The Last Word
Retail Attitudes
By Erinn Morgan

Things may be tight out there, but many retailers are about to make the leap to invest in their businesses. According to "Retail Horizons: Benchmarks for 2003, Forecasts for 2004," a study produced by BearingPoint in Partnership with the National Retail Federation (NRF) Foundation, retailers will participate in the surge of business spending expected this year, including investments in technology.

In fact, 83 percent of retailers expect to replace or upgrade point of sale (P.O.S.) software systems to provide real-time customer information at the time of sale. The second annual report for retail was based on a survey of more than 100 retailers representing input from more than 500 retail executives.

In analyzing this year's survey data, NRF and BearingPoint observed that last year's three currents of change are still incredibly important.

1. Retailers are moving toward greater customer-centricity. They want a richer view of their customers, with the intent of segmenting those who are most profitable.

Once they have targeted these high-value shoppers, the customer-centric enterprise strives to provide products and services to win their loyalty. Of those responding to the Customer Relationship Management section, 51 percent cited customer retention as their number-one strategic initiative in 2003.

2. Retailers are traveling along the data-knowledge-action continuum. Historically keepers of mountains of data, retailers are finally beginning to purposefully analyze it as a way to achieve deeper understanding of their customers--and their needs.

As a result, retailers can execute programs in merchandising, marketing, stores, and the supply chain that put products in the right places at the right times.

3. Many retailers are also shifting toward a boundary-less business model. Flexibility is key--that is, agility to respond to customer demands, speed in introducing new products, and assimilation of new information into marketing strategies.

4. These directions were reaffirmed with the addition of a fourth current for 2004--the need for retailers to be on a greatly accelerated path to differentiate themselves from the competition. Armed with information and myriad shopping options, today's consumers are more demanding than ever.

How can a retailer succeed in a fiercely competitive market? By being different. When planning their five Ps--product, price, place, people, and promotion--retailers need to keep the new business environment in mind.

"As the competition increases, retailers need to figure out how they can differentiate even more," said Scott Hardy, a managing director with BearingPoint's Retail/Wholesale practice.

Some are expanding their product assortments, thereby stretching the notion of traditional retail segments. Jerry Blaesing, senior vice president of BearingPoint's consumer segment, explains, "In order to win, retailers need to do many things well. They must leverage their strengths...while aggressively creating new points of differentiation...."

The study does suggest several approaches retailers can use to set themselves apart from the competition, including:

• Leveraging an understanding of the consumer to create unique and differentiated merchandise assortments.
• Building strong store brands.
• Providing a seamless shopping environment.
• Building and sustaining a high performance workforce.

Underlying all retail strategies for 2004 is a focus on productivity and performance improvement. Being a highly productive organization is crucial in today's competitive retail environment.

The full study may be purchased via the online NRF Bookstore at www.nrf.com/bookstore.