Four fifths of retailers are prioritising online services, finds Rackspace

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The death of the high street is a very real threat for retailers over the next 12 months, with 80% of retail IT decision makers in the UK having to change their IT strategy as a result. This is according to a new research study from Rackspace that explores the monumental impact this trend is having on the retail industry.

The research reveals an almost unilateral shift to delivering on e-commerce – 80% of retailers are now prioritising online services as a result of the death of the high street, according to IT decision makers in retail. But this doesn’t come without its challenges – with 86% of IT decision makers in retail saying that this movement to digital channels has generated greater competition online.

Changing technology demands

Rackspace surveyed 250 IT decision makers in the UK retail industry to see how they are adopting new technologies to react to shifting consumer trends, while continuing to deliver cost-savings and a flawless customer experience.

It found that key factors impacting IT strategies as a result of the death of the high street included:

  • The need to drive more traffic to the website (52%)
  • The need to handle more traffic on the website (44%)
  • The need to deliver a faultless omni-channel customer experience (34%)
  • The need to better integrate customer experiences online and in store (42%)
  • The need to implement new consumer-facing technologies, both introducing in-store experiential technologies like VR and AR (26%) and automated services online (31%)

Lee James, EMEA CTO, Rackspace commented: “The growth and dominance of web and mobile channels has led to waning high-street footfall, and the race to transform both the in-store and online experience is putting immense pressure on IT departments. These factors are shifting IT strategies, further complicating the challenges decision makers face in delivering, designing and implementing new highly-secure, bespoke solutions.”

The drive for new technologies

Retailers are turning to new technologies to solve the problems posed by the death of the high-street, particularly when it comes to e-commerce. When asked about specific technology investments, more respondents indicated that they plan to invest in their online capabilities than instore capabilities [see Figure 1 below], with emerging technologies such as artificial intelligence (33%), chatbots (30%), and virtual and augmented reality (24%) primed for significant adoption.

However, the three leading technologies set to be adopted over the next 12 months as part of an IT strategy are data analytics (48%), mobile applications (46%), cyber security (46%). These three technologies also dominate UK retail IT department budgets for the year ahead, representing 13%, 13% and 12% respectively on average.

James continued: “Retail IT departments see investing in new technologies as an opportunity to reinvigorate the instore experience. The same technologies that will be so vital to the inevitable ecommerce expansion – like data analytics, mobile applications and artificial intelligence – can help to deliver on a flawless customer experience across every channel.”

Barriers to delivering this vision

Retail IT leaders are ambitious, but there are significant barriers to delivering on this vision. Those surveyed revealed that the greatest of these were: budget constraints (42%), a lack of IT / technical skills (27%), the availability of partners to support (20%), legal and regulatory compliance (19%), and a lack of strategic vision (18%). While, for those IT decision makers that are not planning to implement any new technologies over the next 12 months, 50% said that this was due to the lack of a clear roadmap.

James concluded: “The death of the high street presents a very real and immediate threat for retailers of all shapes and sizes. However, this is not just a barrier, but also an opportunity for IT decision makers, as they look to embrace new technologies to deliver a flawless customer experience instore and online. This is a big undertaking for any business, but partnering with an expert managed service provider can support retail leaders in putting a road map in place to successfully navigate the death of the high street.”

Figure 1. Top technology priorities for UK retail sector investment over the next 12 months

Technology Planned for ecommerce adoption over the next 12 months Planned for instore adoption over the next 12 months Percentage of total UK retail sector IT budget over the next 12 months Top two motivations for implementation 
Data analytics 48% 34% 12.5% 21% – To drive greater insight from purchasing data

19% – To deliver a flawless customer experience

Mobile applications 46% 30% 13.2% 20% – To introduce new purchasing channels

20% – To deliver a flawless customer experience

Cyber security solutions 46% 28% 11.6% 21% – To deliver a flawless customer experience

13% – To drive greater traffic to our website

Artificial intelligence 33% 26% 7.5% 19% – To deliver a flawless customer experience

17% – To deliver new services and/or features that my customers demand

Multi-cloud 32% 22% 8.7% 15% – To deliver new services and/or features that my customers demand

12% – To deliver a flawless customer experience

Virtual assistants / chat bots 30% 22% 7.8% 26% – To deliver a flawless customer experience

12% – To deliver new services and/or features that my customers demand

Machine Learning 27% 21% 5.0% 19% – To deliver a flawless customer experience

14% – To enable my development team to deliver new online offerings faster

Virtual and augmented reality 24% 19% 5.8% 18% – To deliver a flawless customer experience

14% – To drive greater traffic to our website

DevOps solutions 22% 16% 5.2% 18% – To enable my development team to deliver new online offerings faster

13% – To deliver a flawless customer experience

Voice recognition / facial recognition 20% 16% 4.0% 21% – To deliver a flawless customer experience

14% – To deliver new services and/or features that my customers demand