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Retail: It's All About 'Experience'
By Paul Scorza, CIO & EVP, I.T., Ahold Delhaize Company and Malcolm D’souza, Sr. Director (I.T. Transformation, Retail Business Services), Ahold Delhaize Company
In the retail supermarket business, the use of technology is not a novelty anymore– it is a necessity! Customers will quickly migrate to the retailer that provides the best shopping experience. In many cases, it is the application of innovative technology that creates the experience, and speed to market is essential in order to stay competitive. This growth in the use of technology has created some unique challenges for both manufacturers and for supermarket retailers. Retailers are clamoring for new, innovative solutions to entice and engage their customers. There is no shortage of ideas; however, the realization of ideas into tangible solutions is lacking.
Technology changes rapidly and with every new evolution, there are new capabilities being made available, which open the possibility for new applications. The ability of retailers to capitalize on the potential use of these new capabilities can be the key to attracting new customers, which translates to increasing market share. At a very basic level, retailing is very simple. Retailers buy product, they display the product, and they sell the product. The application of new capabilities has to be able to support this basic concept of retailing but, also provide new conveniences or services to customers. Call it the “wow factor”.
In addition, omni-channel retailing has become more prevalent and mainstream. Customers expect to be able to shop for products in the convenience of their homes and to be able to pick up the product at a store of their convenience. They expect retailers to provide them with internet connectivity while shopping in their stores, so that they are able to compare prices and offerings from other competitive retailers. The “experience” is a key attribute in impacting customer satisfaction. Retailers are not technologists and therefore need to rely on technology partners to innovate, develop, and deliver solutions to create the experience and keep them competitive.
The ability of retailers to capitalize on the potential use of these new capabilities can be the key to attracting new customers, which translates to increasing market share
One would expect software companies to be able to provide solutions much more rapidly than in-house development teams. However, this is not necessarily the case. Is this because there is a lack of foresight into the future? Is it a lack of investment in R&D? My experience is that software companies are ready to develop solutions but they rely on retailers to provide the concept and idea. To further make the point, software companies need to develop solutions that meet a broad range of requirements because of the large client base that they want to satisfy. This introduces more overhead and complexity and slows down the delivery of new solutions. Also, competition between technology companies is equally fierce and they too are looking for ways to contain costs. Finally, an increasing number of companies appear to be reluctant to invest in new ideas unless they have a partner who will fund the research and development.
At Retail Business Services (RBS), an Ahold Delhaize company that supports its businesses in the US, we have been able to fill the void created by this reluctance to innovate on the part of software developers by creating our own small innovation teams. These teams are staffed primarily by partnering with educational institutions in our communities and offering student internships. These internships provide the students with real world experience, and it provides us with fresh talent and updated skills to develop customized solutions at a reasonable cost. Our experience has shown that we are able to bring innovative solutions to division stores we support, which are relevant and customized to their unique needs more quickly than most software companies. This is also true in the infrastructure space. At Ahold USA brands, investments in areas such as the network were overdue. Ahold USA partnered with its network provider and used them to facilitate the journey to modernize the in-store networks within these stores. While the network provider had the technology and had done other large implementations, the supermarket retail space brought its own set of nuances and challenges. So, we traveled with them on the journey which resulted in a successful implementation-with each of us learning from the other. A definite win-win, in this case.
In closing, the retail industry needs to foster a tighter relationship with key technology partners. The relationship needs to be such that both parties are invested in each other’s growth and success. Instead of the retailer telling vendors what they need and the vendor then building the solution, it would be better if a vendor came to me and said, “we are going to invest in a solution we believe will help grow your business. What we need from you is to partner with us to test, pilot and then use the solution in stores, so we can showcase it to other customers”. That is the type of interaction and relationship we need with our vendors and it is up to all of us to help foster these partnerships.