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F I N D I N G S
7 EXECUT IVE SUMMARY
10 I T B U D G E T S
14 I T STRATEGY
22 STORE SYSTEMS
26 SUPPLY CHAIN
27 WORKFORCE
28 CROSS CHANNEL
32 MERCHANDIS ING
35 WHO RESPONDED
P R E S E N T E D B Y
A S U P P L E M E N T T O R I S N E W S A P R I L 2 0 1 2
T I T L E S P O N S O R S
EMBRACINGEMBRACING
2 2 N D A N N U A L2 2 N D A N N U A L
Social and mobile
technologies convergewith the growing influenceof marketing and analytics in retail
Social and mobile
technologies convergewith the growing influenceof marketing and analytics in retail
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4 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
PUBLISHER
David Weinand904.374.8590 [email protected]
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EDITORIAL
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CORPORATE OFFICE
Edgell Communications
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F O U N D E R
Douglas C. Edgell
1951-1998
ABOUT GARTNER
Gartner Research is a leading provider of research and analysis about the global information technology in-dustry. It worked with RIS to bring out this study, which was conducted during the rst two months of 2012 . In
conjunction with the RIS editorial team, Gartner created the survey and posted it online. Gartner performed the
analysis of the data and was then interviewed by RIS on the meaning of the data. Gartner was not paid for its in-
volvement and RIS did not involve any of the advertisers in the report during the preparation or analysis phases.
Embracing ChangeA convergence of powerful forces is driving retailers to build
on-ramps to the road leading to the transformation of their businesses
Welcome Signs of MomentumRising revenues and IT budgets reflect an expectation
of sustainable confidence
Learning to FlyA measured approach to experimentation runs beneath the surface
of tech adoption trends in retail
The Technology-Enabled StoreMobility moves into stores along with item-level RFID and NFC payment
Retailing in MotionRatcheting up the pressure on supply chains to improve agility
and visibility in an omni-channel world
Workforce Balancing ActLearning how to simultaneously serve customer needs and do more with less
The Multi-Channel ImperativeDeveloping channel capabilities that run the gamut from physical stores to
digital storefronts and everything in between
The Merchandising Arms RaceThe proliferation of merchandising and BI tools is fueled by aggressivemarketers taking action to build the next big missile
Who RespondedPolling C-level and IT-focused decision makers from companies with clout
RETAILRETAILT E C H N O L O G Y S T U D Y CONTENTS
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SOCIAL AND MOBILE TECHNOLOGIES are
converging in retail combined with the grow-
ing inuence of analytics and the rising power
of the marketing department. No doubt about
it, there is a great deal going on today in the
retail industry.
One of the things generating a lot of dis-
cussion these days is about shifting the refer-
ence for Generation Y (18 to 34 year olds) to
Generation C, where C stands for connected.
That seems like an appropriate call for a broad
generalization.
But when you look at the customers that
retailers are dealing with it is clear that be-
ing connected is not limited to any particular
age. A huge portion of the general public is
shifting how it interacts in our highly connectedenvironment.
We now tell the world through social net-
works what we think about everything from
the mundane to the ethereal. We share things
on the Web that not only have the potential to
reach everyone in our networks wherever they
are located, but we sometimes connect to unex-
pected global phenomena. One good example
of this is the Kony 2012 video that at the time
of this writing in a three-week period has been
viewed 78,295,117 times on YouTube alone.
Retailers understand they need to take an
active role in how much of the world now com-
municates and interacts. The data examined in
this study documents these efforts and offers
insight into how retailers are taking paths to
transform their businesses.
MAJOR ACTION ITEMSGartner made news at its annual Symposium
conference last year when we declared by
2017 the CMO will spend more on IT than the
CIO. That prediction was based on a review of
all industries and was not specic to retail.
I dont believe that high level will be quite
achieved in retail because of the large num-
ber of stores that need specialized technology
to support them, a trait that is fairly unique to
retailing. But directionally, the rising inuenceof the marketing department on IT spending is
correct and heralds a new era for retail IT pro-
fessionals and marketers alike.
This trend goes a long way toward explain-
ing why, in less than two years, the action item
Leveraging Social Media has risen to the top
of the priority list for retailers. Most likely this
is the result of the expanding role of the retail
CMO, whose responsibilities encompass social
media and who is therefore in need of tools andbudget to better do his or her job. Optimizing
Big Data, another relative newcomer to the ac-
R I S R E T A I L T E C H S T U D Y 2 0 1 2 A P R I L 2 0 1 2 7
A convergence of powerful forces is driving retailers to build on-ramps
to the road leading to the transformation of their businesses By Jeff Roster
Embracing Change
E X E C U T I V E S U M M A R Y
41%Leveraging social media
34%Cost containment
33%Expanding multi-channel (synchronization) initiatives
39%Developing mobile enterprise and/or store strategy
30%Network and IT systems security
28%Campaign management and promotions effectiveness
26%Adopting a unified enterprise platform
22%Improving coupon and/or special offer effectiveness
22%Developing a mobile commerce strategy
20%New payment technologies (EMV and contactless)
18%Adding capabilities to optimize big data
16%Virtualization (storage, desktop, store-level, etc.)
16%Providing marketing department with advanced tools14%Cloud services and SaaS
13%Increasing private label programs
13%Global market expansion
5%Green retail initiatives
0% 10% 20% 30% 40% 50%
M A J O R A C T I O N I T E M S O V E R T H E N E X T 1 8 M O N T H S
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tion item list, will likely be on a similar acceler-
ated t rajectory.
Perhaps the most signicant shift on the ac-
tion item list is the placement of Cost Contain-
ment, which for several years has been in thenumber one position. This year it has fallen to
third place.
I want to be very clear about what this shift
in priorities signies, because there is no retail-
er that would publically say cost containment
is not a major strategy. The slippage has oc-
curred, if you want to call it that, because of the
rise of other options. In my opinion, it heralds
a time of real innovation in the areas of social
and mobile retailing. And retails embrace of
these forces is a very healthy sign.
