Jeff Roster

Next week I will be attending the first two days of Oracle OpenWord. Most of my two days will be spend at the Palace Hotel where the retail sessions are. So if you plan on being at OOW and at any of the sessions or events listed below please feel free to come by and say hi.

Monday Oct 12

10-11        Client Meetings
11-12:30   International Expansion Strategies
1-3:30       Retail General Session
4-5:30       Crisis to Opportunity
7-10          Retail Reception

Tuesday Oct 13
7-8:30      Breakfast Meeting 
9-11         Client Meetings
11-12:30  Customer Centric Retail Strategies
1-2          Client Meetings
2:30-4      Client Meetings
 
Please feel free to pass along any good retail stories I should look into. My Twitter ID is JeffPR

Today the NRF released the below forecast for Holiday 2009

2009 holiday forecast, projecting holiday retail industry sales to decline one percent this year to $437.6 billion.* While this number falls significantly below the ten-year average of 3.39 percent holiday season growth, the decline is not expected to be as dramatic as last year’s 3.4 percent drop in holiday retail sales nor as severe as the 3.0 percent decline in annual retail industry sales expected for all of 2009.**

I had the chance to sit in on the NRF’s press and analyst’s briefing.  To say the tone was somber would be an understatement.  The positive points in the economic environment the NRF see’s include:

• The economy is beginning to recover but not out of the woods yet.
• Consumer confidence is stabilizing but we have a long way to go
• Stabilizing stock market-
• Consumer savings rates are increasing

I don’t disagree with any of those points.  However my major concern is unemployment.  It’s hard for me to see a scenario where consumer confidence improves dramatically until the unemployment rate gets down in the 6% range.  Why is this important?  A worried consumer is a thrifty consumer.  I would venture to say there are few if any consumers that don’t have a family member or close friend that has not lost their job in the last year.  That tension, in and of itself, will hold down spending.

So what does the NRF see retailers doing?

1.  Inventory control- Retailers have had a full year to prepare for this holiday season. There will simply be less merchandise in the stores this year.   This is much different from last years scenario where no one realized the extent of the economic crisis till early September.  By that point there was no time to respond except for deep discounting.  Retailers will be highly promotional this year.  But those promotions were planed and not ad hoc.

2.  Reduced labor in the stores -Retailers are simply not hiring the numbers of store associates that they have in years past.  On the plus side this reduces costs dramatically.  Obviously the negative is almost certainly a poorer customer experience.  How serious this is, only time will tell.

3.  Scaling Back new store openings -Capital conservation has been the key strategy this year so why open stores if there’s no customers for them.  Part of this store strategy is also to reduce store hours.  This is very similar to the idea of reducing labor in the stores.  Only time will tell if the cost savings are worth the potential negative impact on customer experience.

4.  Focus on promotions- Retailers are fully aware that they will be dealing with a very skittish consumer so look for promotions early and often.

Despite the seriousness of the subject matter there were a few light moments.  The best line was “Is this the year you can buy your wife a vacuum cleaner” highlighting the trend in practical gift giving.  For the record I won’t get getting Mrs. R such a gift.

Yes it’s been awhile since my last blog.  I have spent to much of my blog time exploring Twitter and other social media, but that’s another post.  In the retail world 2009 has turned out to be the year of cost containment and a borderline bunker mentality. The one glorious exception has been retailer’s embrace of social media and increasingly mobile commerce.  A recent blog “Starbucks reveals iPhone apps, heralds mobile e-commerce caught my attention.  I’ve been doing this job over 10 years now and have listened to m commerce pitches for most of that time.  Virtually all were very interesting but with little to no adoption by retailers.  But I believe that has clearly changed.  On my iPhone I can access apps by Amazon, Best Buy, Sears, eBay and the above described Starbucks app.  My guess is within 6 months there will be many, many more. 

