Some organisations are reluctant to relinquish their legacy systems to embrace new technologies

Some organisations are reluctant to relinquish their legacy systems to embrace new technologies

Retailers are not using technology as effectively as they could be and need to adopt a more holistic, long-term approach in order for it to have a positive effect on their businesses, a new report says.

The study, 'Is Technology Clouding Retailers' Vision?' states that retailers have become fixated on having the latest tools and systems, believing they are essential to win customers.

However, fear of projects being too complex or costly, as well as having too many different systems to choose from, may also be preventing some companies from implementing technology effectively, the report from Searchlight Consulting states.

And while some organisations are reluctant to relinquish their legacy systems to embrace new technologies, the need to compete in the new online retail world is driving others to install systems that provide maximum convenience for customers while not always leading to benefits for the retail organisation itself.

"A lot of retailers of a certain age have legacy systems representative of when they were selling to fewer countries on fewer channels," says Simon Ratcliffe, infrastructure director at apparel and lifestyle retailer Fat Face.

The report suggests that instead of constantly searching for a 'silver bullet', which can cause retailers to lose focus and waste investment, they need to adopt a more holistic, long-term approach, as well as pay greater attention to company culture.

Companies such as Amazon, Asos, Net-a-Porter and Shop Direct continue to trial new concepts, often rolling out new customer propositions on a week-by-week basis. While some of these innovations will be pulled soon after deployment, many of them will enter everyday shopping usage.

However, a study by the London College of Fashion claims that the understanding of big data and its immediate application in the retail sector is too customer-centric and not sufficiently focused on maximising advantages to the retailer.

Simon Burke, non-executive director at multiple organisations across different industries, believes some retailers hold back too long before developing a strong online presence. He adds that the industry and its shareholders need to think long-term instead of about short-term profit margins.

"The new normal for retail is for businesses to recognise that investing for the medium term entails putting down money that is not going to create a return tomorrow, but will hopefully build value for shareholders, members et al later on…you need to think outside the box," he says.

The study states that technology has, at times, taken retailers in directions that were not right for the wider organisation, and has sometimes led to inertia allowing rivals to steal market share. Retailers and their shareholders need to have more realistic expectations and a longer-term vision, and to be business-focused rather than IT-led, the report says.

It offers a number of recommendations:

  • Retailers must adopt fail-fast strategies to ensure they find the technology that suits their specific customer, but think long-term in terms of return on investment;
  • Disparate systems remain a major problem, and there's a need to implement 'connecting technology' that brings flexibility to their enterprises;
  • Today's digital world requires IT/tech representation at the top level to ensure corporate strategies and IT decision-making stay aligned to business goals. Organisations must now think about business technology rather than 'IT' – it's crucial tech investments are aligned to wider corporate strategies;
  • Companies must make business-led decisions at all times – there's no use implementing technology for technology's sake.