Keeping up with the Omnichannel: Visibility and Control in Retail IT
By Jim Darragh, CEO, Ipanema Technologies
In this digitally connected world, today’s shoppers are perusing store aisles with mobile devices in their hands and a world of information at their fingertips. Mobile devices play a critical role in the shopping experience, however, today’s generation of shoppers also live in a world where they are able to instantly communicate with other people and things at the touch of a button. The digital age has undoubtedly transformed the shopping experience for consumers and retailers alike. With the growing consumer demand for instant gratification, retailers face the challenge of how to best satisfy their tech-savvy and impatient shoppers.
Year after year, more consumers opt for the convenience of shopping online, primarily because they can shop from the comfort of their own homes. This supports just how imperative it is for retailers to ensure their store network functions are fully optimized in order to deliver customized shopping experiences, achieve greater traffic control over their networks and strengthen business continuity as a whole.
What does this mean for the future of retail? How can physical retailers compete in today’s digital and commercialized world of retail? Better yet, what does the retail shop of the future look like? In 2014, the answer to these questions has been omni-channel retailing. With the explosion of mobile devices and increased smartphone usage, consumers are looking to incorporate mobile technologies and apps into their shopping experience. Major retailers have taken significant steps toward evolving the shopping experiences for their customers by successfully integrating the multiple shopping channels that consumers use, including e-commerce, mobile devices, brick-and mortar locations and more.
Physical and online retailers have incorporated this strategy into their businesses in a variety of ways. Some department stores have started to create innovation labs, which are comprised of technologists, designers, entrepreneurs and researchers all working together to explore the future of retail. At the same time, companies like Amazon, a titan of e-commerce, are reportedly considering opening physical wholesale locations.
The primary motivation behind so many retailers’ decisions to make these drastic changes is closely tied with expectations of today’s shoppers. Consumers have embraced technology in their daily behaviors and now expect their favorite retailers to follow suit. Furthermore, consumers today have the need for speed as they are frequently streaming music, checking their emails and using a variety of social media platforms all while they shop, thus expecting retailers to provide them with fast and reliable Wi-Fi access for them to do so.
We’ve examined the needs of today’s consumers and their technology and mobile expectations, but what does this mean for businesses, management and the technology networks behind the sale? The increased usage of technology and mobile devices is just as important for management as it is for consumers. Retail businesses utilize internal business applications that are networked together throughout stores worldwide. More and more, we are seeing salespeople using mobile devices to assist customers and conduct quick checkouts away from designated checkout areas of the store to increase the flow of sales and enhance their customers’ shopping experience. Managers are also known to use mobile devices to monitor inventory and assess customer activity on the floor. When combining this technology with the retailer’s own applications for the consumer and in-store high-definition video streaming, the retail business network can be faced with considerable strain.
Retailers may be adamant about keeping up with consumer demands for technology, but the steps they take to assure that their IT infrastructure is fully up to speed, do not fall under the weight of the omni-channel. By incorporating objective-based and automated Wide Area Network (WAN) and Application Performance Guarantee (APG) solutions into their corporate network, retailers are able to successfully prevent their business IT needs from interfering with the consumer experience.
Thanks to these solutions, managers are able to simplify and regain control of their IT networks using the corporate network resources. They have full visibility on who is using what and for which performance, allowing them to easily and centrally establish application priorities to ensure that heavy and non-critical traffic doesn’t impede on their networks or cause them to crash during prime business hours. Application Performance Guarantee (APG) solutions enable retailers to strengthen their business intelligence while also smoothly rolling out upgrades and patches, providing faster service and relevant product information to their customers and delivering targeted promotions based on customer data. APG solutions also accelerate the digital transformation of retail, enabling businesses to safely deliver new 2.0 services to their customers for an optimal cost.
Now more than ever before, retail managers must grab hold of their IT capabilities and take advantage of opportunities to achieve greater visibility and control over their networks in order to keep up with the evolution of retail and avoid being left behind.
RadioShack to scale back store closures
RadioShack is scaling back its plans to close 1,100 stores. In a regulatory filing with the Securities and Exchange Commission (SEC), the retailer said its lenders are offering unacceptable terms for RadioShack to proceed with that many store closures. However, the company will still shutter a number of locations as part of its turnaround plan.
RadioShack’s existing credit agreement allows it to close only 200 stores per year and up to 600 over the life of the agreement (between now and 2018.). The company had been negotiating to increase that number to nearly double that number.
In a document filed with the SEC, RadioShack said that its lenders were demanding terms that it could not accept, which is why it is scaling back on its closings.
RadioShack made the following statement in its filing:
"RadioShack previously announced that it was seeking consent from its lenders under the 2018 Credit Agreement and 2018 Term Loan to pursue a program to close up to 1,100 stores. The terms on which the lenders are currently willing to provide this consent are not acceptable to the company. While the company may continue to have discussions with its lenders regarding the proposed store closure program, the company is continuing with a plan to close fewer stores and pursuing other cost reduction measures permitted under the existing terms of the 2018 Credit Agreement and 2018 Term Loan."
Old Navy drives Gap’s April sales
Gap had a good April in terms of sales, and a large part of the reason is the company’s Old Navy banner.
The company reported that April net sales increased 10% to $1.33 billion for the four-week period ended May 3, versus $1.21 billion last year. Gap’s comparable sales for April 2014 were up 9% versus a 7% increase last year.
For the first quarter so far, Gap’s net sales have increased 1% to $3.77 billion versus $3.73 billion last year. The company’s comparable sales so far have decreased 1% versus a 2% increase last year.
“We are pleased with our execution overall in April, especially at Old Navy,” said chairman and CEO Glenn Murphy.
For the month, comparable sales by global brand were as follows:
- Gap Global: up 3% versus an 8% increase last year
- Banana Republic Global: up 7% versus a 1% increase last year
- Old Navy Global: up 18% versus a 9% increase last year
The company expects diluted earnings per share for the first quarter to be in the range of $0.56 to $0.57. It also expects gross margins for the quarter to decline less than the year-over-year decline in the fourth quarter of fiscal year 2013. In addition, the company expects first quarter fiscal year 2014 operating expenses to be slightly above last year.
Gap will release its complete first quarter earnings results May 22, and will report May sales June 5.