Diverse choice, ambition and tighter controls shape retail IT investment in 2016

Consumer confidence is improving, and with our national economy in recovery and fuel prices and mortgage rates exceptionally low, consumer spending can be expected to be the main driver of business growth in the coming year.

Retailers who are ready to meet the changing demands of their customers will benefit the most from this trend, and changes both to the availability and legal acceptability of certain technologies are driving increased investment in retail tech systems.

Providing more payment methods at the point-of-sale has become a high priority, as the 24th Retail Info Systems study revealed. Of the 85 HQ-level executives surveyed,QHQ-l, 46% list diversifying payment methods as their top priority. New security systems are providing more than just loss prevention, as IP-CCTV networks combined with Video Analytics look set to revolutionize in-store CRM. Capable not only of facial recognition but of monitoring direction, measuring speed and counting, these devices and most importantly the software which powers their capabilities can provide retailers with unprecedented levels of information on the behaviour of their customers as they walk the shop floor.

Wide diversity of choice

We expect that the huge and broadening range of choice will increase the demand for expert consultation. Having access to the wealth of experience possessed by service providers can both simplify and enrich the planning process. Retailers can get an introduction to new solutions which they may not have considered, alongside a well-informed evaluation of their effectiveness in applications similar to their own, and may also get valuable warnings against potentially problematic systems. Using a service provider’s accumulated knowledge and experience can mean substantial bottom-line savings, eliminating the cost of generating the necessary knowledge and expertise in-house.

Ambitious multi-site expansion 

There has been a huge level of ambition demonstrated in some retail sectors, with some stores planning to launch dozens of new locations in as many months. Aldi and Lidl have lodged 93 and 78 new store planning applications respectively, a testament to their explosive growth [3]. Combined with the need for different devices for different purposes, the growth of new and often varied format locations can increase the complexity of installation considerably. Some companies have achieved explosive growth through partnerships with service providers, for example Pep & Co’s opening of 50 new stores in 50 days in partnership with Barron McCann.

PCI DSS tightens the rules once more 

Increasingly rigorous demands placed on retailers by the Payment Card Industry DSS is likely to feature as a major factor in informing investment choices. Recent updates declared that TLS and SSL, the standard internet encryption protocols, could no longer be used as security controls in any shape or form. [4] Any business which handles card payments much comply with the PCI DSS or risk substantial penalties if they lose card data while out of compliance. Due to the requirements of PCI DSS compliance, some retailers will face especially complicated upgrades. Using a service provider solves this problem simply by repositioning responsibility from the retailer to their provider. P2PE (point-to-point encryption) solution greatly simplify PCI DSS compliance by reducing the scope of the cardholder data environment. Retailers who have implemented P2PE solutions are protected from any penalties, as in the event of a breach the system rather than the retailer will be held accountable.

Overall, we predict the need for surveys and managed rollouts to rise along with the ambitious growth objectives of the retail sector. An increasingly impatient base of customers ups the already present need to ensure smooth running at all times, suggesting that more retailers will secure 24/7 monitoring services for business-critical systems like servers, and may be inclined to switch NBD SLAs to 2-hour fix agreements. To gain that critical competitive edge in 2016, retailers are likely to place their focus mainly on boosting productivity by optimizing IT systems effectiveness, improving customer insight and tightening security.

[1] http://www.tradingeconomics.com/united-kingdom/gdp-growth

[2] http://business.hughes.com/resources/ris-gartner-2015-retail-technology-study

[3] http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11995280/Aldi-and-Lidl-plot-to-open-five-times-as-many-new-stores-as-Big-Four.html

[4] http://www.itgovernance.co.uk/pci_dss/pci-dss-v3-0-update-changes-explained.aspx