RetailWire: Opinions Mixed On Microsoft’s Move Into Retail Arena

By Tom Ryan, RetailWire
Borrowing a page from Apple's playbook, Microsoft plans to open Microsoft-branded retail stores. Although details were limited, Microsoft said the stores' purpose will be to "create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy."
To head the initiative, David Porter was hired as vice president of retail stores. He spent 25 years at Wal-Mart Stores before joining DreamWorks Animation SKG in 2007 as head of worldwide product distribution. His last role at Wal-Mart was vice president and general merchandise manager of entertainment.

Microsoft said the first priority of Porter would be to define where to place the Microsoft stores and when to open them. The stores could feature a range of products from personal computers running its Windows operating system to cell phones running the company's Windows Mobile operating system to its Xbox videogame console.

"This is an exciting time with our strong lineup of upcoming product releases including Windows 7 and new releases of Windows Live and Windows Mobile," said Microsoft chief operating officer Kevin Turner. "We're also working hard to transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it's clear, simple and straightforward for consumers everywhere."

But many questioned the timing of the launch during a recession, as well as the potential to alienate retail distributors. OEM partners might become rankled at how their wares are showcased in the stores. The failure of Gateway's retail venture as well as Microsoft's own attempt to open a store in 1999 was also widely cited.

A lot of the criticism focused on the challenges of competing against Apple's stores and their hip design, helpful staff and "genius bars." In a research note, Allan B. Krans with Technology Business Research said the introduction of Apple stores was helped by the launch of the iPod but Microsoft doesn't have a similar traffic driver.

"Microsoft is putting the cart before the horse," wrote Krans. "Stores do not draw consumers to products; innovative products bring consumers into stores." But writing on Silicon Alley Insider, Dan Frommer saw potential benefits in showcasing all of Microsoft's products in one place. He wrote, "At very least, they could do a better job than Best Buy at showing off PCs."

Although details were limited, Microsoft said the stores' purpose will be to "create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy."

There was no shortage of opinion from key industry analysts on the BrainTrust panel. A lot of the criticism focused on the challenges of competing against Apple's stores and their hip design, helpful staff and "genius bars."
“Given the capital outlays associated with a retail store, it seems to me that Microsoft would be better served by going back to their initial concept of offering support and customer service inside Best Buy and other retailers,” said Forrester Research principal analyst Lisa Bradner. “Yes, they'd still get the "complaints department" treatment but they could learn a lot in a "store within a store" environment, connect with customers, pilot new products and size the market opportunity without getting into retail management. Simply put, I think it's a mistake.”

However, if any company can undertake a major retail operation in a down economy, it’s Microsoft. This was the viewpoint of NPD industry analysis VP Stephen Baker. “Who cares what the economy is today? It is not like they are going to open 75 stores in a year,” he said. “Expect them to gradually ramp up as any smart company would, changing and experimenting along the way and stopping and restarting to incorporate with they have learned.”

Baker dismissed the idea of the “store-within-a-store” concept. No US electronics retailer has ever fully embraced that concept because of the brand dilution it causes and the difficulty in marrying different visions of marketing and merchandising between the retailer and the vendor, according to Baker.

“This is a good idea, driven more by Microsoft's needs than by any desire to compete with Apple. With the proper scale and patience, this can succeed and be a nice supplement to the volume that goes through retail,” he said.

Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a "BrainTrust" of retail industry experts.

Domino’s Delivers Cost Savings, Data Security With Install of Thin-Client POS

By Debbie Hauss
With customer data security and current economic concerns top-of-mind at Domino’s, the 8,200-store pizza delivery chain expedited the implementation of new thin-client POS operating platforms for its stores. While in the past Domino’s may have rolled out this type of upgrade during the course of 18 months or more, this POS upgrade went out to 550 stores in six weeks.

Motivated by recent credit card security breaches, Domino’s super-charged its previously conservative implementation strategy, with great success. “It really got everyone focused on the same goal for a very short period of time,” says Wayne Pederson, VP of operations technology for Domino’s. “We started with our corporate-owned stores and now this is our template for all implementations.”

Crunching the implementation time did create some temporarily higher help desk costs, and Domino’s needed assistance from Microsoft to script the quicker process, but those minor adjustments were worth the resulting time savings, says Pederson. “We have found that it is much better not to prolong the pain and agony of transition time.”