TOP TECHNOLOGIES FOR 2011
In a multi-channel retail experience information
must move to any touchpoint a consumer might
use and interact with. Retailers understand
that while work-arounds are possible, many of
their current systems act as roadblocks to the
seamless ow of information across channels
and touchpoints.
As a result, almost half of retailers surveyed
plan to retire legacy systems and invest in appli-
cation integration. Many retailers on this pathplan on having WiFi become available in their
stores to enable them to become true hubs in
our hyper-connected world.
Looking at this years set of data it is clear
that retailers are making a concerted effort to
build innovation into their organizations. Thisis not an easy task and requires risk taking.
At times, mistakes may occur at the consumer
level and if they do, the best advice is to be
transparent with customers using the instant
communication tools now available. Admit mis-
takes honestly and quickly, and shoppers, whoactually pioneered the revolution in communica-
tions in the rst place, will reward you.
8 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
E X E C U T I V E S U M M A R Y
48%Mobile POS with payment
37%Loyalty program access
36%Mobile POS with suspend (line busting)
35%NFC Payments
34%Support for EMV cards for payment
34%Mobile wallet/e-wallet
34%Predictive analysis
34%Geolocation
34%Shopper tracking capability
33%Campaign management
0% 10% 20% 30% 40% 50%
47%Application integration
45%Developing apps to enable newly empowered consumers
45%Application rationalization/retiring legacy systems
41%Upgrading store-level bandwidth and infrastructure
41%Fighting intrusions and Web attacks
40%PCI compliance
39%Optimizing stores as a major channel
38%Consumer smart devices in the enterprise
18%Mobile security
11%Fighting against inflation
5%Managing big data3%Environmental sustainability/social responsibility
0% 10% 20% 30% 40% 50%
TOP TECHNOLOG IES FOR 2012
TOP CHALLENGES OVER NEXT 3 YEARSMANY CURR ENT IT
SYSTEMS ACT AS
ROADBLOCKS TO THE
SEAMLESS FLOW OFINFORMATION ACROSS
CHANNELS AND
TOUCHPOINTS.
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10%
5%
35%
40%
30%
25%
20%
15%
10%
5%
0%
THERE ARE GROWING INDICATIONS that
the economy is at last moving in the direction
of self-sustaining momentum. A strong, if not
stellar, 2011 has been followed in the rst
quarter of 2012 by higher stock prices, encour-
aging labor market gures and rising consumer
condence.
The retail industrys solid performance in
2011, including a record-setting holiday sea-
son, is an indicator of a brighter outlook ahead
in 2012. The pace of growth is not as strong
as other post-recession recoveries, which is
frustrating to many retailers, and some worry
about a threat to consumer spending from ris-
ing gasoline prices. But overall, the retail cli-
mate in 2012 is shaping up to be one of the
most optimistic retailers have encountered in
many years.Analysis of retail revenue performance dur-
ing the past 12 months puts some hard num-
bers behind this mostly positive mood. More
than two-thirds (68%) of respondents reported
revenue increases: 34% grew in the 1% to 3%
range, with the same percentage reporting
growth of 3% or greater.
These gures are up from last year, when
63.6% of respondents reported revenue
growth (27.1% in the 1%-3% range and 36.5%
in the 3% or greater range).
Whenever a larger segment of companies
are achieving year-over-year revenue upsides it
is undoubtedly good news. Even better news is
found in the trend among those reporting reve-
nue decreases, which is getting smaller. While
2011 gures showed 16.8% of respondents
reporting revenue decreases of 3% or more,
that number was cut in half this year to 8% ofrespondents. Those reporting no change in-
creased slightly this year, from 8.4% in 2011 to
11% in 2012.
1 0 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
I T B U D G E T S
Rising revenues and IT budgets reflect an expectation of sustainable confidenceBy Adam Blair
Welcome Signs of Momentum
REVENUE CHANGE OVER LAST 12 MONTHS
I T B U D G E T S A S P E R C E N T A G E O F T O T A L R E V E N U E
8%
13%
11%
34% 34%
Decreased>3%
Decreased1% to 3%
No Change Increased1% to 3%
Increased>3%
35%
30%
25%
20%
15%
10%
5%
0%
More thantwo-thirdsreport revenueincreases
Tripled from
last year
Doubled
from last
year
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REVENUE AND IT BUDGETS
Higher revenues also represent good news for
the size of IT budgets, which tend to be tied to
corporate revenue gures. Because there are
so many large retail companies in the studys
respondent pool, a rise of even a few percent-age points can represent a signicant boost to
the overall industrys technology spending.
Analyzing retail IT spending in this years
study reveals another set of positive indicators
for the industry. Only 10% of respondents are
at the lowest end of the scale, with IT budgets
that are less than 1% of total revenues. Last
year this group was 14.1% of the total.
The area that has shown growth is at the
higher end of the IT spending scale. The per-
centage of companies with IT budgets that are
3%-5% of total revenues more than doubled,
rising from 4.7% last year to 10% this year.
Those with budgets totalling 5% or more of rev-
enues nearly tripled, climbing from 6.3% last
year to 15% in 2012.
FEWER BUDGETS SHRINKING
While we can clearly see an upward shiftin how IT budgets are calculated as a percent-
age of revenue, the actual ow of dollars to
the IT department is on a rising but slightly
slower track.
Looking at year-over- year changes in IT
budgets, we see that three in 10 respondents
report no change in their IT budgets, and
the largest group of respondents (36%) indi-
cate that budget increases will be in the 1% to
5% range.
The good news is that the group with
decreasing budgets has shrunk. In last years
study, one in four respondents reported that
their IT budgets were down on a year-over-
year basis (11% declining 1% to 5% plus 2.7%
declining 5% to 10%, and 11% dropping by
10% or more).
This year, the percentage of decliners has
shrunk to 16% of total respondents (6% de-creasing by 1% to 5% plus 4% declining 5% to
10% and 6% dropping by 10% or more).
