Industry Research

Publication Date: 4 February 2011 ID Number: G00210384

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Key Issues for Retail, 2011
Gale Daikoku, Mim Burt, Hung LeHong, Van L. Baker, John Davison
Gartner retail research will continue to provide advice on issues spanning customer,
business and IT topics most relevant to large retailer businesses, as well as IT roles and
domains.

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TOPIC DESCRIPTION
Retail is a broad and diverse industry. It encompasses many sectors and includes very small to
the largest international businesses. Our retail research agenda is focused on key segments of
retailing, and on the business and IT needs of large retailers with more than $1 billion in revenue.
In 2011, leading retailers will be faced with:
The continued emergence of new shopping patterns as consumers increasingly seek to
interact with the retailer through a variety of touchpoints
The increasing use of new technologies by consumers and employees in the retail
workplace
Balancing the need to deal with continued budgetary pressures and the increasing need
to grow the business at the same time
Much of our technology-specific research will also be presented in the context of software
applications and the retail consumer and business processes in which those applications are
deployed in large retailers.
WHY IS THIS IMPORTANT
Leading retailers face continued budgetary pressures while looking to tap into emerging shopping
patterns that place an even higher emphasis on customer processes. Online access to
information such as prices, promotions, stock availability and store location has put customers in
greater control of the shopping process. Retailers that fail to introduce processes and technology
to capitalize on cross-channel shopping across key customer touchpoints will fall behind their
competitors.
KEY ISSUE DESCRIPTIONS
The agenda will provide retail-oriented research for IT-minded business professionals with a
business focus on the following seven core topics:
E-commerce and multichannel Multichannel retailing is a key growth area in 2011
as retailers look to upgrade e-commerce platforms, multichannel infrastructures and
application strategies that deliver a seamless cross-channel shopping experience across
touchpoints.
Customer experience Customers are turning the current retail model on its head by
redefining and customizing the way in which they engage with retailers. Shoppers have
taken greater control of the shopping experience by embracing social networks and
virtual communities to access information that influences their purchasing decisions.
Store operations The store does not operate in isolation, and is a key part of
multichannel retailing for most large retailers. Investments in the store channel will
continue to target the basics of stock availability; good service delivery at all points in the
shopping process (whether assisted or self-service); secure, hassle-free transactions at
the point of sale; and relevant deployment of well-trained labor.
CRM and loyalty Customer-centric retailing practices remain a hot topic with large
retailers that are constantly seeking new ways to use the power of analytics to grow their
businesses. Creating the optimal offers to send to targeted customers using analytics

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and other data sources to predict customer behavior and customer loyalty remain top
priorities.
Business intelligence (BI) and analytics BI and analytics remain important issues
for retail. Retailers vary widely on how well they have evolved their BI capabilities from
the "basics" to advanced areas of BI and analytics.
Merchandising Merchandising capabilities vary widely. In developing economies, the
focus is on moving to packaged software for all areas of merchandising, while in
developed economies, growth is focused on planning and adding optimization into
existing merchandising processes.
Trends The major retail trends from 2010 will continue in 2011, with customer
centricity, cross-channel shopping and globalization being prevalent. We will research
the vendor market for general retail technologies, and highlight technologies that are
likely to generate some retail hype.
E-Commerce and Multichannel Retail
Key Issue: How are retail e-commerce practices and technology changing?
Consumers now shop across channels, so most of them expect retailers to provide a consistent
experience across all channels in which the retailers have customer-facing operations that is,
in traditional channels (such as the store, the Web and catalogs) and emerging channels (such as
mobile). As e-commerce and mobile channels become more integrated with the overall retail
experience, many retailers must re-evaluate and reform policies that drive pricing, promotions
and channel revenue attribution models such as factoring in "interchannel" tolerances for claw-
backs and channel performance metrics.
Key Issue: How are retail m-commerce practices and technology
changing?
The revenue potential of a mobile commerce application for the merchant is twofold. In addition to
the potential revenue generation from mobile application transactions, per se, mobile commerce
will contribute heavily to the multichannel shopping experience. We expect consumers to use
mobile commerce applications to look up prices and availability, but often make the actual
purchase in the physical store or even online from a home computer. Retailers should factor all
these revenue-generating opportunities into their m-commerce strategies.
Key Issue: How are retail multichannel practices and technology changing?
Cross-channel shopping is gaining traction as consumers increasingly move fluidly among brick-
and-mortar, e-commerce and m-commerce channels. As that trend evolves, consumers will come
to expect consistency across channels for merchandise, promotions, and terms and conditions. It
will be up to retailers to weave these multiple channels into one seamless and pleasant customer
experience. Location-based services will play a major role, enabling people to explore the real
world using the smartphone's high-accuracy location technologies and context-aware services
while also connecting to the virtual world.
Planned Research
Multichannel vendor landscape
Consumer mobile trends: Western Europe, Brazil, Russia, India and China

