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Retail 2009: Do the 4R’s Replace the 4P’s?

by Jeff Roster  |  March 12, 2009  |  3 Comments

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.

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Category: retail-industry-events  retail-observations  retail-retail-it-marketing  retail-spending  

Tags: retail-technology-conference  

Jeffrey Roster
Research VP
12 years at Gartner
15 years IT industry

Jeffrey Roster is a research vice president at Gartner as part of the Industry Market Strategies Worldwide unit covering the retail and wholesale industries. In this capacity, Mr. Roster consults on market strategies, competitive assessment of the IT services landscape, technology trends and the direction of IT spending to provide market research for IT vendors. Read Full Bio

Thoughts on Retail 2009: Do the 4R’s Replace the 4P’s?

  1. Sank says:

    I see continuted IT spending in 2009 and 2010 but at a greatly reduced scale. Still there is energy in the following areas;

    – Optimization. This is in line with your thoughts on localization. It’s happening at the price, space and assortment levels. Retailers are looking for ways to develop more personal relationships with their customers. These analytical tools are the price of entry.. The problem is they’re expensive and they take serious analytical horsepower to make them usefull, both from the technology AND the human aspect. There are third parties out tehre who provide these services but in most cases they’re missing one or two pieces of the complete solution, mostly execution.

    – So, Execution systems- In oder to execute store specific and customer specific campaigns and offerings retailers are realizing that their legacy systems for delivering price or merchandise data to their stores does not scale well to the new reality of millions and millions of intersections of space/location/customer/product. You’ll see some energy in bringing those systems up to par. This is a good place for contract work BTW. Fits the model perfect.

    – Business Intellignece. This is the cost of entry for all these activities and retailers are in vastly different place on their level of sophistication here.

    Really, there’s a sort of Masolow’s Hirarchy of Business Intelligence that says; if the top of the foodchain in analytics is Predicitive Analysis, below that is what iffing, at the bottom is reporting on history… I’ve come to the conclusion that organizations can’t go from the bottom to the top with out going though each of steps. So if you don’t have attribute data, or you don’t know how what iff scenarios, you can not predict your customers behavoirs on pricing changes. Even with external software packages.. you find you can’t verify the results…

    Going forward BI is going to be a hot space as it’s the foundation for all of the above.

    That’s my thoughts…. Keep up the good work Mr. Roster.

  2. Naveen Mishra says:

    In emerging markets like India, retail is currently following consolidation phase in 2009. 2008 has been a growth story for all the leading Indian as well as MNC vendors. However, the current economic downturn clearly seems to be bringing a different dimension to the unprecedent growth so far.

    Indian Retailers seem to challenged with the cash flow issues due to restrcicted consumer buying. Aggressive promotions are quite visible, however, it is still not able to drive sustainable growth.
    These business challenges are bringing in a lot of pressure on the 2009 IT spending and a lot of IT vendors have started revisiting their IT plans. As expansion has been put on hold-a lot of related IT spending is going to be directly impacted. In the exisiting ones, as there are closures-a lot of IT redundancy may get created.

  3. Kiran says:


    What are your views on my following question in Retail IT.

    1. Where are the next opportunities in outsourcing in retail?
    2. How can IT service providers successfully secure renewals and win new business?
    3. How big is the midtier opportunity and which vendors are taking a leading role?

    It would be very helpful if you can share your thoughts on the same.

    Thanks in Advance
    Kiran BS

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