1 2 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
I T B U D G E T S
CHANGE IN YEAR OVER YEAR I T BUDGET
A L L O C A T I O N O F I T B U D G E T
P R I M A R Y B U S I N E S S M O D E L
6% 6%
4% 4%
30%
36%
13%
Decreased
>10%Decreased
5% To 10%
Decreased
1% To 5%
No Change Increased
1% To 5%
Increased
5% To 10%
Increased
>10%
35%
40%
30%
25%
20%
15%
10%
5%
0%
Pure-play
e-commerceCatalog/direct
5.6%
4.2%
90.1%
Brick-and-mortar
34%Internal staff
19%Software18%Hardware
15%Third-party services
9%Communications
5%Training and change management
0% 5% 10% 15% 20% 25% 30% 35%
Majority of
retailers have
rising IT
budgets
Stores still
drive retailing
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BIG BETS ARE BEING placed by leading-edge
retailers in the areas of mobile applications,
social retailing, big-data analytics and power-
ful new tools to support the marketing depart-
ment. But maybe your organization isnt ready
to make these moves. Maybe your C-suite
draws a hard line against deploying emerging
technologies until they are proven.
Which raises the question: Are retailers who
are making investments in emerging areas of
technology gambling with scarce IT resources
on projects that have a slim chance of achiev-
ing ROI? Or are they pursuing a different agen-
da entirely?
Consider this: Maybe the rst mobile app
launched by a leading adopter fails to achieve
ROI, but the second one hits the ball out of thepark because it incorporates learnings from the
rst. Then all subsequent mobile apps build on
a track record of success. Maybe this learning
process is actually the goal of the project, and
perfecting it is a way to develop a skill set that
Non-adopter,
dont adopt new tech
unless necessary
Leading,
at the cutting edge
6%
7%
28% 59%
Late adopter,
wait until proven,
then consider
adoption
Quick adopter,
quickly follows
leaders
A measured approach to experimentation runs beneath the surface
of tech adoption trends in retail By Joe Skorupa
Learning to Fly
1 4 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
I T S T R A T E G Y
APPROACH TO TECHNOLOGY ADOPT ION
MATUR ITY OF I T ARCH ITECTURE AND APPL ICAT IONS
14.3%
Basic IT infrastructure
and systems
45.7%
Mostly basic with some
advanced upgrades
22.9%
Mostly advanced,
but lack comprehensive
integration
17.1%
Advanced IT infrastructure
with deep integration
50%
40%
30%
20%
10%
0%
ADOPTING A WAIT-AND-
SEE ATTITUDE MAYENSURE SHORT-TERM
STABILITY, BUT IT
CARRIES LONG-TERM
RISK IN A WORLD
WHERE THE TORTOISE
IS NO LONGER ABLETO CATCH THE HARE.
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is becoming crucial in modern retailing agility
and experimentation.
Retailing in the world of digitally empowered
consumers will favor calculated risk takers.
Adopting a wait-and-see attitude may ensure
short-term stability, but it carries long-term risk,
because in modern retailing the tortoise is no
longer capable of catching the hare.
APPROACH TO TECHNOLOGY
Despite powerful marketplace forces that
encourage and reward IT experimentation,
evidence in the study indicates that retailers
havent changed much in their fundamental
approach to technology deployment for several
years. Comparing this years data to those over
the past ve years, we see that leading-edge
adopters always number in the single digits and
late adopters always form a big majority.
Does this mean a huge block of retailers is
out of touch with todays powerful marketplace
realities? Not necessarily.
Fortunately, both m-commerce and social
retailing have low barriers of entry, so pilot tests
often have minimal nancial impact on the rest
of the organization. Also, many pilots can be
pushed to the periphery of the enterprise to al-low the rest of the organization to operate in-
dependently. Then, when the pilot is producing
promising results, it can be moved toward the
center of the organization and prepared for a
larger rollout. In this way some who describe
themselves as late adopters can do experimen-
tation while also maintaining a conservative ap-
proach to technology adoption.
Another nding that has remained fairlyconsistent over several years is retailer place-
ment on a model that measures IT architecture
and applications maturity. The two extremes in
this model (Basic IT Infrastructure and Systems
with Serious Limitations on one end and Ad-
vanced IT Infrastructure with Deep Integration
on the other) always wind up with the smallest
numbers of retailers. And the two middle steps
(Mostly Basic with Some Advanced Upgradesand Mostly Advanced But Lacking Comprehen-
sive Integration) always end up with the largest
numbers of respondents.
1 6 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
I T S T R A T E G Y
ARCHITECTURE APPROACH TO SOFTWARE
IT ACTIVITIES USING THIRD-PARTY SERVICES
57%Seek best-of-breed software
55%Seek integrated solutions suites
39%Seek on-demand or software-as-service models
55%Use in-house IT resources to develop software
38%Use third-party services to help
28%Seek cloud computing systems
0% 10% 20% 30% 40% 50% 60%
59%IT consulting
33%E-commerce initiatives
32%Custom application development
55%Website development/maintenance/hosting
31%Packaged application implementation/integration
28%Telecommunications or networking
28%Application maintenance
24%Social media initiatives
20%Training
26%Data center operations
0% 10% 20% 30% 40% 50% 60%
FORTUNATELY, BOTH
M-COMMERCE AND
SOCIAL RETAILINGHAVE LOW BARRIERS
OF ENTRY, SO PILOTS
HAVE MINIMAL
FINANCIAL IMPACT.
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1 8 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
I T S T R A T E G Y
One change of note this year is that the
group identied as having Mostly Basic with
Some Advanced Upgrades took a big leap up
in a year-over-year comparison, from 30% to
45.7%. This is a lower rung on the maturity lad-
der than Mostly Advanced But Lacking Compre-
hensive Integration, which has correspondingly
dropped year over year.
Why the backward progress? It could be the
result of legacy components that continue to
age in the tech stack, but a more likely reason
is that as retailers prepare to add new capabili-
ties that were never envisioned ve to 10 yearsago, such as supporting mobile enterprise ap-
plications or big-data analytics, they are coming
to the realization that current architecture and
applications will not easily support them. As a
result, a tech stack that once looked relatively
advanced now looks seriously limited.
Finally, the examination of retailers ap-
proach to software deployment is another cat-
egory that has not shown much movement inrecent years. But it is worth noting that in 2007,
after several years of steady growth the cate-
gory of respondents seeking integrated solu-
tions suites came out on top of the list, beating
best-of-breed software 56% to 45%. This was
at the peak of a multi-year run of software ven-
dor mergers and acquisitions, which seemed to
portend a new era of deeply integrated end-to-
end software suites.
