Retail Strategy: IT Investment

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Framework Primer
Retail Strategy: IT Investment
Presentation created by
Pricing/
Markdown
Optimization
Supplier
Collaboration
Business
Intelligence
Next Generation
In-store
Technologies
Cross-channel
Integration

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Contents
Overview
IT Cost Management
Areas of IT Investment
Templates
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This framework discusses the 5 key areas of IT critical for the Retailers
to invest to secure a competitive, leading position
Presentation Overview
Retailers need to recognize key emerging trends that can deliver new value for their
businesses.
Organizations need to develop critical capabilities to stay ahead of the competition. A proven
method to achieve this objective is to reinvest the savings achieved through IT Cost Management
into building capabilities critical for the future. In order to decide the areas of IT investment,
Retailers need to adopt a market-focused approach, where they need to distinguish the trends
transpiring across industries that have the potential to deliver value for the business.
This presentation breaks down 5 key trends that are transforming the Retail industry. Three of
these trends focus on the customer while the other 2 aim at perfecting the implementation
capabilities. These are the areas where market leaders in the Retail sector are concentrating on
in terms of making targeted investments:
The slide deck also includes some slide templates for you to use in your own business
presentations.
1 Business Intelligence
2 Next Generation In-store Technologies
3 Cross-channel Integration
4 Supplier Collaboration
5 Pricing/Markdown Optimization

The Retail industry is traditionally a low-margin business, which is under
fierce threat by cutthroat competition nowadays
The Retail industry is replete with challenges, such as fragmented IT applications,
complexities, and disconnected systems—resulting in high costs.
State of the Retail Industry
Source: Winning in Retail IT, Booz & Co, 2010
With weak consumer spending; saturated markets; increased consumers demands for service and
lower prices; and intense competition; the bottom lines for Retailers are squeezing and the options
for growth are getting thin. Such low margins compel the Retailers to save costs across the
operations, including IT, which is vital for the success of every strategic endeavor—e.g., enhancing
customer experience, customer loyalty, or cross-channel integration.
Resultantly, IT budgets are also shrinking. To this end, sustaining a cost-effective, efficient, and
customer-centric IT function is a priority for the Retail CIO.
The Retail industry faces quite a few IT challenges—e.g., hundreds of discrete locations, numerous
applications, and diverse technology infrastructure and systems. The IT function needs to integrate
various disjointed applications, including store-based point-of-sale, supply chain, and human
resource management with their core systems. In these context, rational utilization of technology is
important to achieve customer loyalty with clusters of customers across the store, online, and catalog
channels.
Most Retailers count on cumbersome bespoke ERP systems to deal with merchandising systems
and price management, which further add to costs and complicatedness. The apprehensions for
customer privacy and data security, and dependence on traditional ERP systems limit the Retail
sector to take full advantage of offshore IT infrastructure and solutions delivery services.

Contents
Overview
IT Cost Management
Templates

Despite the number of challenges in the IT domain, the leadership in Retail
needs to work on building their IT competencies and saving costs
For more information on these 4 levers, refer to this framework on the topic:
https://www.com
IT Cost Management – 4 Levers of IT Cost Management
Regardless of the ever-increasing rivalry and the challenges associated with technology, Retail CIOs
should prioritize Cost Reduction and improved IT prowess.
Specifically, there are 4 levers at the disposal of CIOs to drive significant savings in IT spend:
Application &
Infrastructure
Simplification
Demand
Management
Lean IT
Organization
Strategic Sourcing
• Drives IT efficiency to new
levels by taking greater
advantage of the best skills
and cost-saving techniques
• Rationalizes application
portfolios and infrastructure,
reducing complexity and
cost.
• Focuses discretionary
spending on highest-value
projects.
• Concentrates on current
and future tech priorities
designed to add real value
to the business.

Pricing/
Markdown
Optimization
Supplier
Collaboration
Business
Intelligence
Next Generation
In-store
Technologies
An important element of IT Cost Management is reinvesting the cost
savings to develop market-facing competencies
Reinvesting costs saved through IT Cost Management in these 5 areas helps to boost
revenue, enhance efficiency, and improve the customer experience.
IT Cost Management – 5 Core Areas of IT Investment
Five key trends are transforming the Retail industry; 3 of them concentrate on the
customer while the other 2 aim at perfecting the implementation capabilities. These are
the areas where market leaders in the Retail sector are concentrating on in terms of
making targeted investments:
The cost savings achieved through IT Cost Management should be reinvested to build capabilities
critical to stay competitive.
In order to decide
the areas of IT
investment,
Retailers need to
adopt a market-
focused method.
This includes
distinguishing the
trends transpiring
around the Retail
business world,
promising to
deliver value for
the industry.
Cross-channel
Integration

