Javier Cazares
Conventional wisdom has it that investing in smart store beacons, online and offline strategies and digital platforms is the recipe for survival for today’s retail organizations. The shopping experience, the thinking goes, must be a seamless blend of online and offline activity fueled by sophisticated technology, guiding the customer along an individualized journey to just the right product.
Some retailers, however, are going against the grain and taking a simple approach to the in-store experience by offering bargain prices in a bare-bones setting, where shoppers find what they want without the help of mobile apps or customized text alerts. And evidence suggests it’s working.
A recent report in Forbes magazine cites the robust financial performance of off-price leader T.J. Maxx, and contrasts it to struggling Target, which has seen e-commerce fulfillment costs erode profit margins. Rather than investing in smart store beacons and data analytics, the report notes, T.J. Maxx leverages the strength of a sophisticated global network of buyers and product vendors.
In addition, T.J. Maxx and other off-price retailers such as Ross Stores, Marshalls and Burlington have the “Amazon-proof” advantage of offering customers a treasure hunt experience within their stores. And Nordstrom Rack’s recent slowdown in growth suggests that trying to integrate e-commerce capabilities into an off-price chain might be a losing proposition.
So, if a retailer eschews e-commerce and pursues a keep-it-simple approach to the in-store experience, the question for the CIO becomes: what kind of IT and operations strategy is appropriate?
Basic cost efficiency is obviously a table stakes requirement in an industry where margins leave no room for error. Cloud-based infrastructure is a must to enable real-time access to data on merchandise, pricing, locations and providers – which is critical to delivering the value proposition of the unbelievable bargain. Robotic Process Automation (RPA) can dramatically boost back office productivity, and – coupled with cognitive applications – enhance the ability of buyer armies to optimize pricing and align inventory with customer demand. And while cutting edge innovation may be a low priority in terms of the customer experience, off-price retailers should not neglect the potential of digital tools to enhance application management and integration.
While e-commerce and smart store gizmos might not be the answer for every retailer, a back-to-basics business strategy does not preclude the need for strategic creativity and innovative insight from the CIO.