Integrated solutions suites stayed on top of
the list through 2009, but gradually lost ground
and now, since 2010, the best-of-breed ap-
proach has once again assumed its position as
the software architecture approach of choice
among retailers, although by a slimmer margin
this year than in the past three years.
Several factors account for this shift, but
the one that probably carries the most weight
is that when retailers seek a solution to solvea problem they want something that doesnt
carry along extra baggage. They dont want an
elephant gun to hunt a mouse or handcuffs
that lock them into a single vendors product
map. The best-of-breed approach offers retail-
ers maximum options.
THIRD-PARTY SERVICES
As with several other datapoints in this chap-
ter, we nd that retailers have been fairly con-
sistent in their strategic approach to using
third-party services providers, with IT consult-
ing topping the list and website development/
maintenance/hosting coming in second place.
The rest of the options have also been fairly
consistent year over year.And the same consistent picture emerges
when we look at the list of top IT services pro-
viders. IBM is on top followed by Microsoft and
all the rest of the usual suspects.
However, it is worth noting that there are
signs that retailers are turning to IT services
providers for more projects than ever before, as
a way to keep in check or reduce the overall IT
budget by shifting these costs into the category
of operating expenses (OpEx). Every retailer
has an ideal level of IT expenditures and also
a bigger list of demands than the capacity to
carry them out.
So, the ability to shift spending out of the IT
budget into another category is a way to free
up resources for other purposes. This kind ofbudget manipulation can be extremely valuable
to a company and also be a boon to IT services
providers.
42%IBM
23.2%Oracle
23.2%JDA
30.4%Microsoft
20.3%Cisco
17.4%SAP
13%Dell
11.6%Verizon
11.6%HP
10.1%Accenture
0% 10% 20% 30% 40% 50%
TOP 10 IT SERVICES PROVIDERS RETAILERS SEEK FOR STRATEGIC INSIGHTS
RETAILERS DONT WANT AN ELEPHANT GUN TO HUNT
A MOUSE OR HANDCUFFS THAT LOCK THEM INTO ASINGLE V ENDORS PRODUCT MAP. A BEST-OF-BREED
APPROACH OFFERS THE MOST OPTIONS.
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Mobility moves into stores along with item-level RFID and NFC paymentBy Joe Skorupa
The Technology-Enabled Store
POS TECHNOLOGY holds a special place in
the hearts and minds of retailers as the cata-
lyst for creating the modern technology-en-
abled store. Interestingly, POS will celebrate
its 40th anniversary next year, and as such
it deserves special recognition. Do you think
IBM, which was behind the launch of the rst
POS system in Pathmark and Dillards in 1973,will throw a party?
Probably not. This is partly due to the fact
that POS is not the pre-eminent, stand-alone
technology it once was. Today, the POS sys-
tem is connected to more than 30 other appli -
cations in the retail tech stack. Also, modern
stores have added a long list of hardware and
software technologies that some experts es-
timate cost about $75,000 per location. Nodoubt about it, retailing technology has come a
long way since POS circa 1973.
Still, POS is clearly rst among equals when
it comes to store technologies, in large part be-
cause it directly supports revenue generation.
And, although it is nearly 40 years old, it is in
the midst of a major transformation that is as
signicant as any covered in this study, thanks
to the boom in mobility.
For this reason, despite decades of matu-
rity, POS is a challenge to keep current due to
the increasing demands placed on it, and al-
though the number of retailers who say their
POS terminals are up to date is relatively high
(44%) compared to other technologies in the
study, the 2012 number is still a big drop from
the 53.8% gure recorded last year.
This could indicate that the strong level of
traditional POS upgrades cited in the study for
the last few years is starting to slow down. This
could be attributable to the cyclical upgrade
pattern often seen in the POS category, or it
could be due to something else.
That something else might be seen when we
glance at the other POS technologies tracked in
this chapter and note that they have had mini-
mal changes in status year over year (including
POS software). This means there are no major
future investment trends of note among these
technologies with two exceptions, and both are
in the area of mobility.
THE RISE OF POS MOBILITY
Do retailers really want to have mobile POS ca-
pability in stores? After all, wireless handheld
POS units are nothing new. And if retailers do
deploy mobile POS, will it be equipped with
transaction capability so that store associates
can do checkouts in, say, aisle three?That is the question facing retailers who are
creating their mobile POS strategies. The chal-
2 2 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
S T O R E S Y S T E M S
STATUS OF POS TECHNOLOGY
0% 20% 40% 60% 80% 100%
44% 18% 8% 13%POS terminals
40% 16% 1 1% 1 0 %POS peripherals
35% 20% 1 4% 16%POS software
9% 8% 13% 24%Mobile POS with suspend (line busting)
8 % 6 % 20% 28%Mobile POS with payment
Self-checkout terminals 13% 1%6%5%
Thin-client hardware/software 18% 1%9% 13%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 monthsWill start major tech upgrade in next 12 months
DESPITE DECADES OF MATURITY, POS IS A CHALLENGE
TO KEEP CURRENT DUE TO THE INCREASINGDEMANDS PL ACED ON IT.
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lenges include providing customer receipts,
wrapping and/or bagging items, and ensuring
that the products shoppers walk out with have
actually been paid for. These are big issues of
concern to many retailers.
To get a handle on emerging mobile POS
trends, we split the category into two parts
Mobile POS with Payment and Mobile POS with
Suspend (for line-busting applications that can
take an order and save it in the POS system to
be recalled later when the shopper pays at a
designated checkout station).
Prior to seeing study results, anecdotal evi-
dence seemed to indicate that current store
environments and management teams werent
ready to deploy mobile POS with transactionalcapability, but study data shows there is no
discernible difference in investment intentions
for transactional and non-transactional mobile
POS. Both show promising levels of interest for
an emerging technology, especially for future
investment in the next 24 months.
Two nal areas in our store systems report
worth calling out for special attention are item-
level RFID and near-eld communication (NFC)
payment.
