IDC Releases Retail IT Predictions For 2015

IDCRetailRetailers must continually implement new technologies designed to provide the best experience for both shoppers and company employees. To help merchants down that road, IDC Retail Insights shared its Top 10 Decision Imperatives for 2015 and beyond. Each imperative includes four parts and correspond with predictions for the several years as outlined by Greg Girard, Program Director at IDC Retail Insights during a web conference:

  1. The imperative itself, or the action to be taken to achieve a desired business outcome;
  2. IT impacts, actions and consequences;
  3. Specific practical advice provided by IDC technology experts; and
  4. Drivers and external factors that bring attention to the decision.

The 10 imperatives are outlined and explained below:

1. By 2017, three times as many retailers will explicitly pin their customer and operations strategies on “third platform” technologies — IT platforms built on mobile devices, cloud services and social networks.


IDC suggests that retailers to move HR, financial, procurement and commodity applications to the cloud and aggressively employ mobile and social business tools for productivity, agility and speed.

2. In 2015, CIOs will invest in omnichannel integration technologies as a top priority to support growth of the omnichannel shopper, who is expected to spend 30% more than the single-channel shopper.

“You need to get the data integration correct first,” said Robert Parker, Group VP at IDC Retail Insights. “You need to have a consistent view of your structures and be inclusive of both structured and unstructured data. Once the data is right, you can do business process orchestration, and we recommend that you prioritize based on the highest business benefit balanced with the lowest level of complexity.”

3. Over the next three years, half of CIOs across the top 250 retailers will adopt omnichannel IT governance fit for a “third platform” era to combat usage of technology acquired outside of the IT organization.

The unchecked adoption of third platform technologies will likely expose retailers to unforeseen operation, security and cost-related risks, making it more important for retailers to determine the business value each technology provides.

“Our guidance is for IT to try to sit at the intersection,” Parker said. “A lot of the omnichannel processes, whether they’re customer facing or related to operations, cut across the traditional business lines. The real insertion of value and relevancy is going to be the ability to identify those existing and planned cross-channel activities and determine which technologies are required to support them.”

4. By 2016, the top 150 retailers will improve ROI on loyalty promotions due to the unification of multiple sales channels.

IT professionals will have to develop a mobile-first approach to all loyalty and promotions programs to maximize ROI, according to the IDC. To consistently execute offers in-store and online, retailers must address omnichannel friction across all loyalty and promotional customer touch points and take a holistic view of customer relationship management.

5. By 2018, 60% of omnichannel retailers will have launched customer mobile payment initiatives to enhance existing ecommerce, loyalty and store MPOS investments.

“Even though many of the major mobile device manufacturers have already invested in wallet technology, and consumers are familiar with paying for goods through apps as popularized by the likes of Starbucks, the entrance of Apple Pay into this market earlier this autumn will cause retailers to accelerate their investment in mobile payment initiatives,” said Miya Knights, Senior Research Analyst at IDC Retail Insights. “Mobile is definitely the next frontier in terms of omnichannel execution and retailers that are already exploring greater mobile engagement will naturally see payment capabilities as an extension of the investments they’ve already made.”

6. As cyberattacks increase, by the end of 2016 50% of the top 250 retailers will have reduced exposure and loss by more than 50% with intelligent sense-and-respond security strategies.

With the increase in organized cyberattacks on retail payment systems in 2014, IDC recommends that merchants employ advanced analytics to identify risk based on behaviors. As additional guidance, the analysts suggest that retailers develop comprehensive network and endpoint monitoring strategies; they need to implement effective incident response teams and protocols across the IT department.

7. By the end of 2016, product intelligence (PI) will inform 80% of the top 10 e-Commerce retailers’ pricing decisions and drive mainstream adoption of high-velocity pricing.

Girard predicted that “Big Data analysis will play a big role” in this imperative, with PI services expected to support high-speed algorithmic pricing decisions for more than 15 million products daily by 2016.

“It’s all about developing a sense-and-respond PI strategy and enabling pricing systems, processes and executives to consume PI content meaningfully in decision-making,” Girard explained. “Assess exposures to — and opportunities to — exploit PI across many strategies from algorithmic pricing to proactive price-matching programs, and also into assortment management.”

8. By 2018, on-demand socially networked delivery services (including Uber, EBay Now, Shutl, Deliv, Postmates, Instacart, Amazon, Alibaba) will perform 90% of all intra-day direct-to-consumer deliveries.

With the technology to analyze inventory and customer service data now in place, retailers will be armed with the fulfillment flexibility they need. For example, many forward-thinking retailers are partnering with same-day delivery providers to maximize customer fulfillment flexibility and minimize cost.

In addition to optimizing delivery services, retailers should allow customers to provide feedback and ratings on these third party providers to ensure that problems and questions are addressed as quickly as possible.

9. By the end of 2015, retailers implementing location-based services will increase “same shopper sales” — retail sales to individual customers across all channels — by as much as 5% through analytics-driven operations.

Location-based capabilities including video analytics, RFID, beacons and associate wearables appear to be the next step in the in-store evolution towards the Internet of Things (IoT). IDC advises retailers to develop and test customer and associate scenarios for beacons, NFC and other location-sensing technologies to improve the overall retail experience. To further understand the future of the in-store environment and the capabilities newer technologies can provide, merchants must evaluate the potential broader role the IoT plays in communication among consumers, products and employees.

10. By 2016, even as private brand growth flattens in the U.S., consumer-driven private brand product innovation will drive a 10% improvement in customer visit frequency.

“Retailers must invest in systems that enable product innovation management, not just product development or sourcing, as important as those capabilities are,” said Leslie Hand, VP for IDC Retail Insights. “Leverage analytics to determine optimal product assortments and placements. Wherever possible, use data visualization tools to improve productivity, consistently and performance within the company.”

The conference closed with a guidance summary for all retailers:

  • Invest in customer-centric information;
  • Equip associates with training and tools that facilitate differentiating experience;
  • Look for technologies built for visibility, speed, automation and anticipatory needs; and
  • Adopt more sustainable infrastructure and applications.

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