After years of talking about how the shopper’s experience could be more targeted and personalised, it was in 2014 that the sector began to embrace an innovative technology that will enable this, that is, beacon technology.
It was probably unsurprising that this really started to take off when Apple forged its path in this area with the iBeacon, and by the same token, it is quite likely that next year we’ll see mobile payments becoming more commonplace after Apple launched its Apple Pay - just available in the US at the moment - in September.
But let’s not get ahead of ourselves. While it would be nice to look back with rose-tinted (Google) glasses at how retailers are exploring new technologies to improve the shopping experience and encourage us to spend more with them, a number of retailers were also shown up by where they weren’t investing - namely, in security. For example, US retailer Home Depot was the victim of a major data breach, as was the UK’s online groceries shopping laggard Morrisons.
Also, Tesco and Marks & Spencer were examples of how even such well-known brands can struggle in the digital age; with the former announcing profit warnings, a major financial misstatement and the departure of the CEO Philip Clarke, the only one in the FTSE100 with a CIO background, while the latter struggled with a new website platform and logistics.
IT darling John Lewis, in contrast, proved it was made of more than just cute Christmas penguin adverts with the launch of a startups lab, and traditional catalogue firm Argos went from strength to strength as it proved itself in the modern, digital world.
Let’s take a closer look at the good, the bad and the ugly of 2014 retail.
John Lewis launched JLAB, a startup incubator based at co-working space Level 39 in Canary Wharf.
It ran a competition which saw 30 entrepreneurs pitch to investors made up of John Lewis directors and other tech leaders, who then chose five finalists to receive financial support, office space and business mentoring for 15 weeks. It crowned Localz, a business specialising in micro-location technology - proximity and iBeacon technology - as the winning startup of its first JLABs programme.
The department store, famous for its high quality customer service, also revealed that despite its digital successes (online shopping and click and collect have proved increasingly successful channels for John Lewis and other retailers), digital actually comes second for the business, being used to support a strong customer service ethic.
The year also started well for Morrisons, the UK’s fourth largest supermarket. Although late to the game, with the help of online groceries retailer Ocado, it finally launched an online grocery service to customers on time and apparently without a hitch.
Is this enough to counter the sale of Kiddicare, the online baby goods arm that Morrisons had originally purchased with the aim of using its infrastructure to launch its online grocery service before deciding to cut its losses? Or the theft of data from a staff payroll systems that was then published online in March?
Meanwhile, Argos was proof that a traditional retail format can keep up with the digital age, by bolstering its digital expertise with a number of major new hires to support its IT director Mike Sackman, who has been responsible for the technology transformation that began in 2012.
Its technology investments include growing the amount of customer data to give shoppers a more personalised experience by encouraging them to register an account, and opening up a growing number of digital concept stores that allow the retailer to test out new technologies such as dynamic voice-picking systems.
But regardless, Argos was unable to avoid what appears to be still the inevitable for many retailers - some customers were unable to access the website for a number of days following “planned maintenance” to the site - which runs on IBM WebSphere Commerce and Sterling Commerce, and apps. It was a particularly bad time for the site to fail as the company was running a promotion at the time.
You’d be forgiven for thinking that retailers these days would be prepared for peaks in demand caused by planned marketing activity, but it appears that one of the newest retail events imported from America - Black Friday to Cyber Monday - was still able to take many of the biggest names in retail by surprise.
Argos’s website, again, suffered, but so did those of luxury fashion retailer Net-a-Porter, Tesco, Currys, Boots, the Arcadia Group and Game.
Then it was revealed that Marks & Spencer was suffering long after the Black Friday weekend had finished. A lack of efficiency in its supply chain meant that the major shopping weekend led to a backlog of online orders, so that in the crucial few weeks before Christmas, Marks & Spencer was warning customers that standard online deliveries could take up to 10 days, with its click and collect service being little better, at four days instead of next day.
This followed the company’s migration of the site from Amazon to its own in-house platform, which did not go as smoothly as hoped, affecting sales. The company said it would take up to six months for the new, £150 million site to ‘settle down’, during which time Marks & Spencer lost many customers who came across issues such as difficult navigation, having to re-register for existing accounts and not being able to select a new delivery address.
Despite US retailer Target suffering a massive data breach the previous year, it seems that some of the other American retailers did not learn from the lesson.
In September, DIY retailer Home Depot confirmed it had been hit by a data breach that was potentially even larger than the one at Target, where data on more than 40 million payment cards were compromised. Although it didn’t confirm the incident until September, the attack is believed to have occurred in late April or early May, according to a number of banks’ reports. Over 2,000 Home Depot stores in the US were thought to have been affected.
Back in the UK, Tesco’s path to world domination was massively disrupted. It has lost 50 percent of its market value in a year, not least because of an accounting problem that caused the retail giant to restate its profit forecast to the tune of £250 million.
This was after it was forced to issue profit warnings, which led to the sudden resignation of CEO Philip Clarke, and while many retailers are investing in IT, Tesco revealed it was cutting costs in this area to try and reverse its fortunes.
While this suggestion will appear to go against the grain, one area of IT Tesco might consider reducing investment in is automation, if any lessons are to be learned from an Amazon price glitch incident last week.
There’s no arguing that Amazon is a prime example of successful, online fulfilment, underpinned by super-efficient automated systems. But it seems that it is this same system that led to a number of Amazon’s third-party sellers who take advantage of the company’s large logistics network to lose thousands of pounds overnight as a glitch in third-party software provider RepricerExpress’ software priced their goods - from Playstation4 computer games to beds and mattresses - at just 1p.
While Amazon’s terms and conditions would normally have protected the sellers by not requiring them to honour price glitch sales because orders placed will not be considered as legally binding until the item is despatched, Amazon’s automated systems were so efficient that items were marked as sent out before retailers were able to cancel the erroneously-priced orders.
Affected retailers, who were mainly small, independent businesses, are still trying to either get goods returned by kind-hearted customers or to get compensation from Amazon, probably as a gesture of goodwill. ‘Tis the season, after all.
Image © iStock/ JasonBatterham