Item-level RFID is still at a low level of adop-
tion, but it has actually doubled in up-to-date
technology year over year, which is signicant.
Some multi-billion-dollar chains have taken
the plunge with item-level RFID in the last 12
months and activity of this magnitude will have
a cascading effect on other retailers.
NFC payment is also worth noting not for a
high level of current interest, which is still fairly
low, but for the activity that retailers are plan-
ning to execute in the near future. More than a
third of retailers say they will begin an NFC roll-
out within the next two years 11% by the end
of this year plus 24% in the next 12-24 months.
This is the highest level of future growth of
any technology tracked in the store systems
category.
MOBILE PAYMENT
While we track several payment functions in
this section and in the Cross-Channel chapter,
payment in stores is quickly emerging as a like-
ly area of deeper coverage for next years study
due to the proliferation of options that offer a
new level of convenience for shoppers.
The most interesting of these is the develop-
ment of the mobile wallet, which is similar to
an online wallet that shoppers use to pay for e-
commerce purchases. On mobile phones they
are powered by native software applications or
downloadable apps.
The Google Wallet came out last year and
employs NFC technology to make transactions
using the MasterCard PayPass network. It
stores payment card data and also coupons, of-
fers and loyalty/rewards card information. Later
in the year, PayPal piloted its mobile payment
solution in stores, which offers the benet to
shoppers that an in-store payment can be done
without the customer using a mobile device. In-
stead, they simply type in their mobile phone
number and PIN at a payment terminal.
Traditional credit card technologies are also
adapting to the omni-channel marketplace
by using the EMV global standard, otherwise
known as chip and pin, or microprocessor-
chip embedded cards, which offer increased
security features through dynamic authentica-
tion technology.
All of these emerging payment options willrequire adding new capabilities to the POS sys-
tem, further cementing its role as the essential
technology in the store.
2 4 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
S T O R E S Y S T E M S
STATUS OF STORE TECHNOLOGY
0% 20% 40% 60% 80% 100%
Electronic shelf labels 4% 2% 1% 6%
NFC Payments 24%11% 4% 6%
Digital signage displays 11% 12% 10%6%
Shopper tracking capability 16%12% 20% 13%
Kiosks 16% 12% 5%13%
Store-level task management 17% 5%11% 17%
In-store pickup or returns of web goods 22% 18% 12% 6%
Store-level loss prevention 27% 15% 11%12%
Item-level RFID 1% 4% 3% 5%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 monthsWill start major tech upgrade in next 12 months
THE PROLIFERATION OF EMERGING PAYMENT OPTIONS
WILL REQUIRE ADDIN G NEW CAPABILITIES TOPOS HARDWARE AND SOFTWARE.
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Ratcheting up the pressure on supply chains to improve agility
and visibility in an omni-channel world By Joe Skorupa
Retailing in Motion
DRIVING OUT COSTS and making process im-
provements are never-ending goals in the sup-
ply chain, but that doesnt mean they are the
top-ranked missions inuencing technology
investment plans. In fact, as the supply chain
comes under increasing pressure from omni-
channel shopping, many retailers now realizethat supply chain systems once considered
robust are actually inadequate to handle the
multi-channel challenge.
This point can be seen in two areas that
had previously been considered strong suits
for retailers warehouse management and
real-time inventory visibility. Warehouse man-
agement has steadily dropped since it hit a
high point in 2009 in the number of retailers
who say they have up-to-date technology in
place (50%). Last year the number was 42%
and this year it is 39%.
Similarly, real-time inventory visibility had
been hovering around 30% for retailers who
say they have up-to-date technology in place,
but this year the gure is 25%. These two ex -
amples are the most notable, but all technolo-
gies we tracked in the supply chain have lost
percentage points for those who say they have
up-to-date tech in place.
The reason this is happening is that retail-
ers are serving greater volumes of shoppers
through increasing numbers of channels, but
they are doing this by using supply chains that
were built to serve stores. In this world, the bar
is set by online pure-play retailers who offer to
ship anywhere, overnight or two-day delivery,
if not free of charge then at a minimal cost to
the shopper.
In this world, retailers need a high degree
of visibility into all levels of their supply chains
and many are nding they are falling short in
on-time delivery, purchase order matching, in-
stock positions in stores, ll rates and hitting
lead-time targets
The good news is that multi-channel ful-
llment, a key function in the omni-channel
retailing world, has the highest level of cur-
rent upgrade activity (24%), followed closely
by sourcing management (22%), which helps
retailers gain control over extended supply
chains that stretch across the globe.
S U P P L Y C H A I N
2 6 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
STATUS OF SUPPLY CHAIN TECHNOLOGY
39% 14% 8%9%
7% 8%32% 11%
11%26% 11% 8%
25% 15% 12%12%
25% 15% 12% 10%
21% 22% 4%11%
18% 24% 7% 10%
5%4% 3% 7%
0% 20% 40% 60% 80% 100%
Warehouse management
Returns management
Transportation managementReal time inventory visibility (SCIV)
Distributed order management
Sourcing
Multi-channel fulfillment
RFID case/pallet
Up-to-date tech in place Started but not finished major tech upgradeWill start major tech upgrade in next 12-24 months
Will start major tech upgrade in next 12 months
AS THE SUPPLY CHAIN COMES UNDER INCREASING
PRESSURE FROM OMNI-CHANN EL SHOPPING, RETAILERS
NOW REALIZE THAT SUPPLY CHAIN SYSTEMS ONCE
CONSIDERED ROBUST ARE NOW INADEQUATE.
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Learning how to simultaneously serve customer needs and do more with lessBy Joe Skorupa
R I S R E T A I L T E C H S T U D Y 2 0 1 2 A P R I L 2 0 1 2 2 7
W O R K F O R C E
THE FLASHPOINT BETWEENserving customer
needs and dealing with top-management pres-
sure to do more with less hits a sensitive nerve
in the area of workforce management.
Fortunately, many retailers have deployed
workforce management (WFM) solutions to
automate these processes, such as budgeting,
forecasting, scheduling, time keeping and task
management. The net result is that some realgains have been made in balancing these com-
peting goals.
