Retail is a significant and diverse sector with unique ICT requirements. Despite uncertainty in the financial markets the prospects for resellers in this sector remain strong.
Consumer confidence is the key to a booming retail sector, and that is something that has taken a battering as a result of the financial meltdown. High street giants Marks & Spencer and John Lewis have both recently reported a slump in sales. John Lewis, often seen as a reliable guide to the state of the UK retail market, has blamed the turmoil in the financial markets for a recent 8.3 per cent drop in its weekly sales and Marks & Spencer, the UK's largest clothing retailer, turned in its worst sales figures for several years. At the same time, several smaller firms have collapsed.
But the news isn't all bad. The Confederation of British Industry, which keeps track of retail sales, noted an upturn in the autumn retail sales figures after a ‘dismal' August. The large supermarkets are still reporting good sales and luxury goods store Harrods saw group sales rise by 13.5 per cent, to a record £688.3m.
Retail is an important UK sector, employing more than 1.2 million people, and accounting for sales of about £255 billion a year. It is also a diverse sector and that provides some help in difficult times. Even John Lewis noted, for instance, that while overall sales were down, some areas were up, particularly sales of kitchen goods and flooring, as people spend money on improving their existing homes rather than moving house. "You have to be very naïve not to be worried at all," acknowledges Simon Daniell, Sales Director at Surrey-based reseller GP Network Solutions.
With the prospects for the retail sector less than rosy, Daniell takes some comfort in the fact that his company has a fairly diverse portfolio of retail clients and has avoided being too dependent on a single customer. "Our biggest client accounts for about seven per cent of our profit, so we haven't got all our eggs in one basket," he points out.
Nonetheless, the prospects for growth in the retail sector are not great and it means resellers like GP Network Solutions have to work harder than ever in digging for prospects. "Like anyone, we have ambitious growth targets and it's all about getting the leads," says Daniell. His firm sells IP telephony software from German vendor Swyx.
"Swyx doesn't give you leads, but it does give you a pretty good product and then you go and sell it," he adds. "I think the Swyx product really does fit any multi-site operation. It gives the power to run all geographic numbers through a single main switchboard, and to implement different call plans." Another advantage, according to Daniell, is being able to demonstrate a return on investment within 10-12 months.
These are the kinds of features that will be badly needed by resellers if they are to continue selling into the retail sector in the face of a major downturn. They will also need to convince customers that investing in telecoms will provide substantial benefits.
COMMENT
There is no doubt that retail is a challenging market. Retailers operate on tight margins and traditional high street firms are coming under fierce competition from internet-based operations, so they need to ensure their telephony and IT systems are highly cost-effective. Interestingly, though, some firms, such as independent bathroom product retailer Plumbworld, have bucked the trend by moving from online-only sales to bricks and mortar showrooms. Either way, retailers need excellent systems that link up their entire operations, from sales and marketing to logistics and product tracking.
Preventing losses is another major aspect of retailing and being able to add video or CCTV to an existing IP-based network has proved popular with some retailers. Product tracking using RFID, however, which looked as though it might become a big new trend, seems to have retreated to a backburner recently.
VENDOR VIEW
Avaya affirms retail strategy
Leslie Levy, Senior Retail Solution Manager at Avaya, says the company is ‘fully committed' to the retail sector and is driving business and growth in this area, despite the economic gloom.
Levy does not expect to see Avaya's commitment to the retail sector change in the next six months, because the needs and requirements of retailers for intelligent communications solutions will only continue to grow. She says that retail firms face formidable competitive challenges, and technologies such as the web and mobile systems have already made a big difference in the way retail firms interact with their customers. "Customer experience, process efficiency, business continuity, and productivity are becoming increasingly critical to retailers' success," said Levy.
The key technologies used by Avaya's retail customers include contact centre, corporate and store systems. An increasing number of UK retailers are moving towards a distributed systems architecture, according to Levy, to help them become more responsive to customers' needs, wherever they are. Retailers have shown particular interest in Avaya's ‘resident expert' concept, which enables call centre agents to find the best available resources to answer customer queries, regardless of whether those resources are in a contact centre or elsewhere. The aim is to answer customers' queries first time.
"Mobility is another key investment area for retailers," says Levy, again because mobile technology gives retailers the tools to respond quickly and efficiently to customers. "In this day and age, retailers have no option but to invest in sophisticated communications technologies if they are to remain competitive," she comments.
All businesses are having to cut costs and optimise efficiency and the retail sector, in particular, is feeling the squeeze. "On one side, retailers are trying to cut costs in a bid to improve the balance sheet while still maintaining the high quality and low prices that their customers demand," says Levy. "On the other side, customers are expecting more in terms of their shopping experience - a higher quality of services and the availability of more sophisticated technology at shopping outlets, whether it's in store, online or via the telephone."
Customer retention will ultimately lie with retailers who are most creative in what they can offer customers, she says. Against this highly competitive backdrop, Avaya is keen to emphasise the ways in which it supports its resellers in the retail sector, tailoring training, for example, to resellers' differing needs. "For some partners a webinar or a fact sheet is all they require," comments Levy. "For others, an on-site training day at our demo centre can make a huge difference."
Direct partner contact, up-to-date product news and marketing material are all important aspects of the way the vendor supports its channel partners, she says.
CASE STUDY
IP Telephony on Yo! Sushi's menu
Restaurant chain Yo! Sushi, which specialises in Japanese sushi served on a conveyor belt, now has about 35 UK restaurants, each of which sources its own fresh ingredients locally, but all other functions, including administration, payroll and pricing, are done centrally at the group's London head office.
Yo! Sushi recently decided to cut its BT line costs and reduce the mobile phone costs of regional managers and other staff, by converging the whole workforce onto a single telephony network, and off the existing circuit-switched telephony system. The group has opted to implement an IP-based solution from Swyx. The main reason for the move was to enable each of the restaurants to consolidate their previously separately telephony, for voice, fax and credit card processing, as well as ADSL, onto a single network, and enabling the whole group to integrate all its systems, including credit card processing, electronic point of sale, telephony and data, into a single, IP-based network.
The group looked at several options - it liked Swyx because it is based on software licences, rather than hardware, making it straightforward to roll out new users centrally, without needing third party support. It was also cost-effective, and flexible, so that the group has now been able to integrate inbound calls with its customer database, making it far easier to handle calls from customers wanting home delivery, for instance. Marco Creuger, Director of Distribution sales at Swyx, which has some 50 resellers active in the UK retail market, says flexibility is the key for vendors like Swyx. "We give our resellers our systems, to build to users' needs and if there's anything missing, they can come back and tell us," he comments.
The gloomy financial picture is not a cause for despair, says Creuger. "Quite the opposite," he says. His viewpoint is that as long as vendors like Swyx keep producing software that retail customers will be able to use to improve efficiency, resellers won't need to worry. He points, for instance, to a recent development whereby Swyx bundled together unified comms systems, effectively giving customers free UC with their PBX. "That has been very well adopted by UK resellers and users," he says.