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Multichannel feedback management
Customer Experience
Key Issue: How are customer shopping/buying behaviors changing?
The customer shopping experience is being redefined by consumers, and retailers will need to
deliver to their wants and needs in a flexible and personalized way. However, to ensure success,
retailers should not lose their focus on the basics of retail.
Key Issue: How will social technologies influence the customer experience,
and what can retailers do?
Social technologies make it easier for consumers to familiarize themselves with products and
services before shopping in any of the retailer's sales channels, which means they may often
make purchasing decisions without any contact or intervention from retailer personnel. This
heightens the importance of the retailer executing all the steps correctly and efficiently prior to the
sale.
Planned Research
Consumer trends and social media
Multichannel feedback management
Store Operations
Key Issue: How can retailers improve store operations by balancing cost
reduction with increased productivity?
Retailers must optimize the store's infrastructure to integrate with the multichannel environment
that exists today (and will in the future). This means that retailers must integrate front-end and
back-end processes and technologies in the store with those of its other channels.
Key Issue: How can retailers optimize store infrastructure to execute a
multichannel strategy?
Retailers will need to optimize the infrastructure across all the channels to execute a robust
multichannel strategy in the store. This will involve using cross-channel CRM initiatives, including
cross-channel loyalty and promotions, planning cross-channel merchandising and cross-channel
buying, and executing cross-channel supply chain fulfillment.
Planned Research
Consumer preferences and self-service trends
Point-of-sale applications for Tier 1 retailers
CRM and Loyalty
Key Issue: How can retailers leverage CRM tools and tactics?
CRM is becoming more complex with the increasing influence of social communities and
multichannel retailing, but loyalty remains one of the keys to retail success.
Planned Research

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Customer offer engine vendor landscape
Consumer loyalty trends
Multichannel feedback management
BI and Analytics
Key Issue: How can retailers leverage business intelligence and analytics
to grow their businesses?
BI and analytics are moving from basic implementations to more-advanced tools, especially due
to the need for retailers to cope with increasing amounts of consumer data in the multichannel
environment.
Planned Research
Advanced analytic trends
Multichannel customer analytics
Merchandising
Key Issue: How can retailers improve pricing, promotion and
merchandising practices with the help of technology?
Merchandising needs vary, with packaged software needs taking the lead in emerging
economies, while advanced replenishment activities are taking the lead in developed economies.
Planned Research
Advanced analytic trends
Customer offer engine vendor landscape
Trends
Key Issue: What are the key trends that will influence critical retail
technology decisions, and what frameworks can help retailers prioritize
their investment decisions?
Monitoring key trends in retail business and technology is a mandatory part of an evolving retail
strategy. As the pace of change (in terms of new technologies, new markets and new service
offerings) continues to accelerate, retailers need to be in a position to understand trends as they
affect their businesses.
Planned Research
2011 National Retail Federation show analysis
Retail Cool Vendors 2011
RECOMMENDED READING
Some documents may not be available as part of your current Gartner subscription.

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2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



"Retail Research, 2010: Aligning Business Processes and IT"
"Key Issues for Retail, 1H10"
E-Commerce and Multichannel Retail
"Multichannel Forecast: A Major Change in Store"
"Google Has Quietly Increased Its Retail Focus: Why Retailers Should Care"
"IBM Acquires Sterling Commerce: WebSphere Commerce Goes Cross-Channel"
"How Can Retailers Get Started in Mobile Commerce?"
"Oracle Agrees to Acquire ATG in an Attempt to Strengthen Its Retail Cross-Channel Commerce
Solution"
Customer Experience
"What Makes a Good Retailer Facebook Page?"
"Should Retailers Use Twitter?"
"Retail Consumer Survey: What Consumers Want From Cross-Channel Shopping"
Store Operations
"Retail Time and Labor Vendor Update, 2010"
"SAP's Point-of-Sale Solutions for Smaller Tier 1 Retailers: SAP POS"
"Oracle Point of Service: Oracle's Point-of-Sale Solution"
"Advanced Retail Solution: NCR's Point-of-Sale Offering for Tier 1 Retailers"
CRM and Loyalty
"Marketing Service Provider Capabilities in Retail"
"Personalized Offers: Do Consumers Value Them?"
BI and Analytics
"A Framework for Multichannel Retail Analytics"
"BVI Networks Delivers Real-Time Store Monitoring"
Merchandising
"Dacos Takes a Different Approach on Price Optimization"
"Rethinking Retail Forecasting and Optimization Architecture"
Trends
"Predicts 2011: Consumers Push Emerging Retail Channels Into the Mainstream"
"Hype Cycle for Retail Technologies, 2010"

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2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



Key Issues
How can retailers leverage business intelligence and analytics to grow their business?
How will social technologies influence the customer experience, and what retailers can do?
How are customer shopping/buying behaviors changing?
How are retail e-commerce practices and technology changing?
How are retail m-commerce practices and technology changing?
How are retail multichannel practices and technology changing?
How can retailers leverage CRM tools and tactics?
How can retailers improve pricing, promotion and merchandising practices with the help of
technology?
How can retailers improve store operations by balancing cost reduction with increased
productivity?
How can retailers optimize store infrastructure to execute a multichannel strategy?
What are the key trends that will influence critical retail technology decisions, and what
frameworks can help retailers prioritize their investment decisions?

Publication Date: 4 February 2011/ID Number: G00210384 Page 8 of 8
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



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