Box Technologies Retail Systems Forum 2011

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Moving to a multi-channel model inevitably prompts massive change within retail organisations but this is increasingly being driven by management and business leadership capabilities rather than new technologies.

By Glynn Davis

Speaking at the recent Box Technologies Retail Systems Forum 2011 held in Reading, Peter Edwards, group CIO at Game Stores Group, told delegates: "It's not about technology, as there are some excellent products out there, so this is not a barrier. The main problems are people's understanding of what's involved and the business challenge of investing in multi-channel at a time when businesses generally have less money."

Nowhere is this understanding more critical than among more senior management whose support of multi-channel is critical when implementing the necessary changes to making it happen within the organisation. At Aurora Fashions, this has been essential to setting it on its path to integrating all its channels.

Andy Tudor, formerly of Aurora and now head of multi-channel solutions at Retail Assist, says: "The single most important piece in the business was the advocates of the change. IT puts forward thought leadership but we needed strong advocacy throughout the business."

For both Aurora and Game Group there are also big issues around dealing with legacy systems, which present major challenges. The problem is that legacy systems will have been added over many years but not necessarily in a strategic manner.

Edwards says: "Businesses are often tactical so they [implementations] are done quickly. We may see exciting things ahead but there's a lot of stuff under the hood that we wished we didn't have."

This situation is especially acute for Game Group as Edwards describes its infrastructure as a "burning platform" as it is a predominantly bricks and mortar business in a world where consumption of games is gradually moving from physical delivery of product to digital downloads. And to add to the issues there is also increased accessibility through mobile devices.

Mobile is certainly having an increasing impact on the retail industry and it was a topic frequently referenced by presenters at this year's Retail Systems Forum. Among them was Dan Hartveld, director of mobile at Red Ant, who stated that 85 per cent of new handsets have internet connectivity, which means the channel cannot be ignored by any retailer.

He suggests some are "scared by mobile", but this should not put them off and he recommends setting specific objectives, depending on want retailers want from mobile. "The big thing is that you can't do everything so focus on one thing, whether it is increasing sales, gaining publicity or increasing brand interaction. Work out what mobile can deliver that other channels cannot," says Hartveld.

The emergence of mobile adds another touch point for retailers to contend with when they develop their multi-channel propositions. For Aurora Fashions the starting point of its multi-channel project was to integrate all the new touch points – reserve and collect, order in-store for home delivery, and reserve in store A for collection in store B.

"We've been introducing a back-end to facilitate this capability," says Tudor, adding that the next step has been to move towards that all-important single customer view across the business. "All the customer information, regardless of what channel, goes into a single CRM (Customer Relationship Management) database."

Brian Hume, managing director of Martec International, says the drive towards multi-channel has prompted a "much bigger interest in CRM". Another driver is the fact that whereas customer data had to previously be collected via loyalty programmes – typically costing 0.75 per cent of sales – the online channel requires customers to identify themselves when ordering online so this margin-eroding cost is eradicated.

Also potentially helping the move towards single customer views is the emergence of web-based PoS (Point-of-Sale) solutions being used in-store. Hume says the traditional scenario of having different PoS in-store and online is disappearing and instead, retailers are taking their online PoS solutions and replicating it in-store.

"The benefit is a common service for customers and it provides easier access to the [CRM] database and a single view of the customer," he explains.

Mobile technologies and multi-channel are combining to fuel great change in-store and PoS solutions are undergoing radical change as a result. At Spar (UK) the business is in the process of moving to an upgraded solution.

Roy Ford, retail IT controller at Spar (UK), told delegates at the Forum that the need for cutting costs from the upgrades the company has to periodically undertake on the till equipment at 1,600 of its stores around the UK meant a move to a next-generation EPoS was essential.

Working with software partner BCP the company has developed a semi-connected architecture that Ford refers to as a 'fit client' solution. This enables Spar (UK) to make upgrades from the centre by providing stores with access via ADSL. And should the link break then there is the fall-back option of connection direct to each store's back office server that does not allow transmission of data but does enable payments to be taken.

This hybrid solution will enable Spar (UK) to make annual savings on its software upgrades of £1 million, which means the development costs of £1 million will be recovered in only 12 months. The other issue Ford has been dealing with at the PoS is PCI-DSS compliance.

As a Symbol group the central office of Spar (UK) has no control over what equipment and IT systems are used within the group's 2,500 stores around the country so it was a tough task sourcing a solution that would go some way to making the estate PCI-compliant.

However, Ford says he found the solution in the Commidea Ocius Sentinel, which will be installed with the standard Verifone terminals used by many stores and will "go a long way to de-scope" the PoS set-up at Spar stores. "We've gone to PCI-compliance as near as we possibly can for a remote location environment," says Ford.  

Such activity at Spar (UK) is not indicative of what is happening in the UK as a whole, according to Mark Kedgley, chief technical officer at NNT, who says there is a widespread dragging of feet throughout the retail sector with 90 per cent of companies not compliant.

He suggests tier one merchants have taken the stance that "if they can find ways to delay [working on compliance] then they will". And among tier two and three retailers, 44 per cent say they do not understand their obligations. 

Although Kedgley says there is no magic bullet solution – this is simply "vendor-speak" – he recommends retailers make the effort to progress towards compliance. Otherwise he warns that the potential damage to their brands from a breach could be serious.

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