Insights

Retail Technology Investments Are Paying Big Dividends

By Jason Gulbinas

March 8, 2018

Recent earnings reports show that retailers are reaping big dividends from investing in technology to improve the customer experience. This data provides appreciable support to the 2017 RIS Gartner study, “Retail Technology: Reconnecting with the Consumer,” which states in no uncertain terms that only those retailers that adopt and invest proactively in technology will prosper:

“The competitive landscapes clearly indicates this is a time for retail to lead and not follow. For the 23% that are “desiring” or do not have a digital strategy, well, let’s just say it was nice shopping with you. We will soon likely add you to the ranks of once great retail brands that are no more.”

Digital transformation has been driving change in retail for years, with the ROI from these investments becoming the focus. Within this evolving landscape, retailers have grappled with how to leverage new technologies to meet changing consumer expectations and keep up with an increasingly nimble, digital-first competition. Headlines in 2017 were filled with store closings and bankruptcies from companies that failed to adapt.

However, there’s good news: we may be at a tipping point, as more and more brands in the traditional retail categories are deploying digital capabilities in ways that are impacting their bottom line.

In recent earnings calls, Home Depot, Ahold, and Abercrombie and Fitch are a few of the companies that directly correlated positive earnings with their investments in brick-and-mortar retail technology and interconnected (omnichannel) experiences.

The Home Depot

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The Home Depot announced fourth-quarter earnings that were up 7.5% from the same period in the prior year.  

“Our ongoing commitment to enhance the interconnected retail experience for our customers, provide localized and innovative product, and deliver best in class productivity resulted in record sales and net earnings for 2017,” said Craig Menear, Home Depot’s chairman, CEO and president.  

Source: Press Release, 2-20-2018

Ahold Delhaize

ahold_delhaize_icon_detail.png

In its fourth-quarter report, Ahold Delhaize reported further margin expansion and raised dividend for 2017 by 10.5%.

Dick Boer, CEO of Ahold Delhaize, said: “We are investing to make shopping more convenient, introducing new  technologies to improve the customer experience and further ease the check-out process, as we live up to our promise to be a better place to shop.”

Source: Press Release, Q4, 2017

Abercrombie & Fitch

Abercrombie and Fitch logo

Abercrombie & Fitch Co reported a 15% YOY increase in net sales for the quarter and 5% for the year.

CEO Fran Horowitz said, “Our focus on staying close to our customer, executing to our playbook and maintaining our disciplined approach to expense management delivered a strong performance on both the top and bottom line… We continue to improve the customer experience with ongoing investments in loyalty programs, stores, direct-to-consumer and omnichannel capabilities.”

Source: Investor Relations

What does this mean?

The future of retail will be defined by companies that invest wisely in improvements to the consumer experience. Abercrombie & Fitch, Ahold Delhaize, and Home Depot are integrating their online and physical retail experiences.  These recent results confirm that their commitment to alleviating friction in the customer journey is paying off. Tactically, that means deploying both tech-based and strategic pathways to the in-store experiences, as well as continuing to better connect digital and physical assets.

At the core, it’s about the customers—delivering better experiences that will drive loyalty. But it is important to note that in-store digital platforms that deliver convenience and smarter experiences for shoppers also have tremendous benefits for retailers, too. These platforms enable retailers to collect better data about in-store consumer journeys, which can be used to determine a host of opportunities for cost-reduction, from more efficient staffing to smarter inventory management to more profitable store layouts.

Data generated by in-store digital (whether supplemental shopping apps, in-aisle beacons, or touchscreen kiosks) can also help retailers connect the dots between customers’ behavior online and in-store; this enables increased personalization through these touchpoints, which then delivers even better shopping experiences—and drives loyalty.

When it comes to retail technology, more and more data points are showing that what’s good for consumers is good for retailers, too.

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