Renewed investments in sourcing, marketing and Big Data are among the retail developments forecast for 2014 by IDC Retail Insights.
In a recent webinar, titled: IDC Retail Insights 2014 Predictions: Worldwide Retail, executives from the research and consulting firm provided their perspectives on long-term industry trends and potential new themes. The goal of the webinar was to help retail leaders capitalize on emerging market opportunities and plan for future growth.
“In the next three years, retail will reinvent itself as omnichannel leaders reach for customer relationships, relevancy and reciprocity,” said Robert Parker, VP and GM, IDC Retail, Energy and Manufacturing Group. “A new replacement cycle of enterprise, planning and commerce systems will anchor complex company-wide business transformation for immersive experience and commerce. Quick-to-market leaders will improve same-shopper sales ― fast becoming the most significant leading indicator of future performance.”
According to the IDC webinar, the top 10 predictions for 2014 and beyond ― and associated drivers, IT influences and recommendations ― include:
1. During 2014, fast-followers will chase the 50 global retailers already transforming store, mobile, and e-Commerce channels, supply chains, merchandising and marketing for the omnichannel customer experience. Ubiquitous mobile and social lifestyles; media spending and consumption shifting to digital and mobile; and increasingly intense competition from all quarters are among the drivers of this trend.
2. Business transformation will drive ERP, core merchandising, floor area ratio and planning investment to a 9% compound annual growth rate (CAGR) through 2015. IT impact includes real-time ERP and flexible core merchandise, critical for scale and speed; continuous “next day/next season” plan and execute cycles, needed for agility and precision; and planning workload spikes suited for economics and performance of cloud-based applications.
3. By 2016, leading retailers will improve same-shopper sales with immersive commerce, driving additional revenue growth of 1.5% and margin growth of an additional 3%. Guidance entails aligning with line-of-business (LOB) leaders who champion innovation and convergence; investing in customer analytics technology, applications and data management; and hiring and training for skills that enable converged retail.
4. By 2017, marketing and advertising technology investment will increase by 50%. Guidance includes putting marketing leadership on the IT governance team; co-developing marketing technology roadmaps and maturity models and benchmarks; and focusing enterprise technology and skills as the enabler of marketing skills and objectives.
5. Retailers will narrow and enable Big Data and analytics (BDA) projects in 2014, as 20% to 30% of projects fell short in 2013. The IT impact consists of granularity, completeness, cleanliness and variety emerging as data issues; legacy BDA technology and applications that do not meet IT, business and analysts requirements; and poor collaboration and mid-level management support that impedes adoption and benefits.
6. Emerging consumer privacy concerns will force 50% of early adopters to revisit hyper-personalized promotions by 2015. IDC Retail Insights guidance includes setting customer privacy as an IT/LOB governance concern; treating privacy as a risk to measure, forecast and mitigate, with third-party expertise; and transforming personalization with transparent relationship, relevancy and reciprocity values.
7. E-Commerce and store platform replacements that enable mobile, integrated and interactive experiences will support a 10% CAGR in commerce investment through 2017. Drivers encompass borderless, anytime-anywhere business; ubiquitous mobile and socially connected lifestyles; and rapid emergence of cloud-based provisioning and services.
8. As product assortment refresh cycles quicken, 25% of mid-sized retailers will initiate new PLM or sourcing projects in 2014. Recommendations include prioritizing investments in PLM that enable faster cycle times and greater product differentiation; aligning product assortments with localized consumer needs, accounting for the voice of the customer; and investing in the technologies that enable supplier collaboration and transparency.
9. Retailers will double the rate of industry supply chain investments in 2014, as compared to 2013. For IT, this means changes in supply chain planning, replenishment and allocation processes as well as algorithms to enable omnichannel fulfillment. In addition, supply chain execution processes such as distributed order orchestration, pick, pack and ship technologies will need to adapt to omnichannel retail.
10. By 2016, 50% of national retailers will invest in distributed order management, enterprise inventory visibility and workforce management to enable same day fulfillment. Drivers include the intensification of competition from all quarters; borderless, anytime-anywhere business; and ubiquitous mobile and socially connected lifestyles.
Click here to access an audio replay of IDC Retail Insights 2014 Predictions: Worldwide Retail.