SAVINGS FOR STORE OWNERS
The new, more secure thin-client POS operating platforms cost Domino’s franchisees $17,000, down from $25,000 for the previous system. Domino’s switched from full PCs at each workstation to an entire new Microsoft architecture that features thin client architecture.

At press time, more than half of Domino’s 8,200 stores have made the switch from Microsoft Server 2000 to Microsoft Server 2003, Pederson says, and more stores continue to make the switch on a daily basis. “The new systems provide increased operating speed, improving the overall performance of the application,” he notes.

Domino’s also is realizing savings in store downtime because each store now has two server configurations. If one goes down it can easily be swapped out with the other. “In the past stores would close down for two or three days until we were able to ship them a new server,” says Pederson. “They can’t function without their computer systems because they simply don’t know how to take manual orders.”

CUSTOMER DATA CUTS
The thin client architecture has allowed Domino’s to reduce the amount of customer information stored at individual workstations, helping the chain achieve compliance with Payment Card Industry (PCI) data security standards. “At one point we were storing credit card information on the individual workstations,” explains Pederson. “Now we are no longer exposed on the store level.”

Pederson urges other companies to secure their customer information as soon as possible. “The worst thing to have happen is a situation where consumers lose confidence in your ability to handle their private information,” he says. “That was our impetus to move as quickly as we did with this implementation.”

Domino’s is using a full suite of Microsoft products to offer the most robust system for its franchisees, says Pederson. Those components include Microsoft Windows Server System, Microsoft System Center Operations Manager 2007, Microsoft Forefront, the 2007 Microsoft Office system and Windows Servicer Terminal services.

5 Key Trends From NRF Which May Separate The “Has Beens,” The “Survivors” & “Thrivers”

Written by Andrew Gaffney
Against a backdrop of Gottschalks joining the ranks of retailers to file Chapter 11 and Circuit City in the process of auctioning off its assets, the NRF Big Show definitely had more of a sober tone this year. While Gottschalks filing was not a huge surprise to many in the industry, the struggles of the chain of 58 department stores and 3 apparel stores reflected the harsh reality that in the current economic crunch retailers are quickly falling into categories of has-beens, survivors, or thrivers.

While retailers may have cut back and sent fewer team members to this year’s NRF event, those retailers in attendance were active buyers in pursuit of solutions that could help them emerge as a company that survives and even thrive once the economy rebounds. In order to stem the current tide, most retailers in attendance were focusing on the following 5 key areas:

1. Efficiency/Cost Savings
   The ROI that tier 1 retailers like Home Depot and Sears have realized from task management and workforce optimization has been well documented, but now more mid sized chains are realizing the value in optimizing their workforce. For example, at NRF this week Books-A-Million, the third largest book retailer in the U.S., announced plans to implement the entire Reflexis Store Operations suite of integrated KPI, labor scheduling, task management, and storewalk/compliance solutions.
   
   "In this challenging retail environment, it is critical to maximize the efficiency of the store level workforce,” said Dennis Lyons, Executive VP of Store Operations for Books-A-Million. “Reducing store salaries in response to tough sales can have negative ramifications if done incorrectly. In order to benefit our shareholders, customers, and associates, it is important to understand the specific labor needs of every store. The workload given to stores must be managed upstream in the home office so that key tasks are accomplished and the right amount of time is allocated and scheduled for sales and customer interaction.”
   
   In addition, Canadian’s largest food distributor Loblaw Companies announced plans to utilize RedPrairie’s Workforce Management applications to manage over 120,000 associates in its stores across Canada
2. Analytics/Business Intelligence
   Considering the rapid change in demand cycles, many retailers are leaning more on the dashboards, real-time alerts and other insights business intelligence and analytics solutions provide. One of the most telling examples spotlighted at NRF was Family Dollar’s Project Accelerate. The Fortune 500 retailers with more than 6,600 stores and $6.8 billion in annual revenues is in the midst of a three-year transformation designed to improve the shopping experience and also improve inventory productivity and enhance supply chain efficiency.
   
