Software : Releases its Top Five 2019 Predictions for the Retail Industry

Darmstadt, Germany, Tuesday, December 11, 2018

Software AG today released its top five predictions for the retail industry. Oliver Guy, global industry director for retail, said: 'In 2019, response to consumer expectations will determine success levels. Leaders will continue to actively apply digital technologies to business problems. Predictions of customer choice will drive growth in areas. Without absolute commitment to digital transformation, retailers are likely to fall by the wayside.'

1. Retail Therapy: 'How does that Make you Feel?'

More retailers will exploit emotional differentiation, targeting potential customers' feelings. Examples include John Lewis' Christmas advertisements, which create an emotional connection with its brand. Part of this drive will come from personalization, plus retailers have hyper-personalization (context, real-time) in their sights - for both product and experience. Artificial intelligence can help with this, but AI relies on quality data so a large constraint will be data availability and collation.

2. Note to Tortoise: This Time the Rabbit Wins.

Retail keeps getting faster - customers demand things faster and the bar keeps getting higher. This relates to internal operations - being able to respond in good time. On top of investing in process automation from RPA, as a step toward full business process automation, retailers will consider real-time analytics to respond to what is happening with customers, in their own supply chains and in their stores. They will learn how to operationalize AI and machine learning technologies in order to deliver real value.

3. Is IoT a Highway to the Danger Zone?

The Internet of Things may be the road to a successful future for retailers, but many consider it fraught with risks. Concerns about security, complexity and connecting to the existing IT ecosystem will restrict uptake for a time. Smart retailers will look across what is being done in other industries and seek to use infrastructure with carrier grade security, from vendors with proven track records.

4. No Man is an Island, Entire of Itself.

Ecosystems will become more complex. One way to increase revenue and differentiate is using partnerships. Examples include Amazon's relationship with the UK's Morrisons, using stores as local distribution centers. Kroger and Sobeys outsourced online grocery sales to Ocado, while Ahold have partnered with meal kit provider Blue Apron.. These kinds of ecosystems will grow and become more complex meaning API management will become much more critical.

5. Consciously Decoupling: Off with Their Heads

Winners will realize that to innovate they need to decouple back-office systems from the customer touch points. Sometimes known as headless commerce, this provides flexibility to continuously tweak and improve the customer journey at the front end, without having to constantly change the back-office. This approach was highlighted in Software AG's 2018 Retail Digital Adoption Survey, whereby digital leaders are using 'third-party integration platforms to insulate digital platforms from change, to increase extensibility, and to gain deployment speed.'