Social Commerce, Demand Intelligence Among IDC’s Top 10 Retail Predictions

Focused on providing new strategies to optimize the value of IT in 2010, IDC Retail Insights unveiled its Top 10 Predictions for the retail industry.

The report explores several hot retail topics, including social commerce, mobility and how demand intelligence is driving inventory management. Leslie Hand, Research Director at IDC Retail Insights, expanded on these predictions with an exclusive interview for Retail TouchPoints.

Retail TouchPoints: Centered on a hot button in retail right now, one of the predictions compares traditional retailers to the Titanic, and the approaching iceberg is social commerce. How can retailers prepare for this? Do you anticipate a change to favor online retailers? Retail giants with bigger customer bases?


Leslie Hand: Social networks are an unprecedented opportunity for merchants – with over 1.3 billion existing accounts on the top-10 social networking sites.

IDC Retail Insights recommends that retailers consider a 4-step approach to social networks:

  • Listen/monitor social network discussions around your brand
  • Deliver useful, relevant content to social consumers beyond mere advertisement – the primary objective should not be generating traffic to the retail banner web site, but to increase brand visibility all over the web.
  • Engage social consumers in interactive activities/communities
  • Deliver consumer services – pre & post-sales – through social networks

There is a place for brick and mortar and online retail, but it is clear that online sales are trending markedly higher with YOY growth 5X that of stores on average last year. A decision to not pursue a social media presence, is a decision to not interact with consumers in a way that is becoming part of a shoppers lifestyle – its similar to making a conscious decision to not go into market leading shopping centers and malls – your brand simply is not represented in an environment full of many of your competitors.

RTP: This holiday season, most retailers ran lean on inventory and it seemed to be a successful strategy. Can you elaborate on Prediction #8 regarding the critical role of Demand Intelligence and offer any examples of who is excelling in this area?

Hand: Last year was very interesting, from the perspective that it was very obvious, at least if you were following retail return on asset figures, to see who already had the capabilities in place in October and November 2008 that enabled a nimble response to reduced demand. These retailers were able to fine tune assortments, reduce demand forecasts and adjust prices and promotional programs to maintain margin expectations given expected product sell-through issues.

The flip side of that story, was many of the retailers who were not able to adjust expectations soon enough, because of the timeliness of demand data or insufficient analytics, remedied the situation by investing in better forecasting and planning tools in 2009. Part of the success this past holiday season can be attributed to merchants sticking to the plan, with an understanding that the data and the analytics and planning tools that were used to develop the plan were smarter and more agile than human experience alone. We believe this was a tipping point for many retailers, who may not have been fully invested in demand intelligence before.

RTP: Prediction #6 suggests retailers will use mobility to drive intimacy. Broadly speaking, what kind of impact do you anticipate from mobile engagement? Do you see mobile commerce and more specifically pricing matching, from the ability to price match and explore such a rich library of information to influence the purchasing decision?

Hand: Mobile consumer interaction brings payment, loyalty, customer service, and promotional offers to the next level. This shopping experience is convenient, fully immersive, interactive, relevant and often personalized. Many consumers are already using their mobile devices to find products, compare products, read reviews, assess ingredients, and compare retail prices. Most customers will not put off a purchase for a small price difference, but consistent difference will have them standing in your competitors’ aisle checking prices in time. Critical advice for retailers – understand that how to use the data that is generated from all of these interactions to maintain competitive pricing and to protect margin.

RTP: What are some of the new retail applications you see emerging in 2010 around customer experience optimization? Are there any specific technologies that you would point to as likely to emerge as integral to the in-store experience this year?


Hand: The biggest category of applications behind the scenes is the analytics applications that will integrate behavioral and purchase data from across channels to hone marketing and merchandising strategies. These are already available from vendors including Teradata, SAP and IBM. On the mobile applications front, we will see improved mobile payments, more retail specific capabilities like Mobile Order Management from Sterling Commerce and mobile schedule management from Kronos and mobile merchandising from Oracle.

Customers, of course, will be most impressed with interactive digital and mobile experiences in the store including sales staff interactions for product assistance, grocery list and health management capabilities.

RTP: Prediction #5 emphasizes the importance of convergence and integrating loyalty, CRM, supply chain, etc. Are there any retailers doing this currently or is this where things are headed? How do these operations integrate into a retailer’s loyalty strategy on the customer-facing end?

Hand: Retailers that are successfully integrating loyalty, CRM, supply chain and merchandising are leveraging service-oriented integration capabilities as a foundation across the entire enterprise IT landscape. In many cases they have identified a single process or set of processes that would be dramatically improved by streamlining and automating the workflow. One example that comes to mind is a large North American apparel retailer that needed visibility to product across their enterprise, so that they could make sure that they could balance inventories contingent on demand. Automated processes were created to find inventory and create transfers utilizing data that already existed in core systems. Store associates have access to order tracking and lifecycle information so that they can proactively advise consumers of order status and when necessary problems trigger alerts of exception conditions. In this scenario, an additional step could be taken to prioritize transfers or order fulfillment based on loyalty status, much like the airlines do when you are on standby. The rewards of being a loyal customer can be enhanced and must be reflected in retail loyalty strategies.

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