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The Tech Investments Retailers are Banking on for Improved Customer Experience

In 2017, retailers finally took a sledgehammer to the walls that for so long kept their brick-and-mortar, web and mobile operations separate. Now that they’re embracing technologies that will allow them to streamline the retail experience, 2018 will undoubtedly be the year of unified commerce.

Indeed, retailers plan to increase their overall IT spending for the coming year by 5.6%, up from last year’s 4.5%, according to a new study by Retail Info Systems (RIS) and the IHL Consulting Group. They also expect to increase their store IT spending by 5.8%, up from last year’s 4.7%.

“These figures represent the largest increase for both enterprise and store IT spending since 2008,” the study’s authors wrote. The main areas of investment, particularly for department stores, will be mobile for managers, mobile for associates, and mobile points of sale (POS), further affirming mobile shopping’s increasing foothold on retail traffic.

In a similar vein, retailers say that 30 percent of their software spending in 2018 will be on cloud-based solutions, up from 26 percent in 2016. E-commerce software will dominate about 43 percent of this budget, followed by store systems (31 percent), and sales/marketing and business intelligence/analytics (both at 29 percent).

But rather than settling for turn-key solutions, many top-tier retailers are rolling up their sleeves to write their own code. With mergers, acquisitions, and cloud platforms spurring both the need and opportunity for standardizations, custom-built applications can help companies acquire—and maintain—a competitive advantage, the study said.

Chief among most retailers’ unified-commerce wish lists is the capacity to check inventory and ship products from stores. Other potential investments include click and collect —also known as buy online, pickup in store—which showed a whopping 67 percent uptick in interest from 2016. (In comparison, shipping from stores saw only a 30 percent jump.)

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At the same time, retailers are accommodating the desires of customers to buy an item in one store—or channel—and return it through another.

“Nearly half (48 percent) of the respondents indicate they currently have the capability to return purchases to the store regardless of which channel they were purchased or fulfilled,” the report’s authors wrote. “Another 10 percent plan to deploy it in 2018.”

Such capabilities can spell sales-growth increases of more than 5.5%, the study said. Companies with up-to-date technology for ordering online from POS, for instance, can expect a 14.1% in sale growth in 2018, while the ability to order from other stores can boost sales by 10.3%.

That said, plenty of scope for improvement and experimentation remains in these areas; omnichannel retail, although growing, is still a relatively sparse playing field.

“Only 21 percent of retailers—an increase of 17 percent from last year—claim they have true holistic merchandise management and/or assortment planning across all channels,” the report said.

Perhaps in defiance of the much-ballyhooed “retail apocalypse,” this increased IT spending dovetails with another of retailers’ leading priorities: personalizing the customer experience.

To bring this concept to fruition, 54 percent of the retailers that RIS and IHL surveyed said they wanted to implement a single version of customer data across all off- and online channels. Another 46 percent of retailers are looking to adopt a single transaction engine, working in tandem with an enterprise order-management system, as a “foundational element for unified commerce,” the report said. Crucially, a single transaction engine can promote inventory visibility, something that 78 percent of respondents, up from last year’s 48 percent, said was important to them.

But adapting mobile technology to meet these needs can be both a boon and a bane, the study said. For one thing, handheld devices can break, be misplaced or get purloined. Still, the biggest concern for 75 percent of retailers is the lack of high-value apps from their existing POS vendor. Other challenges include the lack of mobile-management staff and an in-house or third-party support/help desk for devices (both at 60 percent); limited Europay, MasterCard and Visa (EMV) payment options (47 percent); and effective mobile security (45 percent).

Scanning the horizon, RIS and IHL also looked at emerging technologies such as artificial intelligence (AI)/machine learning and conversational commerce (e.g., Google Home and Amazon’s Alexa). Such technologies could streamline operations, though at the cost of current workforce structures.

“Whether affected staff will be retrained, redeployed or let go is a decision that every retailer will have to address,” the study said. “And retailers are not alone. Every company will have to address the workforce implications of AI.”

But any means of increasing productivity is worth the effort, whether it’s through AI or a unified commerce architecture in the cloud, the study added.

“In fact, the pursuit of productivity through emerging technologies has long been an engine of growth for retail and the economy as a whole,” it said. “Both will adapt to the power and promise of AI in coming years.”