However, there is a new frontier on the work-
force horizon and it is in the area of tapping
rich existing enterprise databases to improve
workforce optimization and labor allocation. To
make this happen, retailers will have to make
workforce management analytics a key com-
ponent in the organizations overall analytics
strategy. When this occurs, retailers will have
the ability to make better workforce manage-
ment decisions, adjust on the y, and track the
effects of their decisions to improve the cus-
tomer experience while simultaneously hitting
labor budget targets.
Most retail organizations have long used
analytics to optimize inventory, pricing and fore-
casting on a store-by-store level, but many have
been slow to extend analytics in an effectiveway into their WFM solutions. At best, some re-
tailers use workforce analytics in a centralized
manner to inform decisions at the headquar-
ters or regional level.
However, to provide optimal benets, work-
force analytics should be pushed to individual
stores so managers can use data to guide deci-
sions and measure results. And the dashboards
developed to report KPIs to managers should
be accessible from a tablet, smartphone or
other mobile device.
Mobility in retailing is a clear opportunity to
improve store and DC productivity, but it is also
a challenge, because it will have a big impact
on managing, scheduling and hiring associates.
Impacted areas include training, skills required
per shift, new employee roles, new metrics to
measure employee efciency, and new hiring
and recruiting goals.
The good news is that retailers have been
smart enough to make steady investments in
WFM and human resource solutions over the
last ve years. The end result is that a large
segment of retailers either have up-to-date
technology in place today or are in the process
of upgrading their software now. For every tech-
nology tracked in this chapter this combined
gure is either above 50% or close to it, with
two exceptions task management, which is
still a fairly recent solution, and mobile-enabled
workforce or HR applications, which we only be-
gan tracking last year.
Interestingly, the use of social media for
recruiting and hiring, which was also added
last year, has jumped from emerging status to
broad deployment in record time.
STATUS OF WORKFORCE MANAGEMENT TECHNOLOGY
STATUS OF HUMAN RESOURCES TECHNOLOGY
0% 20% 40% 60% 80% 100%
Time and attendance 52% 14% 16% 8%
Labor scheduling and optimization 32% 16% 19% 10%
Task management 22% 11% 15%13%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 monthsWill start major tech upgrade in next 12 months
Education and training
0 % 1 0% 2 0% 3 0% 4 0% 5 0% 6 0% 7 0% 8 0%
Human resources and benefits 40% 19% 11% 7%
Recruitment and onboarding 2 6% 19% 11% 6%
26% 18% 16% 10%
Social media recruiting and/or hiring 25% 7%18% 11%
Mobile-enabled workforce and/or HR applications 7%14% 15% 14%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 monthsWill start major tech upgrade in next 12 months
Workforce Balancing Act
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Developing capabilities that run the gamut from physical stores
to digital storefronts and everything in between By Joe Skorupa
The Multi-Channel Imperative
2 8 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
THE URGE TO SHOP IS TRIGGERED by an in-
dividuals wants and needs, and thus begins a
journey that ultimately ends in making a pur-
chase. However, in todays multi-channel world,
this journey is far from linear.
A shopper might go to a store, use a smart-
phone to check prices, query family and friendsabout recommendations, go back online to
make a purchase, and then return to the store
to pick up the product.
As a result, retailers are challenged to be-
come cross-channel polymaths, meaning they
need to become skilled experts in multiple
disciplines. These disciplines include deliver-
ing easy-to-use shopping experiences that run
the gamut from physical stores to digital store-
fronts living on a variety of platforms. And, of
course, they need to make sure all channels
have seamless interconnectivity to deliver a
consistent brand and shopping experience.
For the most part, retailers have recognized
that adopting this sort of multi-channel mission
is a critical element in the digital age. Evidence
of retail investment in mobile and social ini-
tiatives, for example, is found throughout the
study, and we will review more in this chapter.But it is worth noting that there is also
evidence that many retailers are not as
polymathic (yes, its a word) as they should be
in the age where Amazon.com has become the
new Walmart.
Recent cross-channel misres include Tar-
gets Missoni collection, Disney Stores limited
edition Princess doll, H&Ms Versace collection
in 2011 and again in 2012, Barneys Lady Gaga
Workshop, and Liz Claibornes multi-channel
promotion handled by Kate Spade. Each of
these had serious problems that indicate some
retailers are not as advanced in their digital re-
tailing as they are in brick and mortar.
E-COMMERCE PLATFORM ACTIVITY
Over the last ve years we have tracked prog-
ress by retailers moving from rst-generation e-
commerce platforms with limited capabilities to
second-generation e-commerce platforms with
broad exibility and scalability.
Now that e-commerce platforms are ubiq-
uitous and have gone through several gen-
erations of development, we have decided
to benchmark their status in a way that more
closely aligns with the methodology we use to
track other technologies.
What we found is that e-commerce plat-
forms, unlike more mature technologies such
as workforce management and supply chain
solutions, are on an accelerated timetable for
C R O S S C H A N N E L
STATUS OF E -COMMERCE PLATFORM
Platform needs updating, but no plans 7.0%
We dont have an e-commerce platform 16.9%
Plan to upgrade within 24 months 12.7%
Plan to upgrade within 12 months 12.7%
Currently upgrading platform now 32.4%
Re-platformed within past 2 years 18.3%
0% 5% 10% 15% 20% 25% 30% 35%
Not planning any activity 19.5%
Fully functioning m-commerce strategy in place 10.3%
Pilots in progress 24.1%
Planning under way 46%
0% 10% 20% 30% 40% 50%
STATUS OF MOBILE COMMERCE STRATEGY
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The current snapshot of the mobile apps
landscape indicates that the dominant func-
tions are store locator, barcode scanning, link
to retailers social networks, and product infor-
mation. All of these apps have roughly a 40%
share of respondents who say they have up-to-
date technology in place.
Another takeaway is that there is a surpris-
ingly low level of current usage for geoloca-
tion, support of 2D barcodes, support for EMV
(chip and pin) payment, and support for NFC/
RFID payment. However, each of these areas
shows strong development activity in the next
24 months.
