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Legacy tech hinders retail growth

Thursday December 1 2011

Old technology and legacy systems are holding back customer-facing business wanting to expand online, according to specialist retail IT consultant, Mark Collin

Old technology and legacy systems are holding back customer-facing business wanting to expand online, according to specialist retail IT consultant, Mark Collin

Recent research suggesting that High Street retailers are losing out on £500 million over a three-year period because of their inability to keep their online presence up to date, is worrying but sadly not surprising.

 

Mark Collin, European client principal of IT consultancy ThoughtWorks’ retail division, said: “In our experience working with traditional High Street retailers, they are keen to make their mark online, but they are being held back by baggage in their technical environment and lack of guidance needed to make their efforts a success.”

 

Many of these companies have the same aspirations as pure online retailers, such as Amazon, The Hut and thetrainline, he added. “But unfortunately, they have technical debt and legacy systems inhibiting them from growth.”

 

Over the past couple of decades, Collin explained retailers were primarily operating based on their bricks and mortar business models. “A new channel and way of doing business came up in the early 2000s and retailers quickly created a new division that could handle that business almost exclusively,” he said. “From the mid-2000s there has been a rapid proliferation of channels, many of them based on digital commerce; however retailers are hard pressed to break into these newer channels cohesively.”

 

Making legacy fit for multichannel

 

Collin continued: “In my opinion, the challenge is not that of performing pure online retailing, but it is the intersection of rapid proliferation of new channels, satisfying a more demanding and evolved customer base, while operating in a constrained environment. Specifically, that environment is one they created decades ago, using bulky hardware and bloated legacy software that is just too expensive to throw out and replace.

 

“Creating a new infrastructure for each channel clearly does not make sense for retailers. Instead they are grappling with several questions: What is the best way to take a new channel to market faster? How do these retailers integrate a new channel to work seamlessly within their existing landscape? For some of these big corporations, a complete rejuvenation of software would be a massive undertaking. And if they are to become ‘agile’ what changes do they need to make?”

 

Maximising revolutionary benefits

 

He said: “In our experience, working with several large, well-known retailers there seems to be an overriding factor in their view of the future. We have seen some common themes; a real desire to get their e-commerce and multichannels flying and in sync, a desire to increase their speed and agility in response to changing market dynamics and recognition that there is a new breed of retailer emerging. At a recent e-commerce conference, many cited this as a 'cultural revolution'.”

 

In order to meet this revolution, Collins said these organisations need to become more agile and forward-thinking. “Specifically, adapting and improving their level of customer experience and diversifying the delivery of its services,” he added.

 

“The companies who are doing it right and doing it best are a new breed of retailer, one that is constantly challenging their business model. The future of online retailing will be framed on customer experience design, agility and continuous delivery in keeping up with the evolution of technology. They are successfully adding their 'secret sauce' to some core retail principles – quality, value for money, customer service excellence, availability and timely delivery,” he concluded.