to introduce processes and technologyto capitalize on cross-channel shopping across key customer touchpoints will fall behind theircompetitors.

KEY ISSUE DESCRIPTIONS

The agenda will provide retail-oriented research for IT-minded business professionals with abusiness focus on the following seven core topics:

E-commerce and multichannel Multichannel retailing is a key growth area in 2011as retailers look to upgrade e-commerce platforms, multichannel infrastructures andapplication strategies that deliver a seamless cross-channel shopping experience acrosstouchpoints.

Customer experience Customers are turning the current retail model on its head byredefining and customizing the way in which they engage with retailers. Shoppers havetaken greater control of the shopping experience by embracing social networks andvirtual communities to access information that influences their purchasing decisions.

Store operations The store does not operate in isolation, and is a key part ofmultichannel retailing for most large retailers. Investments in the store channel willcontinue to target the basics of stock availability; good service delivery at all points in theshopping process (whether assisted or self-service); secure, hassle-free transactions atthe point of sale; and relevant deployment of well-trained labor.

CRM and loyalty Customer-centric retailing practices remain a hot topic with largeretailers that are constantly seeking new ways to use the power of analytics to grow theirbusinesses. Creating the optimal offers to send to targeted customers using analytics

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and other data sources to predict customer behavior and customer loyalty remain toppriorities.

Business intelligence (BI) and analytics BI and analytics remain important issuesfor retail. Retailers vary widely on how well they have evolved their BI capabilities fromthe "basics" to advanced areas of BI and analytics.

Merchandising Merchandising capabilities vary widely. In developing economies, thefocus is on moving to packaged software for all areas of merchandising, while indeveloped economies, growth is focused on planning and adding optimization intoexisting merchandising processes.

Trends The major retail trends from 2010 will continue in 2011, with customercentricity, cross-channel shopping and globalization being prevalent. We will researchthe vendor market for general retail technologies, and highlight technologies that arelikely to generate some retail hype.

E-Commerce and Multichannel Retail

Key Issue: How are retail e-commerce practices and technology changing?

Consumers now shop across channels, so most of them expect retailers to provide a consistentexperience across all channels in which the retailers have customer-facing operations that is,in traditional channels (such as the store, the Web and catalogs) and emerging channels (such asmobile). As e-commerce and mobile channels become more integrated with the overall retailexperience, many retailers must re-evaluate and reform policies that drive pricing, promotionsand channel revenue attribution models such as factoring in "interchannel" tolerances for claw-backs and channel performance metrics.

Key Issue: How are retail m-commerce practices and technologychanging?

The revenue potential of a mobile commerce application for the merchant is twofold. In addition tothe potential revenue generation from mobile application transactions, per se, mobile commerce

will contribute heavily to the multichannel shopping experience. We expect consumers to usemobile commerce applications to look up prices and availability, but often make the actualpurchase in the physical store or even online from a home computer. Retailers should factor allthese revenue-generating opportunities into their m-commerce strategies.

Key Issue: How are retail multichannel practices and technology changing?

Cross-channel shopping is gaining traction as consumers increasingly move fluidly among brick-and-mortar, e-commerce and m-commerce channels. As that trend evolves, consumers will cometo expect consistency across channels for merchandise, promotions, and terms and conditions. Itwill be up to retailers to weave these multiple channels into one seamless and pleasant customerexperience. Location-based services will play a major role, enabling people to explore the realworld using the smartphone's high-accuracy location technologies and context-aware serviceswhile also connecting to the virtual world.

Planned Research

Multichannel vendor landscape

Consumer mobile trends: Western Europe, Brazil, Russia, India and China

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Multichannel feedback management

Customer Experience

Key Issue: How are customer shopping/buying behaviors changing?

The customer shopping experience is being redefined by consumers, and retailers will need todeliver to their wants and needs in a flexible and personalized way. However, to ensure success,retailers should not lose their focus on the basics of retail.

Key Issue: How will social technologies influence the customer experience,and what can retailers do?

Social technologies make it easier for consumers to familiarize themselves with products andservices before shopping in any of the retailer's sales channels, which means they may oftenmake purchasing decisions without any contact or intervention from retailer personnel. Thisheightens the importance of the retailer executing all the steps correctly and efficiently prior to thesale.

Planned Research

Consumer trends and social media


Store Operations

Key Issue: How can retailers improve store operations by balancing costreduction with increased productivity?