Despite the fact that there is a huge amount
of investment going on in the areas of e-com-
merce platforms, m-commerce and mobile
apps, evidence indicates that many retailers
may not yet be effectively executing the next
step up on the ladder of omni-channel maturity
synchronizing the brand and shopping experi-
ence across all channels.
3 0 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
C R O S S C H A N N E L
upgrading. We see this by noting that 32.4%
of retailers are upgrading their platforms now
and 12.7% plan to start an upgrade within
12 months. These are high numbers in them-
selves, but when you add to the mix 12.7% who
say they will upgrade within 24 months, the g-
ure jumps to nearly 60% who say they will up -
grade in the next two years.That is a huge level of activity and a major
recognition by retailers of the need to nally
stop conceding the online channel to Ama-
zon.com, whose year-over-year growth gures
should send shivers up the spines of most
multi-channel retailers.
MOBILE COMMERCE BOOMS
Even more impressive than the planned invest-
ment numbers seen in e-commerce platforms
is the activity recorded in the mobile channel.
The best way to understand the signicance
of the ndings in this area is to note that only
19.5% say they are not planning any m-com-
merce activity. This means that more than 80%
of retailers have an m-commerce strategy un-
der way, which is a huge number for a technol-
ogy we have only been tracking for three years.
Granted, only 10.3% say they have a fullyfunctioning m-commerce strategy in place, but
this is nearly double what it was in 2010, and
those who say they have a pilot in progress has
grown steadily over three years to its impressive
24.1% level.
For the rst time this year we began to track
specic customer-facing mobile applications
deployed by retailers and the overarching take-
away is that mobile apps are getting a massive
amount of investment across a wide array of
functionalities.
0% 20% 40% 60% 80% 100%
Store locator
Barcode scanning
Link to retailers social networks
Product information
User/product reviews
Inventory status
Product purchaseCoupon redemption in stores
Up-to-date tech in place Started but not finished major tech upgrade Will start in next 12-24 monthsWill start in next 12 months
Integration with social networks
Customer support
Product comparisons
Loyalty program access
Daily deals/flash sales
Sharing (outfits, wishlists, shopping carts, etc.)Support for 2D barcode
Geolocation
48%
37%
37%
35%
29%
25%
24%
23%
23%
22%
18%
16%
16%
16%
10%
9% 4% 21% 13%
18% 9% 14%
8% 11% 16%
16% 9% 20%
15% 18% 19%
13% 9% 10%
6% 18% 14%
16% 20% 13%
16% 4% 11%
22% 6% 18%
19% 16% 13%
15%
23% 9% 10%
16%5%
19%
9%
13%4%
11%
10% 11%
9% 15%
STATUS OF CUSTOMER-FACING MOBILE APPLICATIONS
MORE THAN 80%
OF RETAILERS HAVE
AN M-COMMERCE
STRATEGY UN DER WAY.
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The proliferation of merchandising and BI tools is fueled by aggressive
marketers taking action to build the next big missile By Joe Skorupa
The Merchandising Arms Race
IF THE GARTNER PREDICTIONis accurate that
by 2017 the marketing department will have a
bigger technology budget than the IT depart-
ment, we should expect to see signs in this
years study that this trend is emerging. Do we?
The rst indicators can be found in the list
of major action items retailers say they will beworking on for the next three years, which ap-
pears in the Executive Summary. Social media
leads the list and further down is providing bet-
ter tools for the marketing department.
Another indicator is found in the top 10
list for technology investment in 2012, which
is also in the Executive Summary chapter.
This list pulls data from all questions asked
in the study and then lists the top 10 technolo-
gies that retailers say they will invest in by the
end of the year. Of the 10, four are related to
marketing: predictive analytics, geolocation,
shopper tracking capability and campaign
management.
Another clear set of indicators of this trend
is found in this chapter, where we examine in-
vestment intentions across a spectrum of tools
used for merchandising and business analyt-
ics. Both of these areas show the highest levelsof category-wide investment when looked at
by projects that are already started but not yet
complete, and also projects set to begin by the
end of the year.
This indicates an arms race is taking place
in the proliferation of merchandising and busi-
ness analytics technology that is being fueled
by marketing departments taking an aggres-
sive approach to building the next big missile.
Marketing departments have always con-
trolled big budgets, but until recently they were
mostly devoted to advertising. But as expen-
sive, mass-market advertising loses ground to
a splintering consumer base, marketers are
seeking new ways to reach customers and new
tools to help them accomplish their jobs.
If the Gartner prediction is accurate, or
close to being accurate, many technologies in
this chapter will be locked into a cycle where
roughly a fth of retailers at any given time will
be in the process of updating marketing tools.
Marketers are always in need of ring the next
big missile and they are turning to technology
to help them get it.
MERCHANDISE TECHNOLOGY
So many things need to come together to ll a
store with appealing products to serve shopper
wants and needs that it takes a host of cross-
functional IT tools to make it happen. This or-
chestration, which touches nearly every aspect
of the retail enterprise, is at the heart of what
merchandisers do, and at the end of the day
3 2 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
M E R C H A N D I S I N G
STATUS OF MERCHANDISE TECHNOLOGY
0% 20% 40% 60% 80% 100%
New product or private label development 24% 12% 7% 7%
Category management 29% 16% 15% 7%
Allocation 25% 23% 9% 9%
Assortment planning 21% 20% 13% 9%
Product lifecycle management 20% 15% 11% 16%
Multi-channel planning and forecasting 18% 22% 15% 10%
Shelf and space planning 18% 14% 15% 5%Price and markdown optimization 17% 16% 13% 16%
Campaign management 17% 15% 19% 15%
Replenishment 35% 24% 13% 7%
Forecasting and planning for stores 32% 24% 18% 7%
Item management 30% 25% 10% 5%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 monthsWill start major tech upgrade in next 12 months
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they are judged by how well the symphony is
performed.
In the merchandising category, we nd the
top technologies retailers say they are currently
in the process of updating are item manage-
ment (25%), replenishment (24%) and forecast-
ing and planning for stores (24%).