But the key question is, “Will people use these apps to conduct real business. ”  I believe that question was answered very dramatically by eBay CEO and Presedent John Donahoe at shop.org recently:

• eBay Mobile app for iPhone launched last year and to date, it’s been downloaded by 4 million users, regularly appearing in the top 3 free apps in the lifestyle category.
• All kinds of things sold through eBay mobile app … the most expensive include:
  o A rare Lamborghini for $750k
  o A $300k power boat
• Mobile is our fastest-growing business. Our GMV so far this year through the eBay mobile app alone is about $350 million … and growing double digits week on week.

Those are simply amazing stats and illustrate the broad appeal of m commerce today.  So to answer the question posed in the title, I do believe m commerce’s time has arrived.  Retailers need to prepare for this onslaught.  Are you ready?

Below are excerpts from the Executive Summary for the Gartner/RIS News Tech Study . We’ll be releasing the study and presenting the data next month at the Retail Technology Conference 2009.  Follow the runup to the conference on Twitter at #RTC

The year 2009 will long be remembered as a time of great challenge for retailing as a whole and the retail CIO in particular. No one wants to focus on doom and gloom on a steady basis, but as of this writing, there are few positive economic signs to point to on the horizon. The stock market continues to produce daily declines, the revaluation of housing has yet to stabilize, and the consumer continues to remain stingy on all but the most necessary of purchases and only buying items on deep discount.

So what’s in store for 2009? Will retailers slash their IT budgets in a desperate bid to improve their income statements? Slash, no, but they will definitely reassess, redirect, reallocate and remove costs as much as possible.

However, here’s why I don’t see overall IT budgets decreasing dramatically in 2009:

• Centricity is STILL the dominant strategy today in retailing. In all but the smallest retail formats this requires technology enablement to successfully carry out.
• Predominance of first-generation e–commerce platforms still exists across all tiers and subsectors, which requires significant upgrading or replacement.

Top 10 IT initiatives started in 2009

I’ve spent the last six months worrying what answer I would give to the question: What are retailers working on in 2009? “Nothing” was the most common answer I received from my blog and twitter efforts. While I understand it’s become fashionable to deliver negative news in this environment, fortunately the real answer to the question is much more positive.

The new initiatives can be summed up in two words: customers and data. A fair number of retailers are still wrestling with long-term POS and kiosk projects, which focus on improving customer service and satisfaction. And a larger block of retailers is wrestling with concerns surrounding data: How to find it, speed it up, and make it available to wider audiences within the organization.

So Where Do We Go from Here?

This year will be a time of phenomenal challenges to the retail community. We will see more retailers fall this year, like Circuit City and so many others. And as they pass from the scene their competitors will grow stronger.

We will see many retailers close unprofitable stores. Some will claim this is another sign on the pending retail apocalypse. While others, me included, believe this is a healthy development. It’s the pruning of the orchard in preparation for the next crop. Some of these stores should have been closed years ago. Better late then never.

We will most likely see housing valuations remain fluid and 401K’s still depressed. But those of us in the industry need to buckle down and persevere. And we will.

Finally, we need to begin preparations for a coming upturn. Despite all the doom and gloom a rebound will happen. And smart retailers will be ready when it does.

The Industry Market Strategies team has just finished the first installment of the 2009 forecasting exercise. The complete WW Industries forecast cube can be found at Forecast: Industry Market Strategies by Vertical Industry, Worldwide, 2006-2012, 1Q09 Update and is now available. You will need to be an IMS client to gain total access to the cube.  But below we can give you a few glimpses into trending in the major industries. For readers of this blog that are not familiar with Gartner’s internal organization IMS is the team that I work in. Our task is to understand all the trends, drivers and barriers that impact our industry’s and translate that into our IT forecasts.

Below are some insights into what we see happening:

Financial Services industry spent $558.4 billion World wide in 2008 on IT (hardware, software, IT services, internal services and telecommunications) and it will be reduced by 2.1% in the US in 2009, yet positive growth remains in the Middle East, Eastern Europe, Latin America and Asia/Pacific regions. The worldwide compound annual growth rate from 2007 through 2012 will be 3.4%. Key analysts are Susan Cournoyer and Vittorio D’Orazio.