Retailers must optimize the store's infrastructure to integrate with the multichannel environmentthat exists today (and will in the future). This means that retailers must integrate front -end andback-end processes and technologies in the store with those of its other channels.

Key Issue: How can retailers optimize store infrastructure to execute amultichannel strategy?

Retailers will need to optimize the infrastructure across all the channels to execute a robustmultichannel strategy in the store. This will involve using cross-channel CRM initiatives, includingcross-channel loyalty and promotions, planning cross-channel merchandising and cross-channelbuying, and executing cross-channel supply chain fulfillment.

Planned Research

Consumer preferences and self-service trends

Point-of-sale applications for Tier 1 retailers

CRM and Loyalty

Key Issue: How can retailers leverage CRM tools and tactics?

CRM is becoming more complex with the increasing influence of social communities andmultichannel retailing, but loyalty remains one of the keys to retail success.

Planned Research

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Customer offer engine vendor landscape

Consumer loyalty trends


BI and Analytics

Key Issue: How can retailers leverage business intelligence and analyticsto grow their businesses?

BI and analytics are moving from basic implementations to more-advanced tools, especially dueto the need for retailers to cope with increasing amounts of consumer data in the multichannelenvironment.

Planned Research

Advanced analytic trends

Multichannel customer analytics

MerchandisingKey Issue: How can retailers improve pricing, promotion andmerchandising practices with the help of technology?

Merchandising needs vary, with packaged software needs taking the lead in emergingeconomies, while advanced replenishment activities are taking the lead in developed economies.

Planned Research

Advanced analytic trends

Customer offer engine vendor landscape

TrendsKey Issue: What are the key trends that will influence critical retailtechnology decisions, and what frameworks can help retailers prioritizetheir investment decisions?

Monitoring key trends in retail business and technology is a mandatory part of an evolving retailstrategy. As the pace of change (in terms of new technologies, new markets and new serviceofferings) continues to accelerate, retailers need to be in a position to understand trends as theyaffect their businesses.

Planned Research

2011 National Retail Federation show analysis

Retail Cool Vendors 2011

RECOMMENDED READING

Some documents may not be available as part of your current Gartner subscription.

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"Retail Research, 2010: Aligning Business Processes and IT"

"Key Issues for Retail, 1H10"

E-Commerce and Multichannel Retail

"Multichannel Forecast: A Major Change in Store"

"Google Has Quietly Increased Its Retail Focus: Why Retailers Should Care"

"IBM Acquires Sterling Commerce: WebSphere Commerce Goes Cross-Channel"

"How Can Retailers Get Started in Mobile Commerce?"

"Oracle Agrees to Acquire ATG in an Attempt to Strengthen Its Retail Cross-Channel CommerceSolution"

Customer Experience

"What Makes a Good Retailer Facebook Page?"

"Should Retailers Use Twitter?"

"Retail Consumer Survey: What Consumers Want From Cross-Channel Shopping"Store Operations

"Retail Time and Labor Vendor Update, 2010"

"SAP's Point-of-Sale Solutions for Smaller Tier 1 Retailers: SAP POS"

"Oracle Point of Service: Oracle's Point-of-Sale Solution"

"Advanced Retail Solution: NCR's Point-of-Sale Offering for Tier 1 Retailers"

CRM and Loyalty

"Marketing Service Provider Capabilities in Retail"

"Personalized Offers: Do Consumers Value Them?"

BI and Analytics

"A Framework for Multichannel Retail Analytics"

"BVI Networks Delivers Real-Time Store Monitoring"

Merchandising

"Dacos Takes a Different Approach on Price Optimization"

"Rethinking Retail Forecasting and Optimization Architecture"

Trends

"Predicts 2011: Consumers Push Emerging Retail Channels Into the Mainstream"

"Hype Cycle for Retail Technologies, 2010"

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Key Issues

How can retailers leverage business intelligence and analytics to grow their business?

How will social technologies influence the customer experience, and what retailers can do?

How are customer shopping/buying behaviors changing?

How are retail e-commerce practices and technology changing?

How are retail m-commerce practices and technology changing?

How are retail multichannel practices and technology changing?

How can retailers leverage CRM tools and tactics?

How can retailers improve pricing, promotion and merchandising practices with the help oftechnology?

How can retailers improve store operations by balancing cost reduction with increasedproductivity?

How can retailers optimize store infrastructure to execute a multichannel strategy?

What are the key trends that will influence critical retail technology decisions, and whatframeworks can help retailers prioritize their investment decisions?

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Documents

KI Retail 2011