Survey: 63% of retailers to increase IT spending in 2012
Downers Grove, Ill. — Survey results released Wednesday by CompTIA, the non-profit association for the IT industry, found that innovations in information technology continue to transform the retail sector, with digital signage, payment processing, customer engagement and other solutions playing increasingly important functions.
Seventy-two percent of retailers surveyed rate technology as important to their business, CompTIA’s Retail Sector Technology Adoption Trends Study revealed. That figure projects to increase to 83% by 2014.
Sixty-three percent of retailers expect to increase IT spending in 2012. Large retailers expect to boost IT spending the most – 4.8%. For all firms, the planned increase is 4.2%.
One in three retailers currently uses digital signage, with an additional 20% intending to do so soon. Sales and promotional announcements and other direct engagement with customers are the most popular uses, cited by 71% of respondents.
Among all emerging technologies, adoption intent ranks highest for geo-location services. About one in five retailers now use geo-location technologies and other location-based solutions to reach customers.
"One reason for the strong interest may be in response to ‘showrooming’, where consumers visit a physical shop to assess a product but make the purchase from an online retailer to get the lowest possible price," said Tim Herbert, VP research CompTIA. "Location-based technologies can give retailers the tools to incentivize in-store purchases, such as special discounts for in-store customers who check-in via an app."
Retailers are experimenting with technologies that improve upon point of sale systems or leapfrog those systems entirely and leverage new platforms for payment processing. In the CompTIA study, 13% of retailers are currently using a mobile payment system. Another 19% plan to do so over the next 12 months.
Herbert noted that adoption of new technologies must be accompanied by a broad-based technology strategy that addresses foundational needs as well."Reliable wireless connectivity, robust security, quality end-points, data back-up and other IT basics can’t be overlooked," he said.
CompTIA’s Retail Sector Technology Adoption Trends Study is based on an online survey of 500 U.S. retailers conducted between March 27 and April 2.
All Mixed Up
I mentioned briefly in my last column that I’ve been a little puzzled by what seems to be an industry-wide reluctance to design and develop, and in many cases redevelop centers into, true mixed-use venues. It’s not that our industry doesn’t get excited about mixed-use spaces — they clearly do. But, something is getting lost between the glamorous articles and design concepts, and the real-world execution. There’s always been a lot of buzz about mixed-use developments, but when we look at how many fully realized, true mixed-use developments there are in the U.S., really only a few dozen, the numbers are surprisingly low — in my mind, at least.
To be clear, there are some really great mixed-use projects out there. Some developers and commercial real estate professionals have done an amazing job of harnessing the synergies of mixed uses in exciting and profitable ways. And the interesting thing is that many of them were not designed and built from the ground-up as mixed-use; they were redeveloped into mixed-use. Which leads me to question why that is.
Are developers being overly cautious in a tenuous economic environment? Is it harder to get funding for more ambitious mixed-use concepts? Does the inherent complexity of mixed-use make those projects not just more daunting, but also more difficult to execute successfully? I tend to think that the answer might be “D: None of the Above,” but ultimately (and perhaps inevitably) it all leads back to the money. A common refrain I hear from industry professionals is that they are worried that investors won’t “get it.” There is a sense that “whatever we do, let’s make it easy for the lenders to understand.” I get that impulse — nothing is going to happen without financial support, and everything from market research to leasing and design can become more difficult when dealing with a large mixed-use concept — but ideally, shouldn’t it be all about the consumer? Or, more importantly, all about the best use of the real estate?
Why don’t investors get it? I think perhaps the industry, in general, has historically viewed real estate in distinct segments: Retail, commercial (office and hotel) and residential. As a result, not only are we dealing with some mixed-use inertia, but also a very specialized development marketplace. The pool of professionals who are comfortable working in the “mixed-use” space is actually quite small. As a result, the complexities of mixed-use projects often require collaborative efforts between multiple parties, which can further complicate the situation.
To make matters worse, all too often I’ve seen what happens when a half-hearted attempt at “mixed-use” has been made: a dining or entertainment tenant tacked on to a span of inline retail. Mixed-use projects that are tentative or poorly executed don’t work. You need that all-important critical mass to generate the synergy and cross-traffic that can make mixed-use a powerful format. And, because mixed-use, more so than pure retail, resists that cookie cutter formula, every project is different. So, it’s important to identify what uses are supportable and complementary.
While they might be more complicated, I do think it’s important for the industry to make more of an effort to pursue mixed-use opportunities. Not just because mixed-use spaces are often the most engaging and dynamic places to live, work, shop and play, but because, when it’s done right, the rewards/returns can be significant. The ability to attract shoppers, promote cross-traffic and extend hours makes mixed-use a uniquely powerful retail engine.
I’ve talked in the past about how malls (even underperforming malls) almost always occupy prime pieces of regional real estate. Developers and owners need to consider the fact that, in many cases, they won’t really be unlocking the highest value of a site if a strategic mix of uses isn’t introduced. The single greatest asset of any project is the real estate, and in my opinion, the unwillingness or inability to maximize the value of that asset is a true shame. I see plenty of candidates out there for prime mixed-use redevelopment: projects where underperforming retail is compromising quality real estate. I think the whole industry has to become more integrated and more flexible, with less compartmentalizing and more recognition that mixing uses is likely to become more prevalent — and lucrative — in the future. We have to be willing to take chances. After all, very few spectacular projects came about by playing it safe.
What do you think? Please make a public comment below or feel free to e-mail me privately at [email protected].
Click here for past columns by Jeff Green.
Best Buy Mobile expands into China
MINNEAPOLIS — Best Buy, which at its recent shareholders’ meeting said it would offer more technology services, has announced that it is expanding the Best Buy Mobile brand and store-within-a-store concept into 14 Five Star stores throughout Nanjing, China, this summer.
The expansion of Best Buy Mobile into the Chinese market is the first evolution of Global Connect, a partnership that was formed in November 2011 between Best Buy and Carphone Warehouse.
"The launch of Best Buy Mobile in China is a true global effort,” said Shari Ballard, president, international for Best Buy. The launch follows a similar model that led to the development of Best Buy Mobile in the United States in 2006. Just as Carphone Warehouse did with Best Buy five years ago, the Global Connect team is working closely with its Five Star partners to develop a mobile sales strategy that is designed for the Chinese market, said the company.
While Best Buy’s goals highlighted at its shareholders’ meeting seemed to apply more to its U.S. business, the expansion of Best Buy Mobile inChina can only help the company achieve some of its objectives including increased relevance, better customer connections, improved officiencies and expanded service offerings.