In the devastator In the aftermath of the global pandemic, businesses across industries are grappling with the economic impact – and little more than the besieged retail sector. Without a doubt, “doing the numbers” is rare in the midst of lower incomes. This means that the focus is inevitably on containing costs, including IT spending, often leading to the dilution or even abandonment of IT initiatives essential to retailers’ long-term competitiveness.
Most affected are probably those companies that have regularly postponed replacing old, stable computer systems “for another year” to save money. Today, many existing portfolios contain proprietary and highly modified cutting edge applications that can span multiple generations of technology. The functionality within these can be fragile and difficult to change, requiring an expensive interface and laborious integration.
Consumers are now embracing technology that is improving their lives at an ever faster rate. In the United States, the internet has reached an adoption rate of 82% in 20 years, while the smartphone has exceeded that adoption rate in less than 12 years. This trend was underscored during the pandemic, during which consumer behavior quickly turned to online shopping.
This continued and rapid consumer adoption of technology solutions has had a significant impact on the retail industry. Many longer term plans to enter the online market must now be put aside to meet customer expectations. They must move up the list of priorities, from tactical “do” to strategic “must do”. There is no more negotiation, no waiting time.
Unnecessary IT policies, legacy systems
Yet the question remains. Why have so many retailers been extremely slow to embrace technological innovation? In many cases, this probably amounts to myopic control of IT spending!
For starters, maintaining legacy applications always takes up an inordinate amount of IT and financial resources. Notably, the findings from US firm RSR Research indicate that a typical IT budget is split 48:52 between infrastructure needs and business applications. This latter part is generally divided into 46:54 between new development and maintenance of the existing portfolio of systems.
That means the lion’s share of the IT budget is spent on keeping the lights on, rather than throwing in new light – and ushering in a new era of digital retail.
In short, bold steps (and proper budgets) need to be taken in order to start moving to a more flexible core. That said, even focusing on their heart is not enough. Consumers are looking for retailers to add parts to all of their platforms – but this is difficult to achieve with existing systems.
The problem can even extend beyond legacy code to the computing resources themselves. The traditional method of developing and supporting applications – the hierarchical waterfall approach – was widely used with legacy applications. This required detailed documentation and the deadlines were not particularly tight.
IT now needs to move quickly and adapt its own way of doing business to keep pace with the speed of change for businesses and consumers. New skills, using Agile development methodologies and practices – including prototypes and iterative sessions – must now be used to deliver small things on time that make a big difference; and of course, finding new ways to add value to the consumer.
Pioneering IT pays off
Some local retailers have invested in updating their technology and systems over the past few years, allowing them to adapt and adapt during the recent pandemic and position themselves for the ‘new normal’ in the- of the. Some examples include:
- Shoprite’s head of strategy and innovation, Neil Schreuder, recently reported that the much-touted and highly successful Sixty60 online shopping app requires little additional investment as it has already invested heavily in the improvement of its systems.
- The Foschini group (TFG) was able to breathe new life into the ailing Jet stores of the Edcon group. CEO Anthony Thunstrom said, “We have a new point of sale system that incorporates a lot more functionality. We were about to launch this with some of our TFG brands, so we just re-prioritize the launch in Jet… Due to lack of funding they (Jet) really don’t have any money to spend on it. IT infrastructure, so we bring them entirely on our systems. “
- Woolworths South Africa recently launched a point of sale pilot project. The retailer had a number of compelling reasons for replacing its outdated point-of-sale systems, and most focus on improving the customer experience.
These retailers have been able to expand the reach and range of services they offer to consumers by leveraging past IT investments. Everyone recognizes that a commitment to continuous improvement of the customer experience is the new normal.
Understandably, many small retailers may think their pockets aren’t as deep as these leading retailers, but unless they learn to focus less on cost containment and more on technology investments, their consumers (and shareholders) can leave them behind.
As Mark Lamberti, founder, architect and former CEO of Massmart for 19 years, noted: “You can’t increase your profits just by cutting costs.”
To move forward and survive in the highly competitive retail industry, players will have to bite the bullet and spend money to make money.
Author, Allan Dickson, is Independent President of redPanda Software
About Allan Dickson
Allan Dickson has over forty years of experience in the computer industry and holds degrees in Economics from the University of KwaZulu-Natal and Information Resource Management from Harvard Business School.
He has a proven track record in delivering major IT-driven transformations in South Africa’s retail and banking sectors and has been particularly effective in building ‘bridges’ between IT and communities. users it serves.
Dickson is one of the most experienced people in retail systems in South Africa. Having held management positions at Edgars, SPL, Standard Bank, Woolworths and Ellerines, his experience and wealth of knowledge led him to take a new path as an independent consultant in 2009.
Dickson adds gravitas to the entrepreneurial and dynamic management team of redPanda Software and regularly shares his experience and expertise in strategic, project and operational management with the company. As a recognized expert in building capacity and unleashing capacity in organizations and people, Dickson is an invaluable asset to the redPanda Software group.
About redPanda software
RedPanda Software is a specialist retail software developer, providing highly customized software solutions to major retailers around the world. By boldly developing long-term partnerships based on trust and transparency, we are able to deliver sustainable, quality software that enables forward-thinking retailers to achieve their growth goals. Our unique partnership approach begins internally, where we build relationships of trust with our employees so that they are part of a cycle of sustainable growth. This growth cycle has propelled talent development and today enables redPanda to deliver bespoke retail software that is agile delivered within predictable financial and time parameters.
RedPanda Software is the largest South African partner of Flooid, one of the world’s leading independent retail software providers, bringing the best global retail solutions to South Africa with local integration and support provided by redPanda Software.
For more information on redPanda software, visit www.redpandasoftware.com.
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The dangers of legacy software for retailers moving to digital journeys
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