2014 RETAIL TRENDS REPORT

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2 WHAT TO EXPECT For retailers, will be the year of getting connected.

3 Jason Becker, Chief Operations Officer of RICS Software, offers insight on what to expect in, including what retailers want, why investing in SaaS is a smart and ultimately necessary decision, and advice on using your data effectively. The following overarching principles set the stage for how retailers will and should interact with their technology over the course of the next year. Connecting with customers. Connecting with vendors. Connecting with data. Big-box enterprises utilize advanced retail technology to monitor and enhance customer relationships, target advertisements to specific buyers, equip employees with tablets enabled as mobile point of sale devices, and use reports to make decisions using vast amounts of data. As these stores make products available online and easily accessible to the increasingly instant gratification-driven consumer, smaller retailers need their own technology solutions in order to keep up. It s impossible, however, for retailers with limited resources to develop these solutions on their own. These retailers have all of the business challenges and technology appetites of the largest retailers, but none of the budget or tech skills. 1 So how do small to midsize retailers compete in this evolving environment? Software as a Service solutions enable small retailers to get the best of both worlds: an intimate relationship with consumers, powered by enterprise-level insights and optimization. 1 Over the past few years, these solutions have become available for small to midsize retailers. And in, they will be necessary to compete. 2

4 1 Subscriptions make sense. Retailers want to subscribe to technology and software, not buy it. The subscription strategy helps owners mitigate financial risk because the immediate-term cost of getting started is low and the long-term risk of buying software that may become obsolete in a year or two is eliminated. Subscribing to software over buying is a common sense best practice. 3

5 2 Invest in your technology. Invest in your team. Investing in smart technology and software is one step towards realizing your business strategy and goals. Great retailers understand that an equal or greater investment in employee process training is critical. 4

6 3 Use data to make smart decisions. Retailers want to maximize the value of their data by using it to inform inventory buying decisions, market to customers and prospects and negotiate with suppliers. Collecting data is important, but using data is more important. The RICS system empowers retailers to increase revenue, decrease on-hand inventory and negotiate with suppliers. 5

7 4 Take advantage of opportunites to get connected. The retail technology industry is in a state of flux and transition that's moving towards significant new capabilities for retailers. Most independent owners and operators have technology in their pockets that's way more powerful than any other technology tool they've ever used to run their businesses. Modern retail technology can empower retailers with real-time data for quick and easy analysis, eliminating an era of outdated data. We have to take advantage of modern technology and use it. 6

8 WHAT TO EXPECT As technology evolves and customers become accustomed to price transparency and lightning-fast order fulfullment, they expect more from retailers...

9 Bob Kennedy, Co-founder of Blue Mile and Owner of Movin Shoes, a specialty running store, builds on his experiences and adopts new technology to formulate solutions moving forward into. Here are his thoughts on how the retail industry will continue to evolve. How do you respond? In 2013, mega-retailer Nordstrom invested in technology to revitalize the entire customer experience, with good reason. Nordstrom customers who buy via multiple channels spend up to quadruple the dollar amount of single-channel shoppers, driving the incentive for the retailer to leverage its myriad assets from its rewards program, unhindered access to inventory, and supply chain prowess to marketing, technology and simplified merchandise returns to its full advantage. 2 Though retail technology can imply automation and the accumulation of data for the sole purpose of counting and evaluating, this will not be the case for the successful retailer of. Technology will have a different, somewhat counterintuitive role: humanizing retail. It seems contradictory. How does investing in technology make retail more human? The answer: it allows the retailer to focus on the customer, personalizing the in-store experience in a way that was previously impossible. Using technology to increase customer retention, extend length-of-stay, and increase spending makes use of small to midsize retailers best competitive advantage: building and nurturing customer relationships. In this way, you are emphasizing the most important, most human component of your business: your customer. As it turns out, this component also determines your profits. 8

10 1 Retailers are focusing on becoming integrated with other technologies, becoming truly omnichannel. For Bob, these integrations include launching ecommerce, implementing direct marketing, and improving social media efforts. In the era of companies who rely on customers demand for instant gratification to gain a competitive advantage, this omnichannel approach offers smaller retailers a chance to compete. Customers want to choose when and how they engage with us, and we need to listen to that and respond. This customer-focused approach to retail, coupled with the technology that enables the customer relationships to exist, will define the retail environment. 9

11 2 New year. Same challenges. For independent retailers, the challenges have been the same from the start, as they have been for any independent business. With limited resources, retailers must solve how to effectively implement changes at a risk and cost that make sense. Retailers will face the hurdles of obtaining enough resources, finding the right people, and learning how to scale in a way that is cost effective. You have to invest in your business, work it, and operate it, and that requires ongoing resources that you don t necessarily have. 10

12 3 New year. Same challenges. New solution. Handling these challenges requires taking advantage of opportunities that companies like RICS present. Buying Software as a Service makes sense; we don t have the capacity to build those systems ourselves. Retailers are taking advantage of the opportunity to utilize the capabilities of systems that are now accessible through the SaaS model. By integrating this retail software with other applications, small to midsize retailers can become omnichannel without incurring unsustainable, impractical expenses. 11

13 4 The retail climate has changed in the past decade. Adapting and evolving are necessary to survive and succeed. There s been a shift in demographics. Ten years ago, even five years ago, you could do no wrong. You d open up a local store, get to know your customers and if you were likeable you d be fine. With the introduction of new competition, people can get the products we sell any time, any place. The explosion of online shopping and the resulting price transparency has dramatically altered the way independent retailers do business. In order to stay up-to-date and competitive, small to midsize retailers must use the available resources to carve out niches. In Kennedy s eyes, this means going straight to the source. Focus on strengthening the relationship with the customer; get to them quickly. If what they want isn t in the store, reach them through ecommerce while they re at home or at work. This is what the customer has come to expect. After a while we taught them everything, so they knew what to look for. Now it s a matter of combatting that. Taking advantage of the opportunities offered by modern technology allows Kennedy to combat the challenges of a new retail climate, take his store to the next level by embracing an omnichannel approach, and utilize RICS to make his independent business competitive and profitable. 12

14 WANT TO TAKE YOUR BUSINESS TO THE NEXT LEVEL THIS YEAR? Give RICS a call at to learn how we can help you do it. 13

15 CITATIONS 1 RSR Research 2 Retail Info Systems News 14

16 An ebook Presented by