In Tough Times, Love Your Customers

To attract shoppers, online retailers and brick-and-mortar stores are doing a little shopping of their own—for IT equipment and software.

Recession-weary retailers, in an effort to gain a competitive edge, are investing in new point-of-sale (POS) technologies and Web applications to improve customer service and enhance the shopping experience. They’re also implementing software to forecast sales and improve inventory levels. The results include cost savings, higher profits and assurances that they have the right amount of inventory to meet customer demand.

“The mantra for this year is ‘customer-centricity,’” says Leslie Hand, research director of IDC’s Global Retail Insights. “Retailers are focused on reducing costs where they can, but a lot of their attention is on creating a better customer experience.”

For online stores, it means adding new features, such as customer product reviews or one-page checkouts, to make purchases faster and more convenient. For brick-and-mortar stores, the trend is to integrate Wi-Fi access and computing devices, such as touch-screen kiosks, to better engage customers and assist them with their shopping.

At apparel or electronics stores, touch-screen kiosks allow customers to access product catalogs to comparison shop. If items are sold out at the store, customers can order them at the kiosk and have them delivered to the stores or to their homes, Hand says. Some supermarket chains are experimenting with mobile handheld devices that provide coupons and alert customers to sales. Others provide bar-code scanners that allow customers to scan in items as they shop, which speeds up the payment process.

From a distribution perspective, global companies with more than 10,000 employees rank inventory optimization as their top supply chain IT investment, according to IDC’s Manufacturing Insights. Inventory optimization software allows businesses to forecast demand and better manage their inventory, says Simon Ellis, practice director of supply chain strategies at Manufacturing Insights.

“Supply chain planning has made enormous leaps forward, and inventory optimization has driven significant savings for those who have adopted it,” Ellis says.

Worldwide retail IT spending is expected to grow 2.4 percent, from $81 billion in 2008 to $83 billion in 2009, while supply chain management spending in the manufacturing sector is expected to reach almost $3 billion in 2009, a 4.5 percent increase from 2008, according to IDC. Attractive prices, high-quality products and good customer service are critical. But to boost sales, retailers can turn to technology to differentiate themselves from the competition, Hand says.

“Retailers are always looking to innovate,” she says. “[Retail technology] does something that makes the customer think of a vendor differently and positively, which is especially important in this current economic environment.”

The following three businesses have taken advantage of e-commerce applications, POS technologies and inventory optimization software, respectively.