January 12, 2004

By Jenny Carless, News@Cisco

Retailers are constantly looking for ways to maximize productivity and efficiency in their stores. As exemplified in the METRO Group's "Future Store Initiative," companies around the world are turning more and more to technology to help them achieve those goals and stay competitive.

Cisco Systems has been intimately involved with these advances and continues to help retailers implement technologies and related strategies that are changing the face of retail. Based on its extensive experience, Cisco's Internet Business Solutions Group (IBSG) retail experts have outlined a roadmap for retail executives to help them transform today's stores into successful stores of the future.

Retail in 2010

What will retail look like in 2010? The vision that Cisco has developed comprises three main concepts: connectivity that provides instant access to information, "smart" products and enhanced knowledge about customers' buying preferences.

By implementing these concepts, a retailer can create a more enjoyable, efficient shopping experience for the customer; it will have employees who are more informed, better prepared to help customers and have higher job satisfaction; and it can reduce the cost of the supply chain.

"It's all about moving toward a real-time retail environment," says Dean Sivara, director, Internet Business Solutions Group. "When customers are in the store, you want to be aware of their presence, and you want to know their purchasing preferences so you can offer targeted promotions while they shop."

High speed connectivity and wireless mobility will allow retailers to provide streaming video for e-learning and shelf-edge promotions, support real-time inventory decision making and provide a customized experience to shoppers. With wireless mobility employees can spend more time on the sales floor, where they can provide customer service. Customers get the information they want about a product when the want it - whether from the personal shopping assistant on the shopping cart, an interactive shelf display or multi-media signage.

By 2010 RFID tags - low-power microchips that store information - will turn ordinary items into smart products. Research indicates that 70 percent of buying decisions are made while a customer is in the store, so instant access to detailed product information can mean increased sales.

The ability to track products in real time with RFID tags offers important benefits to the supply chain, also. Store items rarely become out of stock, and inventory levels can be reduced.

An RFID chip in a shopper's loyalty card can help the customer create a shopping list based on past visits and allows the store to offer discounts and promotions specifically for that shopper. The chips also provide other conveniences: for example, an entire cart of products can be scanned automatically in the checkout lane without removing the items for point of sale scanning.

Challenges

Retailers face a number of challenges in the near future. Implementing the 2010 retail roadmap will place them in a much stronger position to take on these challenges.

For example, Wal-Mart, the $240 billion retail giant, has created a cost benchmark that is difficult for most others to match - and is using technology to do it. Other retailers must adopt the same advanced technologies to lessen Wal-Mart's competitive advantage.

Increasing globalization means that retailers must compete not only with their age-old adversaries but with new companies from around the world. Consolidation will also continue to be a test: many well-known brands will struggle unless they can find a differentiator. Technology can be that differentiator.

Finally, ever more sophisticated consumers want to know where their food comes from, they want to know about the ingredients in the products they buy, and they want the information in real time. The store of the future can give them what they want.

Following the Roadmap

"The roadmap is designed to help retailers get started. It helps them think through the issues they need to understand and to plan for their future rather than be reactionary," says Sivara. "It also emphasizes the role of leadership - the importance of stepping forward and taking calculated risks."

Cisco's IBSG has produced an executive handbook guide detailing the roadmap, 2010 - The Retail Roadmap for Chief Executives, targeted for a variety of executives from the CEO and CIO to the head of store operations. Copies will be available at the National Retail Federation show in New York (see below) and at www.cisco.com/go/retail2010.

Working with Retailers

Cisco was a key player in developing the METRO Group's innovative Future Store Initiative. "Before the Future Store, other retailers tested new technologies - wireless tools or RFID - one at a time, but METRO is one of the first large retailers to take a more holistic approach to technology piloting," explains Sivara. In merging these technologies, METRO also addresses the age-old retailing problem of how to pay for the infrastructure: implementing 20 technologies at once makes it much easier to justify the cost.

Cisco is working with many other global retailers to help them create their future store strategy, including Hudson's Bay Company, Albertson's, Home Depot, The Limited and Carrefour. "Because we've been through it with METRO, we can help retailers better understand and prioritize solutions, based on their strategic goals, to best impact their customers, employees and suppliers. We can also advise on the necessary technology foundation and help align that technology with a retailer's specific strategies," Sivara explains.

Just as technology has become more prevalent, useful and easy to use in society as a whole, the same trend is occurring in the retail sector. Savvy retailers have the opportunity, by following the 2010 roadmap, to get in the fast lane and learn how to implement advanced technologies to help ensure their success in the future.

The Retailing 2010 Roadmap is being demonstrated at METRO Group's booth at the National Retail Federation 93rd Annual Convention and Expo, January 11-14, 2004, in New York. For more information, visit http://nrfannual04.expoexchange.com/.

Jenny Carless is a freelance writer based in Santa Cruz, CA.