Retail industry spent $ 153.3 billion worldwide in 2008 on IT(hardware, software, IT services, internal services and telecommunications). Growth in North America in 2009 will essentially be flat at 0.5%.  Asia/ Pac, Japan, Latin America, Middle east and Africa will also have positive growth in 2009, while Western and Eastern Europe will be negative. The worldwide compound annual growth rate from 2007 through 2012 will be 3.6%.  The key analyst is Jeff Roster.

Transportation industry spent $105.9 billion worldwide in 2008 on IT (hardware, software, IT services, internal services and telecommunications).  North America, Western Europe and Japan will have negative growth in 2009 while Asia?pac, Eastern Europe, Latin America, Middle East and Africa  will be positive.  The worldwide compound annual growth rate from 2007 through 2012 will be 3.6%.  The key analyst is Bob Goodwin.

Utilities industry spent spend $128.1 billion worldwide in 2008 on IT (hardware, software, IT services, internal services and telecommunications). Despite a positive outlook for the industry, utilities apply the brakes in 2009 on their pace of annual growth to 2.8%, slowing to less than half of the 2008 AG. The worldwide compound annual growth rate WW from 2007 through 2012 will be 5.2%.  The key analyst is Cynthia Moore.

Communications industry spent $368.3 billion worldwide in 2008 on IT (hardware, software, IT services, internal services and telecommunications).  North America, eastern Europe, Asia Pac Latin America and Middle East and Africa will have positive growth in 2009 while Western Europe and Japan will not. The worldwide compound annual growth rate WW from 2007 through 2012 will be 4.0%.  The key analyst is venecia Liu.

Manufacturing industries spent $482.7 billion worldwide in 2008 on IT products and services worldwide in 2008 on IT (hardware, software, IT services, internal services and telecommunications).  The worldwide annual growth rate will fall to negative 0.6% in 2009, while the compound annual growth rate for 2007 through 2012 has been lowered to 2.8% as a result of the global economic slowdown.  The key analyst is Ken Brant.

Healthcare spent $88 billion worldwide in 2008 on IT products and services worldwide in 2008 on IT (hardware, software, IT services, internal services and telecommunications).  2009 will see growth in IT spend in all the regions.  The worldwide compound annual growth rate WW from 2007 through 2012 will be 5%.  The key analyst is John Lovelock.

If any reporters are interested in getting in touch with any of the analysts you can reach out to Gartner analyst relations or leave a comment below and I will be happy to route to the analyst.

I just launched the study yesterday and the data is streaming in.  Already I’m seeing some interesting and counterintuitive trends in the data.  Each year this study is important.  It gives us a unique view into the retailer mindset on IT spending patterns.  However this year the importance is off the charts.  If you haven’t gotten a survey invite and would like to particiape please drop me a note at jeff.roster@gartner.com and I’ll send you the link.

Another NRF has come and gone. I thought I’d share some of the recurring questions and my answers.

1.  How is attendance/floor traffic at the show- Any time you talk about numbers or percentages it’s  critical to properly define what you are talking about.  When the NRF talks about attendance they are referring to registrations.  I believe when analysts and technology and service providers(TSP’s) talk about attendance they really are thinking traffic on the trade floor. Usually those should be in sync.  However this is not a usual year. In my opinion traffic on the trade floor was down over years past.  I’ll pass on putting a percentage on it.  So if there was a dip in attendance(traffic on the trade floor) what does that mean?  The short term impact is less then some might think.  Here’s why.  I’m aware of very few companies, retailers or TSP’s, that don’t have a travel restriction of some kind in place.  Many have instituted business case justifications for incurring the expense?  I believe retailers answered the question by bringing smaller teams.  The people that stayed home were the junior staff not the senior folks.  That’s the important fact and a perfectly logical response to the current financial climate.  Plus seeing an increase in the percentage of senior executives is a very good thing if you are making quicker decisions and talking higher level strategies  with thier vendors.

