E-commerce growth threatened by tech barriers

MIAMI — Retail's e-commerce channel has become a shining star in an otherwise dismal retail season. While the National Retail Federation projects overall retail sales growth to be 3.5 percent in 2008, the U.S. Census Bureau estimates that e-commerce sales will rise over 17 percent in the same period, and over 70 percent in the next five years.

However, while retailers have made progress in aligning customer service processes with evolving consumer shopping patterns, Retail Systems Research's latest study shows that even retail winners (those that outperform their peers in year-over-year sales) fear their information systems stand as the biggest barrier to future improvements. With retail performance increasingly dependent on the inter-play between stores and online, such barriers threaten both retailer results and the meteoric growth of the online channel.

The study, "Finding the Integrated Multi-Channel Retailer," sponsored by SAP and IBM, finds that retailers have made significant progress in integrating the processes that support multi-channel sales by more closely aligning purchasing and fulfillment across channels. But even while the Web continues to flourish as the fastest growing channel, most retailers remain concerned that redundant processes and non-integrated systems will drive up their costs as the volume of non-store sales increases.

The research also found that retailers increasingly see alternate channels as a way to enhance the value of the dominant channel, the store. At the same time, retailers cannot afford redundant business processes and systems for all the channels that they operate, and so there is tremendous pressure to address operational efficiencies and systems integration issues in order to fulfill customer expectations of a seamless cross-channel experience.

"Shoppers don't see the barriers between retailers' different channel operations," said Brian Kilcourse, managing partner at RSR and author of the report. "Creating a consistent brand identity across all channels is viewed as a critical success factor by the vast majority of retailers, according to our research. Improving systems to ensure that product, customer, and inventory information is timely, accurate and available to all the channels is a key component of that, in order to enable cross-channel ordering and fulfillment."