This is the third in our series of blogs exploring how retailers can balance the dual aim of investing in technology to improve their customer proposition, while ensuring smooth-running business operations that deliver against shareholder demands and expectations.
In this blog we look at how IT investments should be business-led rather than IT-led, and how, once the business strategy is decided, you can work out what IT projects are needed to help support it.
“IT shouldn’t be putting forward something that is not in the business’s interests. If as an IT director, CIO or CTO you aren’t connected with the rest of your board or understand what the company objectives are – you probably shouldn’t be there.”
This statement from Charles Tyrwhitt’s Simon Kerry seems obvious. But there are so many instances of retailers and hospitality companies operating in silos, which can make for disjointed operations and poor decision making.
It is when these divisions form in a business that the well-crafted commercial goals can become even more difficult to achieve.
“Business strategy shouldn’t be driven by tech – IT is a function, in the same way HR and other retail departments are,” says Kerry.
“Our responsibility is to understand what the company objectives are, whether that’s over a tactical 12 months, mid-term two to three years or longer term five-plus years. Once you understand what those goals are, you can work out what IT projects are needed to help support it all.”
He adds: “In my view, this is part of the overall process that every organisation should go through.”
A good example of a business-led IT investment in retail this year comes from one of the new-age retail leaders, Asos.
Alongside Oracle Retail, the online fashion house’s IT team devised, developed and launched a new clearance optimisation engine in the space of nine months, in a move the organisation hopes will revolutionise its merchandising processes.
It’s effectively a calculation engine which ingests wide amounts of sales, price and seasonality data history to then produce a table of markdowns and forecasting curves based on expected product demand. Specific Asos business rules are combined with algorithms, enabling the system to work within relevant boundaries.
Talking at the Oracle Retail Industry Forum 2017 in Barcelona in September, Lucy Partridge, Retail Subject Matter Expert at Asos, said that business support for this technology-enabled project was critical to the rapid and successful roll-out of the solution.
“We had a strong sponsor in the head of merchandising,” she explained.
“Because of her confidence in the tool it gave the rest of the business confidence. And it was also great for when the teams were challenging [the rules]. We stuck to the vision which helped us to deliver it successfully.”
Representatives from different parts of Asos helped shape the solution from the beginning, and the pilot team were central to training the wider organisation on how to use the technology to ensure business continuity.
“It was a business-led programme rather than an IT-led programme,” added Partridge.
“[The initial] users went on to become part of the pilot team, which was very important for ironing out the bugs and tweaking the rules and the user interface and getting the right look and feel.”
Whether such an alignment comes more naturally to a digital-first retailer like Asos, which actually views itself as much as a technology company as a fashion retailer, can be debated. But the merchandising tech solution launch story is certainly an example of astute business planning.
The solution moved from concept to live in a short time frame, and its journey to launch was mapped out involving all parts of the organisation.
Keeping things ‘IT light’
Not having a “traditional” IT team at all is another way of ensuring that all technology investment decisions and deployments are completed with the business front of mind. There are certainly some hospitality firms that operate with this model, including Côte Brasserie.
Strahan Wilson has been CFO of the French-themed restaurant chain since September 2016. When he arrived at the company he brought with him experience of overseeing a number of key tech projects from his time as finance director at sandwich chain Eat. He may be unusual as a financial director in his close proximity to tech projects.
“At Côte, we have an odd arrangement in that we don’t have an IT department per se,” he comments.
“We have IT investments but no department to support it, which makes it a lot easier for us to see it as a value centre rather than a cost centre because the technologies we have, we use – and we don’t see the overhead.”
He adds: “The overhead clearly exists but it is through a maintenance support contract with an IT provider. We see IT as a value-add in the sense of ‘I will buy this technology and it will do this job for me’.”
Wilson explains this approach means the company doesn’t see IT as a cost centre, and there are certainly no legacy infrastructure issues because there is no on-premise hardware at Côte, aside from a small server which is about to move to the cloud.
“We are either in the cloud or completely outsourced, so that makes things easier for us,” he says.
Avoiding silos and channels
The idea of operational silos is not a new phenomenon, but it has certainly been amplified by the arrival of eCommerce – which for many businesses was a bolt-on to the existing retail stores. Not only, did it create an additional internal team within head office, but in some cases, it also led to customers being segmented or classified based on the channel they were using at the time.
Multiple surveys have shown consumers do not tend to view retailers in terms of the sales channels they offer, they just see one brand and expect to be able to transact and engage with, and contact that company however and wherever they are at any given time.
The recruitment of customer experience officers and customer journey professionals is indicative of the industry’s attempts to join up their channels and view their shoppers holistically, but many companies still have a long way to go to achieve true joined-up customer experience and crosschannel integration.
“If you look at the big digital players such as Amazon and eBay they are opening physical space and I guarantee they will not be separating the customer,” argues John Colley, former Managing Director of Retail at Majestic Wine, and CEO of Hobbycraft.
Colley says thinking in channels is wrong, although he acknowledges when retailers start something from scratch that may have an uncertain ROI they might want to run it separately. Even then, he says, it still needs to be complementary.
“At the end of the day a customer is a customer,” he adds.
“If they want a choice, it’s a retailer’s responsibility to make it as seamless as possible. If you don’t integrate it you can tell, and customers see the detachment – that’s not an experience they enjoy as they want the personal touch.”
In the fourth and final instalment in our series of blogs, we look at the importance of developing the right culture in a retail business, and aligning the wider team with the company’s ultimate goals. We discover that much of being successful in this area comes down to savvy recruitment and deployment of those resources.