2.  What’s the vibe of the show/What’s the mood of the industry? I think there’s no question that there was a somber feel both here at the show and in the industry.  The key question to me is what does this have to do with tech?  I believe virtually every retail CIO will be looking to tech to drive out costs and/drive revenue.  Ok so what’s new about that?  Projects this year will be smaller in scale with a faster payback timeframe.  This i believe could be a key driver for innovation.  I believe the only thing that is unacceptable is to do nothing.

3.  What’s new  or cool at ths show? That’s always a difficult question to answer because so much of my time at a show is spent meeting with senior executives from technology and service providers and retailers discussing forecasts, trends, survey data and strategy and not nearly enough time walking the floor. So instead of delighted a few and irritating the many I don’t answer this question publicly.

4.  What does IT spend look like for 2009? The answer to that resides behind the Gartner firewall.

If you attended what are your thoughts on the show?

Weather delays had some impact on attendees but not nearly as much as feared. Easily the most asked question I’ve fielded today was on attendance.  Will the recession steal the joy out of NRF’s Big Show?  The answer to that I say is no.  I would expect attendance to be off last years pace but not dramatically so. I think it will actually benefit the vendor community as the folks attending will be more senior executives who can make decisions.

Sunday has always been a lighter attendance day when compared to Monday or Tuesday.  Today was no exception to that rule.  The keynote session was full.  One note: looks like there were a few additional rows of tables set up which would take up more space.

I thought the best quote of the day came from Tracy Mullin of the NRF in her opening remarks:

Usually we look back briefly to the previous year.   But this year the only thing we want to celebrate is it’s passing.

Few would argue with that sentiment!

I’ve repeatedly been asked my thoughts on what Web 2.0 tools retail and technology executives should use.  I am by no means an expert in this subject.  But I have been exploring this area fairly aggressively and will pass along my observations.

LinkedIn – To me this is a no brainer.  This is a powerful business tool that I constantly refer to.  This week, in preparation for NRF, I will go through all my connections to look for changes in employment status, job descriptions etc.  I see very little downside to connecting.  If you are a retailer or an executive selling technology into the retail industry feel free to send me a connection request.

Facebook – My views here are much more complicated then LinkedIn.  Yes I am active on Facebook and have enjoyed it tremendously.  But for me this is a personal social tool and not primarily for business.  I understand others take a different approach.  That’s fine.  But for me my Facebook page connects my personal, religious and political lives.  It’s all mainstream points of view but I don’t see the need to connect business contacts through it.

Twitter - My experience with this tool dates all the way back to November 2008 so obviously I’m an expert. Just kidding.  But in that short amount of time I’ve become a huge fan.  You can easily follow people from many different perspectives.  In many ways it’s much less personal then Facebook and other tools.  To me this is it’s big differentiator.  A nice feature is the 140 character max which forces brevity.  There are a handful of retailers that I am following that appear to be using twitter effectively.  I do caution that this can become a tremendous times sink so use with caution.  Please feel free to follow me at JeffPR

Plaxo – I am on Plaxo and accept connections but haven’t pursued it aggressively.  To me there’s redundancy between my LinkedIn and Facebook strategies.  I understand the idea of linking all this information together in one but.  But to me that’s the problem.  I don’t want all this info lumped together.

I understand there are other networking sites that are trying to gain traction.  But at this point I don’t see enough benefit to warrant the additional time investment.

What sites are you investing time in?  Love to hear your thoughts.

As promised here’s my NRF evening schedule.  Hopefully I won’t regret doing this.  But like the great NRF Twitter experiment 2009 we’ll see how this goes.  If you are a reader to this blog feel free to look me up and say hi if you’re at any of these events.  I’d love to hear your thoughts on Retail 2009.

Sunday

• NRF Reception -5 to 6:30PM
• Retail Insiders Reception – 9 to 11PM

Monday

• IBM Event – 6:30- 8PM
• Microsoft Event – 8 – 9:30PM
• RIS News Executive Cordials Reception – 9:30PM – 11PM
• Oracle After Hours event 11PM -?

Tuesday

• Blogging 6:30 – 10PM

MY Twitter id is JeffPR

Use #NRF with any of your NRF related Tweets.