   Family Dollar’s executive team has identified its use of SAS merchandise planning applications and business analytics as a key component of Project Accelerate. “SAS enables the Family Dollar merchandising organization to quickly create integrated merchandise financial plans we can share and adjust collaboratively on an almost real-time basis,” said Scott Zucker, Vice President of Merchandise Operations for Family Dollar. “With the current economy, it is important for us to make inventory adjustments quickly to minimize ‘discretionary’ risk and maximize ‘basic needs’ opportunities. During 2008, the SAS Merchandise Financial Planning solution enabled us to adjust our merchandise assortments much more quickly than in the past. This allowed us to make immediate investments in the consumable categories that our customers need most during these difficult times. Our strong fourth quarter results from June to August in 2008 reflect this mix shift away from more discretionary merchandise.”
3. Customer Centricity
   Every retailer claims to be customer centric, but in the current economic climate many retailers are actually putting their money and focus behind those claims. As a clear indication, a Sunday conference session entitled “Are You Truly a Customer-Centric Retailer?” drew approximately 800 attendees. Presented by DemandTec, the session introduced new research from IDC on the state of customer-centricity and insights from Best Buy and Canadian drug chain Rexall PharmaPlus.
   
   Leslie Hand, Research Director for IDC Global Retail Insights, previewed the results of a recent survey to be published later this month. The results highlighted suggest customer-centricity is a retail initiative that has firmly taken hold, especially among the industry’s higher performers. “We were impressed with the fact that customer centricity is one of the top three focuses of most retailers and that customer insights are being deployed extensively by both marketing and merchandising,” said Ms. Hand.
   
   Denise Darragh, VP of Marketing & Advertising at Rexall PharmaPlus, a 350-store drug chain in Canada, described how the 350 store chain has used customer segmentation to better target and promote to specific shoppers. Dan Moe, VP of Merchandising Operations and pricing for Best Buy, presented a summary of how Best Buy’s well-publicized customer centricity program has changed how the company approaches merchandising, pricing, and advertising.
   
   
4. Connected Channels
   Retailers looking to connect disparate sales channels had several live demos on the show floor of providing the ability to allow consumers to buy from any channel, and easily have that purchase fulfilled from the distribution channel of their choice. For example, Manhattan Associates showcased the integration of its Distributed Order Management (DOM) solution with WebSphere Commerce from IBM. Building a demo around their joint client David’s Bridal, Manhattan and IBM demonstrated the ability for buying products online with pickup in stores, by allowing visitors to the IBM booth to order gifts such as digital photo frames from an IBM gift registry and then have that order picked up at the Manhattan Associates booth.
   
   "Solutions like Manhattan's DOM are the future for cross-channel order management, especially given the certified integration with a leading eCommerce solution like WebSphere Commerce," said John Morrow, CIO for David's Bridal. "This technology allows us to have complete order and inventory visibility along with better communication with our customers in every selling channel. As you'd expect, having absolute certainty over ability to deliver by our customers' wedding day is core to the David's Bridal culture, and Manhattan DOM gives us the tools we need to make this happen."
   
   In another powerhouse teaming around cross-channel commerce, Accenture and Microsoft announced an initiative at NRF to help retailers tackle the challenge of linking consumers to emerging technology platforms such as social networking and online communities.
   
   Under the multi-channel retail initiative, Accenture and Microsoft will work with Avanade -- a global IT consultancy created by Accenture and Microsoft – to help retailers extend the shopping experience to an ever-widening number of locations and devices, including the Web, mobile computing, and even new ways to shop in stores.
5. The Arrival Of Mobile Commerce
   The NRF Show also featured one of the first live demos of the new Microsoft Tag short code technology. Built around a prototype retailer called Martin Blue, Escalate Retail promoted an offering for a free pair of iPod travel speakers. Retailers were invited to “snap” the tags featured in ads and post cards with their web-enabled phone and “order” the free speaker as a reward for taking part in the demo. After snapping the tag to place their order, retailers were able to stop by the Escalate booth to pick up their order and learn more about the mechanics of how the behind-the-scenes tools used to deliver the live “Buy Anywhere, Fulfill Anywhere” example.
   
   Despite huge growth in Japan, quick response codes are still in their infancy in the U.S. The debut of Microsoft’s Tag technology could change that quickly.
   
   There were also demonstrations of mobile payment solutions showcase at the NRF Big Show, with exhibitor Vivotech showcasing its Near Field Communication (NFC) software which enables mobile payments. The company also announced plans for a trial with Sheetz and Wright Express, which will enable drivers to make fuel purchases by merely tapping their phones at contactless payment readers.
   
   In collaboration with Sheetz and Wright Express, ViVOtech will provide the complete end-to-end NFC mobile solution including a mobile wallet, Over-The-Air (OTA) fleet card provisioning infrastructure software, promotion management software, and contactless/NFC terminals installed at Sheetz locations. The trial will include more than 350 participating Sheetz locations throughout Pennsylvania, Virginia, Maryland, West Virginia, Ohio and North Carolina.

