New York, N.Y. -
– Retail industry managers are dealing with an increasing amount of data by investing more in information technology, according to a survey by Teradata, a division of NCR Corporation. The survey, released at the National Retail Federation’s annual conference, also revealed that this trend is expected to continue next year.
Among the key areas where additional information technology (IT) spending is being deployed are supply chain, pricing and customer management as well as data warehouse solutions. Larger companies are also considering radio-frequency identification (RFID) technology as a means to improve inventory and stock levels as well as to improve customer and information sales.
“RFID technology promises revolutionary changes in supply chain efficiencies by making it easier and more automatic to track movements, in a cost-effective manner, at more handoff points in the supply chain,” says Des Martin, Vice President of Retail Consulting at Teradata. “One thing that RFID brings that really changes the game, however, is ‘item serialization.’ Serialization will, as the overall cost/benefit equation justifies it, drive ever more precise optimization of the demand and supply chains, and will inevitably drive retailers who wish to compete with the early-adopters of this technology to continuously re-examine their technology architecture to detect those precise break-even points where the right investments will deliver a net ROI.”
Consistent with Martin’s point, the survey revealed that the amount of data available to retail managers has been increasing over the past five years, a trend expected to continue through 2005. Retail industry managers surveyed attribute this surge in data availability to outside forces, including customer demand, competition and changes in the economy. Internal drivers of data increase, including corporate strategies and initiatives and data consolidation, are also playing a role in the increase.
Most retail managers report that spending on IT has increased in the past year and expect spending to continue to rise in 2005. They expect the increase to be allocated to price optimization, supply-chain management, customer/event management, loss prevention, data warehouse solutions and analytical support systems.
RFID at a Nascent Stage in Retail
While RFID penetration of the retail industry is just beginning to grow, some retail managers surveyed say their companies have plans involving the technology for the future. Twenty percent of retail managers surveyed say their companies have RFID projects planned or underway, with projects nearly twice as prevalent at firms with annual revenues of $3 billion or more. Among companies with RFID plans, roughly half are reviewing RFID technology or performing trials with selected suppliers.
“What we are seeing in RFID is that the initial timeline projections indicating a decade-long or more rollout of the technology were accurate, and while significant progress is being made, vendors and trading partners still have substantial work to do to develop a roadmap that is workable for all parties,” says Martin.
More than half of all retail managers surveyed report that RFID technology would improve their company’s inventory levels. Other key benefits of RFID noted include better customer/consumer information, better information on sales data and reduced instances of out-of-stock items. Reported challenges to utilizing RFID include the initial capital investment needed and customer concerns around issues of privacy.
About the Teradata 2005 Report on Retail Technology
The Teradata study was conducted by BuzzBack Market Research between Dec. 21, 2004, and Jan. 4, 2005, querying 100 retail executives. All respondents live in the United States and are employed by retail companies with worldwide revenue of $500 million or higher. All respondents hold the position of manager or higher and work in a corporate/general management, finance/strategic planning, operations or technology/IT department. Managers surveyed represent a range of companies in the retail sector, including: Lowe’s, Rite-Aid, Pathmark, Giant Food, Kohl’s, Wal-Mart, Abercrombie & Fitch, K-mart, Blockbuster and many others.