Australian retailers too slow with technology

Australian retailers too slow with technology

Microsoft Future of Retail event hears savings that can come from investment in technology

Retailers have been urged to improve their use of IT

Retailers have been urged to improve their use of IT

Retailers have been urged to improve their use of IT to survive the economic downturn at a Microsoft Future of Retail event in Sydney.

Australian Retailers Association (ARA) spokesperson, Michael Lonie, said the conditions for retail in Australia were at the toughest point in more than three decades.

“A great number of the CEOs and managing directors of retail organisations have never seen these kinds of conditions before,” Lonie said. “Unemployment is becoming a problem that will impact on confidence and spending, and while the last stimulus package worked, a lot of the money did not come through to retail, so we’re still reserved about the impact of the one that is coming.”

But there were opportunities in the $292 billion domestic retail market, Lonie said.

“Retailers need to work more closely with customers, and improve internal processes and efficiencies – cutting costs is not going to be enough.

“Not since Y2K has there been substantial investment in technology in retail. It is time to focus on this area going forward.”

Managing director of Busbrand Group, an international brand management group that represents Guess by Marciano, ALDO and Travelite, Simon Nankervis, said heavy investment in technology had allowed the retail manager to guide the business and remain profitable by keeping staff expenses and inventory down.

“By investing in technology, if my staff leaves I have continuity of business,” Nankervis said. “Technology such as biometric scanning has fixed the poor time theft [recording staff hours] we had previously, and our systems have allowed us to maintain a minimal level of inventory.

“I would rather spend $50,000 on technology than hire additional staff.”

Managing director of consultancy firm The Retail Doctor, Brian Walker, said far too little was being spent by retailers on technology.

“Retailers spend less than a third of what insurance, banking or manufacturing verticals do on technology,” Walker said.

According to The Retail Doctor, throughout 2007 one retailer went out of business every 12 minutes in the US. The five main causes were out of control growth and expenses, the inability to effectively manage margins, too much inventory and a lack of cash.

Ways to survive the economic climate included faster speed of business, continuous innovation, and integration between online and offline presence, Walker said.

“Fit retailers – those with high confidence and profitability, develop their point of difference and are effective at conveying that to customers,” he said.

“The ability to read the market while staying true to your offering is critical. Consider things such as store design and format, and continually refresh it. When rate of change outside of the company exceeds the rate of change within it, disaster is imminent.”

Walker also suggested retailers consider some of the social networking tools that customers are using, and adapting the business to take advantage.

“The geographical market is moving to a hybrid model of both geographical and virtual sales,” he said. “Even when consumers purchase in-store, many are doing their pre-research online.”

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