IHL Group IDs Biggest Losers When It Comes To Out-of-Stock Failures

Out-of-stocks continue to plague the retail industry as one of the biggest causes of lost revenue and customer frustration. Now a new research study from IHL Group has helped to quantify just how big the problem is for the industry and also identifies the biggest laggards when it comes to in stock positions.

Consumers experienced out-of-stocks during approximately 17.8% of their shopping trips, which is about 123% higher than the out-of-stock rate claimed by retailers for themselves, according to the new report from IHL Group titled “What’s The Deal With Out-Of-Stocks?”

Breaking the out-of-stock issue down by verticals, IHL Group found consumer electronics stores are losing the most, with consumers saying that they leave the store without buying at least one item 21.2% of the time. The study also found warehouse clubs lose $1.78 and grocery stores lose $.68 in sales for every customer when consumers cannot buy that product or an adequate substitute.

"Retailers remain in denial when it comes to consumer's perceptions of out-of-stocks," says Greg Buzek, president of IHL Group, an analyst firm and consultancy that serves retailers and technology vendors. "Consumers don't care why the product is not available. They come in with money to spend at the stores and have to leave either because the shelves are empty, there is no one to help get a locked item, or the staff simply cannot find the merchandise even though the computer system says they have it. 9% of all consumers in our study have simply stopped shopping at one or more retailers in the last 12 months due to the problem."

The study applauds those retailers who have achieved best in-stock performance by naming Safeway as best-in-class among grocers (with only 14.7% of consumers experiencing out-of-stock of at least one item); Ace Hardware as best-in-class for home improvement, (with only 13.6% of consumers experiencing out-of-stocks); and Fry's Electronics in consumer electronics (with 13.1% percent of consumers experiencing out-of-stocks).

On the flipside, the IHL study also highlighted those retailers losing the most revenue due to poor in-stock performance. With an 18.1% out-of-stock rate, IHL estimated CompUSA is losing $1.16 for every customer, while Radio Shack, with a 22.7% out-of-stock rate, loses $1.46 per customer.

The other biggest revenue losers, according to the report, were: Office Max, which has a 30.6% out-of-stock rate and loses $1.96 per customer; Office Depot, which has a 26.6% out-of-stock rate and loses $1.67 per customer, and Circuit City which loses $1.65 per customer with a 25.7% out-of-stock rate.

IHL provides customized business intelligence for retailers and retail technology vendors, with particular expertise in supply chain and store level systems. Our customers are retailers and retail technology providers who want to better understand what is going on in the overall technology market, or wish to identify specific equipment needs for the retail market.

Case Study: Family Dollar Optimizes POS System With Embedded Apps

By Amanda Ferrante

While many other retailers are struggling, business is good at Family Dollar. The 6,700 store value chain is adding stores and posting increases in the 3% range. Not resting on its laurels, the company understands that competition means constant improvement to the in-store customer experience. The check out process is one of the latest areas where the chain chose to make an impact on that experience.

In early 2008, Family Dollar’s POS devices accepted only cash, checks, PIN debit, and electronic benefits transfer (EBT) cash. To remain competitive in the retail sector, Family Dollar wanted to expand its tender types to include signature debit, credit, and government-subsidized EBT programs such as USDA Food Stamps. The legacy systems in place could not support the complexities of these programs and required an overhaul of the application architecture and technical foundation.

Until recently, Family Dollar’s 16,000 checkouts were mainly equipped with aging POS terminals running proprietary application software. The single-threaded operating system meant that only one application could run at a time, while the 640k memory limit and outdated interface requirements restricted the addition of new retail application packages. Connectivity between stores and the corporate office was limited to a one-way, daily dial-up communication of summarized transactions with some capability for messaging.

“These initiatives were focused on providing avenues for new revenue growth, increasing employee efficiency and efficacy, and improving inventory management,” says Paul Rossi, Director of Customer Services for Family Dollar. “We also wanted to provide faster customer throughput and better customer service, as well as to create scalable, secure, flexible systems to support future growth and enhancements.”

Leveraging Assets
The technical tipping point came when Family Dollar decided to implement SAP Transactionware General Merchandise (SAP GM), SAP/Triversity's client/server point-of-sale application, which integrates with DOS, Linux, and Windows XP. Due to the extensive size of the rollout, new technology had to co-exist within the current environment. With 1,500-2,000 newer DOS-based POS terminals recently purchased, ROI for the new system was a pressing issue.