Contents
Overview
IT Cost Management
Templates

A key area to invest in IT—and develop critical capabilities—is Business
Intelligence
Advanced data analytics tools and techniques help the Retailers to recognize customer
behaviors and tailor their offerings to fulfill their customers’ requirements effectively.
Business Intelligence – Overview
REQUISITE COMPETENCIES
Integrate data to help organizational strategic planning.
Employ the available data to identify customer demands and to promptly
understand the shifts in their needs.
DETAILS
Like other sectors, Retailers are also making huge investments in
developing capabilities and applications to gather, consolidate, and
cumulate the data required to carefully evaluate customer activities,
spending tendencies, and interpret the impact of their business decisions—
e.g., pricing, promotions, and new product launch.
Definition
Business intelligence
comprises the capabili-
ties, know-how, systems,
tools, excellence, threats,
and procedures
employed to assist an
enterprise develop a
thorough appreciation of
market performance and
commercial environment.
RETAIL
TREND
Business
Intelligence

Up-and-coming hardware and software POS solutions are another area
to invest in IT to stay ahead in the Retail game
Next-generation Retail systems drive operational efficiencies through better transaction
management and less handling of cash.
Next Generation In-store Technologies – Overview
Definition
These are the latest and
emerging hardware and
software POS solutions
for the Retail sector that
the Retailers use to
increase revenues and
decrease expenses
during the customer point
of sale process.
RETAIL
TREND
Next
Generation
In-store
Technologies
Improve customer experience through prompt and straightforward
transaction processing.
Reduce the amount of time customers stand in line and decrease the
number of walkouts.
DETAILS
Next-generation Retail systems consist of advanced POS systems such as
wireless POS/portable terminals, kiosks, and self-checkout terminals.
These systems help decrease customer transaction times, integrate new
customer management abilities—e.g., loyalty programs and personalization
features.

The integration of customer transaction channels is another key IT
investment for the Retailers
Cross-channel integration objectively develops a consistent customer experience across
all interaction channels—the web, physical stores, call centers, and catalogs.
Cross-channel Integration – Overview
Coordinate customer experiences across all transaction channels—in-
store/online/call center.
Integrate back-office operations for all channels of interaction so
customers can easily move between them.
DETAILS
Integration means more than creating a common brand identity and look
and feel. By enhancing Retail, supply chain, and back-office systems
across the value chain—from merchandising and POS systems to business
intelligence tools—integrating across every channel allows Retailers to offer
cross-channel loyalty programs, consistent online and in-store pricing,
inventory visibility across channels, and advanced in-store kiosks, and
mobile commerce solutions.
Definition
Cross-channel
Integration involves the
integration of customer
transaction channels
onto one platform—for
instance, it entails the
blending of operations
related applications and
cross-channel interaction
systems.
RETAIL
TREND
Cross-
channel
Integration

A robust communication flow and partnership between different suppliers
is another important factor to look at while investing in Retail IT
Building information sharing platforms that provide near real-time sharing of demand and
supply information with suppliers is critical to the success of such systems.
Supplier Collaboration – Overview
Definition
Supplier Collaboration
simply means sharing of
information between
suppliers and merchants
to augment the supply
chain activity.
RETAIL
TREND
Supplier
Collaboration
Allocate inventory and capacity effectively through better coordination
with suppliers.
Streamline the Retailer/supplier relationship to make the supply chain
more efficient.
DETAILS
Retailers are investing in systems that foster more robust collaboration with
suppliers to better manage supply chains—including everything from
merchandise planning, sourcing, and purchasing to replenishment and
inventory management.

Evaluating the factors affecting demand—e.g., consumer behavior, trends,
purchase history—is critical in optimizing pricing to maximize profits
Leading Retailers are already making real gains in profitability by integrating demand
forecasts, promotional information, and regional/local variations.
Pricing/Markdown Optimization – Overview
Definition
Pricing/markdown
optimization involves the
ways to predict the
profitability of different
price actions to drive
incremental profitability.
RETAIL
TREND
Pricing/
Markdown
Optimization
Optimize product pricing to maximize profitability.
Mark down prices on seasonal merchandise to maximize profit.
DETAILS
Using sophisticated analytics and algorithms, Retailers are moving toward a
highly analytical approach to pricing and markdowns. Proper pricing of an
item can be the difference between a profitable item and a loser.

Contents
Overview
IT Cost Management
Templates

Insert headline
Insert bumper.
4 Levers of IT Cost Management – TEMPLATE
Application &
Infrastructure
Simplification
Demand
Management
Lean IT
Organization
Strategic Sourcing
• Insert filler text, filler text,
filler text, filler text, filler
text, filler text.
filler text, filler text.
text, filler text.
text, filler text.
text, filler text.

Insert headline
Insert bumper.
5 Core Areas of IT Investment – TEMPLATE
Pricing/
Markdown
Optimization
Supplier
Collaboration
Business
Intelligence
Next Generation
In-store
Technologies
Cross-channel
Integration

Insert headline
Insert bumper.
5 Core Areas of IT Investment – TEMPLATE ALTERNATE
Next Generation In-store Technologies
Business Intelligence
Cross-channel Integration
Supplier Collaboration
Pricing/Markdown Optimization

Insert headline
Insert bumper.
5 Core Areas of IT Investment – TEMPLATE ATERNATE
Next
Generation
In-store
Technologies
Business
Intelligence
Pricing/Markdown
Optimization
Supplier
Collaboration
Cross-channel Integration
text, filler text.
text, filler text.
text, filler text.
text, filler text.

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Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
about our company.
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