Retailers are all tech companies deep down

With just a 0.6% increase in like for like growth, Black Friday did not deliver the hoped for spike in sales for UK retailers. Yet this cross-market figure masks the deep divide between success and failure.

Retailer perception

The way in which Amazon has transformed retail thinking over the past two decades is extraordinary. The company has not only created new retail models but also inspired the expectations of customers across every generation. In the process, many retailers that failed to respond have disappeared – and new entrants that embraced new retail thinking from day one have gained market share at an unprecedented speed.

>See also: Retailers: “a frictionless mobile experience is our highest priority”

But there still remains one fundamental difference between Amazon and the rest of the retail market: self-perception. Amazon has always defined itself as a technology company – just one that happens to do retail. Despite the explosion in ecommerce, the majority of retailers, however, still define themselves as retailers who need to invest in technology.

Yet e-commerce is just one aspect of technology-led retail disruption. From online price comparison to new payment models and social media reviews, retailers have had to adapt massively to succeed. What has become painfully apparent recently during difficult trading conditions is the stark difference in success between the tech-first and tech-if-we-must retail models.

Proactively optimising

How, for example, does a retailer with a single store evolve to become a phenomenally successful ecommerce site with 60,000 SKUs? The answer is most certainly not by following the crowd; not by reluctantly embrace e-commerce by investing in one of the many standard, off the shelf solutions; that approach results in a me-too retailer forced to reluctantly realign its business processes around a generic piece of software.

>See also: IT needs to play a role in every branch – says 97% of retailers

In contrast, taking a tech-first approach requires not only intelligent investment but a commitment to continual innovation. From the creation of a bespoke system for both e-commerce and back office processes that is designed to support a specific retail model, to avidly embracing new technologies to drive competitive advantage, successful retailers are proactively embracing technology to optimise every aspect of the business model.

The difference is stark. For example, most retailers will use Google AdWords to track the value of pay per click keywords and others you should be tracking; but a tech first company will leverage this data to automatically compare keyword click through with conversion and, in response, switch off underperforming AdWords.

Similarly, retailers will often manually track competitor pricing in order to remain competitive in a world where consumers are both price sensitive and comparison savvy; but using a bespoke price scanner a retailer can continually scan competitors’ pricing and automatically match those prices in real time.

>See also: IT needs to play a role in every branch – says 97% of retailers

Technology confidence also enables retailers to quickly embrace new customer facing innovations, changes that are key to creating that essential market differentiation. How quickly, for example, will a retailer add the new Amazon Pay option to the existing credit/debit card and PayPal service? Or offer customers a chance to buy expensive items via an innovative online finance arrangement?

It is this depth of technology commitment that is the key to maximising the big sales opportunities such as Black Friday and Cyber Monday. Retailing is in continual flux – and the successful retail companies of the future will be those that make the mindset shift from retailers who invest in technology, to technology companies that specialise in retail.


Sourced by Nick Thompson, managing director, DCSL Software

Avatar photo

Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...

Related Topics