The answer for Family Dollar was Windows Embedded for Point of Service, a powerful operating system built for retail that offers a small footprint, extensive USB peripheral support, and POS for .NET™ designed to connect people, information, and peripherals in a familiar and standardized way. Development of the POS device itself was led by Toshiba TEC, which was able to leverage its Windows XP Professional experience, combined with Microsoft Retail Group support, to speed development of the Windows Embedded device.

Windows Embedded for Point of Service also could be “locked down” to prevent employees from installing unauthorized applications, surfing the web or downloading suspicious files. This was critical because the POS devices not only performed a mission-critical business function, but they also captured sensitive customer information.

Within three months, the new POS terminal was integrated with key peripherals using industry standards like OPOS, Unified Point of Service (UPOS), and POS for .NET, another retailer focused feature of Windows Embedded. After six months, the new checkout devices were being tested in stores. The entire project, including enterprise integrations, took less than a year from concept to deployment.

To date, Family Dollar and Toshiba have replaced or upgraded nearly 4,500 POS terminals in the field using a rotating installation method—DOS POS terminals removed from one group of stores are re-imaged with Windows Embedded to support the next group of stores.

Improving the Front and Back Ends
The POS equipment now includes a movable POS and PC keyboard, portable data collection device and the Personal Identification Number (PIN) pad for tender types—all connected through Windows Embedded for Point of Service. Family Dollar can now accept an expanded range of tender types like food stamps and credit cards. Additionally, reducing the total number of required registers reduced support costs and increased space for merchandise in the store.

The customer experience has improved dramatically. Customers now see a full-color presentation screen on a 15-inch flat panel display. They can view the rolling receipt, as well as promotions and advertisements. Lane efficiencies have been gained by eliminating older equipment and optimizing the use of the cash register as a multitasking device.

Reductions in shrinkage were also measured and attributed to enhanced functionality within the Point of Sale system and increased presence "up front" by store associates. Hardware and maintenance costs were reduced by eliminating the need for other back office computing equipment in the stores. Employee satisfaction has also increased. Family Dollar’s manager retention level is now higher. Employees are able to stay in touch with what’s happening at headquarters, like job openings, benefits and corporate emails.

The new POS terminal can communicate with the portable data collection terminals (PDTs) used for product cycle counts, price checks, and other barcode applications. Store managers upload the data to corporate back office systems through the POS terminal, and can even make data corrections on a Store Manager Portal page.

Northeastern Professor Gao Offers 4 Point Plan of Attack To Address New Retail Realities

As a well-published academic specializing in international retailing Tony Gao, PhD, Marketing, Northeastern University, has written about some of the most complex issues the business can serve up. How does “The Antecedents and Consequences of Organizational Commitment in the Korean Retail Context” strike you for complexity?. But when it comes to the current retail environment, even he is taking a strictly back-to-basics approach.

“Value can come in different ways: same product for less money, higher quality for same price, same quality for lower price,” he explains. “To retain loyal customers and cement relationships with new customers, the value-oriented strategy must be worked into the entire organization, from operations to merchandising to communication.”

But, he warns: “Be sure to cap spending without compromising service.” Gao names BJ’s Wholesale Club as an example of a retailer that has cut costs but not customer service. “BJ’s is better utilizing its open store hours,” he explains. “The stores used to be open from 9am to 10pm but now they are open from 10am to 9pm. With the savings in labor from those two hours, the company is focusing more resources on the quality of its products.”

4 Difference-Makers For Retail
Retailers striving to survive in the current economy should offer deals early and often, suggests Gao. His advice was well-heeded during the Thanksgiving holiday weekend. In the past some retailers, particularly smaller, independent specialty companies, could get by without offering promotions and discounts but today they must offer them to help keep customers coming back.

To summarize his theories that describe which retailers will be successful during a down economy and beyond, Gao has put forth four phrases that he says will make or break retail companies:

1. Create a buffer zone. Loyalty, internal support and historic performance are all keys to creating a strong buffer zone. Gao says retailers need to ask themselves: “’How many more mistakes can you afford to make before customers turn away?’ because this is the time when customers who are not loyal will be attracted away with deals.” Additionally, companies will strong support from the board of directors will have more leeway to tackle challenges and retailers that have performed well historically have a better chance of survival.
2. Implement innovative marketing programs. Retailers should literally think outside the box when planning marketing strategies. For example, Baby Universe has aligned with Costco.com, giving the company another source of sales. BJ’s is expanding its consumer base by targeting more traditional grocery shoppers with smaller packages of products compared to Costco and Sam’s Club.
3. Fit with today’s times. Retailers that offer necessities will fare best in this economy, Gao notes, including food, consumables, drugs and gasoline. Also, retailers offering great value to their customers will come out on top.
4. Offer diversification. Retailers should diversify their merchandise offerings, their geographic selling areas and their selling channels, Gao says. “Retailers like Walmart that offer a broad scope of merchandise will fare better than those who offer a narrow selection,” he says. “Walmart also receives 20% of its revenue from Europe. That is diversification.”