This year we split up forecasting and plan-
ning technology into two categories to see if
there was a difference in accomplishing these
tasks when focused on physical stores, the tra-
ditional approach, and for multi-channel syn-
chronization, which is a more holistic approach
to modern retailing.What we found is that when ltering the
rankings by up-to-date technology in place,
multi-channel forecasting and planning ap-
pears farther down the list than store-centric
forecasting and planning. This makes sense
because multi-channel tools are a more recent
development. But when we examine future up-
grade intentions, both tools are on essentially
the same update path.
Interestingly, the tool with the highest
percentage of retailers saying they will
update within 24 months is campaign
management, a pure marketing function,
which seems to be a conrming point to the
Gartner prediction that marketing is on the
rise in retail organizations.
ANALYTICS AND BUSINESS
INTELLIGENCEDespite years of aggregating huge databases
of POS and customer information, it is gener-
ally acknowledged that retailers have been
underutilizing a resource of tremendous value.
But while this is true for retailers overall, it is
not true for leading adopters who are putting
advanced analytics tools in the hands of skilled
executives and achieving measurable results in
driving revenue.
Typically, advanced analytics tools are used
to support the merchandising and marketing
departments, although other departments
benet, too, such as store operations and the
supply chain.Our detailed look at analytics and BI shows
there is a huge amount of upgrade activity go-
ing on right now and another huge amount
planned within a one-year and two-year time
frame. The top three areas that are presently
up to date are: market basket analytics (28%),
customers segmented by demographics and
transaction history (26%), and centralized cus-
tomer data and intelligence (26%).
Areas targeted to get the most investment
by the end of the year, which is a combination
of projects already started and projects set to
begin by the end of 2012, include all of the
above plus frequent shopper/loyalty programanalytics and campaign analysis.
A retail enterprise that gets maximum
value out of its analytics and BI capabilities
is one that has an integrated framework that
employs quantitative methods to derive action-
able insights from data, and then uses those
insights to shape business decisions to im-
prove outcomes.
Retailers havent achieved this end game
yet, but they are in the process of putting all
the pieces in place within the next few years.
M E R C H A N D I S I N G
3 4 A P R I L 2 0 1 2 R I S R E T A I L T E C H S T U D Y 2 0 1 2
STATUS OF B I/ANALYTICS TECHNOLOGY AND CAPABIL IT IES
0% 20% 40% 60% 80% 100%
Market basket analysis 28% 19% 13% 6%21%
Customers segmented by demographics, transaction history 26% 23% 14% 13% 12%Centralized customer data and intelligence 26% 22% 10% 14% 13%
Frequent shopper or loyalty program metrics 24% 24% 9% 15% 16%
Conversion metrics using store traffic counting 2 2% 12%10%1 2% 29%
Customer data segmented by channel 21% 15% 12% 9% 28%
Campaign analysis metrics 21% 14% 19% 12% 21%
Consistent customer data recognition across channels 21% 17% 12% 17% 21%
Psychographic metrics using social network data 8% 6%10% 21% 37%
Predictive analytics 1 9% 14% 16% 18% 19%
Up-to-date tech in place Started but not finished major tech upgrade
Will start major tech upgrade in next 12-24 months No plans for major tech upgrade
Will start major tech upgrade in next 12 months
THERE IS A HUGE AMOUNT OF ANALYTICS AND BI
ACTIVITY GOING O N RIGHT NOW AND ANOTHER HUGE
AMOUNT PLANNED WITHIN A TWO-YEAR TIME FRAME.
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Polling C-level and IT-focused decision makers from companies with clout
Who Responded
THE INFORMATION IN THIS YEARS study is
based on signicant input from people who are
senior-level decision-makers within their own
organizations. The respondents also represent
retail companies that, due to their size, exert
considerable inuence on retails technology
trends.
In order to provide a balanced cross section
of the industry, respondents are from carefullyselected retailers and are invited to participate
based on job title, revenue segment and retail
category.
More than one-third (36%) of all survey re-
spondents are C-level executives, which has be-
come a hallmark of this study. These executives
have both the responsibility and authority to set
their companies IT and business agendas, and
their insight gives the study a unique gravitas.
The bulk of the other job titles are heav-
ily involved in IT. This includes CIOs (28%) and
the largest single group of respondents (39%),
directors of IT. Together these two segments ac-
count for over two-thirds of the survey pool.
POWER PLAYERS
In addition to the high number of respondents
who wield internal clout, theres also strong
representation from retailers that are among
the biggest and most inuential in the industry.
More than one-third (35%) of represented com-
panies have annual revenue in the $1 billion
to $10 billion range, with another 11% in the
upper echelons of Tier I, at $10 billion and up.
These large retailers are important drivers
of IT trends. They have big technology budgets
and therefore represent a large proportion of
the industrys overall spending. In addition, their
size and the number of storefronts they operate
means that their tech decisions exert a major in-uence on customers, competitors, trading part-
ners and technology vendors.
All revenue levels have strong representa-
tion in the total respondent group, ensuring
that this study provides an accurate reection
of the diversity of the retail industry.
The study also reects the industrys diver-
sity in terms of retail verticals. The largest ver-
ticals represented specialty hard goods, at
36%, and apparel/footwear/accessories, with
24% of respondents are themselves broad
and diverse retail verticals, with wide variations
in assortment mix and business model.
JOB T ITLE RETAIL SEGMENT REVENUE CATEGORY
28%
8%
25%
39%Director IT
CIO
Departmental
management
CxO
13%
24%
7%
4%
16%
36%Specialty Hard Goods
Apparel/Footwear/
Accessories
Grocery/Drug/
Convenience
Hardware/
Home Center/
Automotive
Department Store/
Mass Merch.
E-commerce/
Catalog
16%
14%
11%
8%
35%
$1 billion to
$10 billion
$500 millionto $1 billion
$50 millionto $250 million
>$10 billion
-
8/10/2019 Gartner 2012 Retail Technology Study April 2012
19/19
P R E S E N T E D B Y
S U P P O R T I N G S P O N S O R S
T I T L E S P O N S O R S
T H A N K Y O U T O O U R S P O N S O R S
YOUR VISION,OUR SOLUTION
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RETAIL
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RETAIL
2 2 N D A N N U A L
T E C H N O L O G Y S T U D Y