How Can Retailers Maximize ROI From Tech Investments?
The retailer-as-a-tech-company dynamic has been heavily influenced by Amazon (and Alibaba in China), and has further been prompted by Walmart’s continued investments in AI, robotics and VR, among other technologies. In the latest example, this week Lowe’s brought talent and technology under its own wing to mesh with existing operations, acquiring a retail analytics platform (and team members) from Boomerang Commerce.
As these retail industry titans spend millions of dollars figuring out how to gain additional share of wallet through their own technology advantages, how should the rest of retail go about delivering on this transformation — especially given the high costs often involved?
This week, the RTP editors share their thoughts on the continued merging of retail and tech as a way to spur innovation, and explain how retailers can effectively absorb technology into their enterprises.
Adam Blair, Editor: It’s been one of the most interesting developments of the past five to 10 years: the number of retailers that have moved from being consumers/users of technology to being acquirers-developers-and-even-resellers of technology. I doubt there’s any one “right” way for retailers to make such a transition, not least because the retail industry is so varied and technology changes so quickly. But here are three basic guidelines: 1. Make sure the data you already routinely collect in-house (sales, customer demographics, product preferences, buying patterns, etc.) empowers whatever technologies you build or acquire — and that the new tech doesn’t duplicate things you already do. 2. Particularly with an acquisition, make sure you’re getting not just the solutions but also the people whose expertise and energy make the tech valuable. Even if you don’t hire them outright, keep them on as consultants so they benefit you, not your competitors. 3. If the technology proves valuable, follow Kroger’s lead and monetize it — as long as doing so doesn’t conflict with your core business.
Glenn Taylor, Senior Editor: Maybe retailers don’t have to specifically acquire a tech business, or even invest in one, but they had better start hiring like one if they want the brains required to understand what shoppers think. It starts by looking at computer science and software engineering graduates, or recruiting those who are already employed at agencies. Many retailers already get this: “Software developer” was the third-most-common job in retail in 2017, rising from the eighth most common in 2013, according to LinkedIn data. These developers often have a handle on cloud services and customer data platforms, and they can be vital to improving both the front end (think mobile experience) and back end (think supply chain optimization) in a way less tech-driven employees cannot. The Lowe’s acquisition seems like an obvious move to go tit-for-tat with its biggest competitor and rival The Home Depot, especially given the latter’s technology investments. Overall this is good for every party involved. Last year, Home Depot hired 1,000 technology professionals at its Atlanta, Dallas and Austin tech facilities, all of whom are specifically versed in software engineering, system engineering, UX design and product management.
Bryan Wassel, Associate Editor: One possible change to retailers’ relationship with technology is that shoppers may own their own personalization tools, rather than let retailers take care of it. This possibility was raised in a Harvard Business Review article pointing out that travel booking services, which take a wide variety of criteria into account to deliver the cheapest and most efficient trips, could eventually be applied to shopping trips: rather than pick out ingredients for a meal or outfit themselves, shoppers could use outside programs that find the cheapest and easiest collection of purchases that get them what they want. Performing curation without retailers’ input could turn modern personalization trends upside-down — rather than looking at an individual shopper’s past purchases, retailers would need to look at what’s trending nationwide and what their competitors are doing to try and stock the right products at the right prices. This would require a whole new set of solutions and associated algorithms. As a result, retailers would do well to remain agile with their technology choices, and keep an eye on related industries to see how their strategies develop.