Bracing for a difficult 2009
After evaluating relative success or failure following the holiday season, retailers can expect to be faced with a difficult economy throughout 2009 and possibly beyond, says Gao. “Retailers will have to adjust their mentality to react to this environment,” he notes. “Maybe it’s not the best time for major strategic investments, but it is a good time to fine-tune operations and focus on customer service.”

Gao cites Lowe’s as a retailer ahead of the curve with customer service. “Lowe’s executives argue that even though sales may not be as good as they were in 2005, the company is better in terms of having systems in place to better serve all customers. All retailers should be doing some of that right now.”

When the holiday numbers are finalized in March, expect to see some bankruptcy announcements, he says. “We may not see a lot of bankruptcies, but definitely some. I don’t expect overall economic conditions to be much better in March or April of 2009, so retailers that didn’t fare well during the holidays will be under deep pressure.”

Forecasting Substantial IT Spending Cuts In 09, Analysts Predict Projects To Make The Cut

Call it the “CSI phenomenon.” As coined by AMR Research retail VP Mike Griswold, it describes the current atmosphere in which every retail expenditure is under the kind of analysis reserved for a crime scene and accompanying forensics. As a result, retailers have moved from trying to guess how much their IT budgets will be cut, to focusing on the projects that they need to execute.

For the record, Griswold and his colleague Janet Suleski told the AMR Business Technology Conference in Boston last week that the 7% to 8% increase in retail IT budgets projected earlier in the year will in reality be a decrease in the neighborhood of 5%. This reassessment came on the same day that Best Buy CEO Brad Anderson joined Barnes and Noble CEO Steve Riggio in calling the current retail environment “the most difficult climate we've ever seen.” When it comes to infrastructure, customer relationship capabilities, and data analytics, retailers are no longer asking “how deep” but “what can I spend on?”

Griswold believes retailers will be predisposed to pick IT projects that show a quick and appreciable ROI, are implemented within six to nine months and have a low impact on everyday business operations. “The back office piece is still struggling at many retailers,” he said. “The customer facing piece of cross-channel retailing has received a lot of attention, now it’s time to bring planning and execution together. The disconnect between the warehouse and the store needs to be addressed.”

Here are the projects most analysts and retailers say will be affected, both positively and negatively, by the new budget dynamics:

Promotions Optimization: With marketing budgets at wire-tight levels, knowing the effectiveness of discounts and marketing efforts to support them is expected to be the single largest IT investment for retailers in 2009. Real-time information that can be spread throughout the supply chain is also a “must have” to optimize any spending that gets approved.

Workforce Management: Finding the right people to hire, and training them to be effective with customers is top priority on the budget “must have” list. Retailers continue to balance technology and humanity when it comes to the customer experience. Workforce management is where those two issues intersect.

Knowledge Management: Many key retailers have indicated that knowledge management is integrating quickly with workforce management. Customer and inventory knowledge is not being collected and disseminated solely for sales and marketing executives. “It is being used to help sales associates be more effective with customers,” says one major retailer.

Cross Channel Management: How many customer segments do I have and how do I get to them? Those are the questions that retailers want more information on as they continue to keep pace with “buy anywhere/fulfill anywhere” issues, and also maintain momentum for loyalty programs.

POS Upgrades: It is unlikely that existing initiatives will be scrapped, but POS upgrades may be at risk for retailers that don’t want to risk the business process interruption.

System Replacement/Upgrades: Total replacement and upgrades fail the quick turnaround and change management tests. Big ticket enterprise management projects are under review.

RFID, Digital Shelf Upgrades: Once again this can be expensive and not necessarily a higher priority than optimization, workforce or knowledge.

One thing is for certain, retailers and software vendors are not panicking. Most of the key players we spoke with were adjusting, not squashing their budgets. As Griswold says: “Retailers still want better customer relationships and that will continue to be addressed.”