We’ve had a busy few weeks attending various conferences and summits with our partners and customers. In the retail industry specifically, we’re finding that there is more urgency than ever for companies to become as agile as possible in terms of their IT and integration.
These 4 reasons seem pretty obvious – most of us would figured it out already. However looking at these points in context, and looking at the stats, shows that retailers are really up against it. It’s not only about continuing to engage with the customer in the way they want to be engaged – it’s also about keeping up with the macro trends. It may feel a bit like trying to go up the down escalator at times!
1. Online shopping is growing
- E-commerce is the fastest growing retail market in Europe and North America.
- Online sales in the UK, Germany, France, The Netherlands, Sweden, Italy, Poland and Spain grew from £132.05 bn in 2014 to £156.67 bn in 2015 (+18.6%).
- Online sales are expected to grow again to reach £182.80 bn
in 2016 (+16.8%) and £215.38 bn in 2017.
2. High Street vs Online
- The growth of online sales at the current rate will rapidly reduce the market for traditional shops.
- In Europe as a whole, online retailers in 2016 are expanding by 16.7% in a fairly stagnant retail market.
- Sales through stores are expected to diminish by -1.5% overall this year, and as much as -4.3% in the UK.
Retail Futures 2018 forecast that by 2018:
- Total store numbers will fall by 22% to 220,000 in 2018
- The share of online retail sales will rise to 21.5% by 2018
- The High Street will continue to suffer: around 41% of town centres will lose 27,638 stores in the next five years
- UK retailing has the highest proportion of online retail sales, so what happens here is being closed watched by foreign observers as Britain becomes a test bed for retail innovation
3. Increased complexity in retail systems
- Some of the most successful retailers have outsourced secondary distribution (warehouse to store) to third party logistics providers.
- Yet the best retailers do not surrender control or oversight of warehouse and transport operations.
- This capability relies on agile, integrated systems.
(Source: EY – Retail Operations – Six success factors for a tough market)
4. Brexit changes are coming
- Many implications for Online and Retail shopping, including currency fluctuations and economic volatility could lead to big gains for UK ecommerce providers
- Retailers will need to re-assess / reconfigure their supply chains / factories / automation
- Changes in regulations, consumer law and employment law
- Product standards and policy regulation
- Unemployment / migration affects retail operations
- Retail post-Brexit will have to be more agile, more digital, capital-intensive and more responsive to change.
A strong case for increased agility
All of the above points provide a strategic imperative for retailers to be agile as possible and having good integration is key to this. This agility relies on having well-integrated systems, which in turn rely on an ESB or SOA solution to pull all the disparate systems together. For example, do your inventory, CRM and payment systems speak to each other? Are you anywhere near having that elusive Single Customer View? We have seen many companies attempt to set up the systems to support this, sometimes spending a lot of time and money and still not getting it right. Sometimes we get called in to help pick up the pieces. It really is essential to get the right help, early on. It is also important to view the journey to SOA or integration as a journey. This way of viewing your systems takes a long-term approach, and happens over years.
What a collaboration with Integrella might look like:
- We review your systems, take into account your business objectives, and come up with a recommendation which suits your company
- A balance between efficiency, productivity and thought leadership
- You benefit from existing artefacts and processes
- Shared technical tasks
- You get more resilience to integration problems
- Ultimately, you save time and money
BUT the devil is in the detail. It has to be done right, first time, by experts.