TECHNOLOGY IN VIEW

FROM IAN INSIGHTS

How Retailers Can Keep Pace with Amazon – Part II

By Ian Campbell
CEO of Nucleus Research

Being a retailer these days is not easy. Consumers have strong demands and many options to get what they want. Delivering the exact products they seek at the best price and with the fastest delivery is the name of the game.

And as I noted in my last post, Amazon has set the bar very high. Brand loyalty is not what it used to be and consumers quickly go elsewhere – often from a mobile device – when a retailer doesn’t have the right item in stock. Or at the right price. Or delivered quickly enough.

We also discussed control tower solutions, which provide visibility across the entire supply chain, versus Distributed Order Management (DOM) systems, which enable order fulfillment with products in stock. Nucleus predicts that Amazon will put any retailer that doesn’t deploy supply chain control tower solutions out of business within five years.

This goes beyond keeping pace with what Amazon is doing today. Retailers need to think about how to compete over the next few years. At Amazon, the breadth of products available is only getting broader, the prices are only getting more competitive and the delivery is only getting faster. It only gets harder from here.

So how can retailers plan for the future and set themselves up to be even more competitive in a highly volatile, omnichannel environment? Analytics!

Retailers need more insight into what consumers want, when they want it and what they are willing to pay. They need to get ahead of trends to be prepared to take full advantage of a cycle, rather than coming late to the party.

This only builds the case for control tower technology. Perhaps the biggest trend across enterprise technology today is the integration of analytics with key business applications for richer insight. When you consider the supply chain, DOM systems only provide visibility into what is in stock at any given time. Control tower, on the other hand, gives a view of items across the entire system, including items en route or even at the manufacturer. Analytics will provide supply chain control towers with the business intelligence to spot trends as they emerge and then make the course corrections in production and distribution to have those products in the store.

Consumers are fickle and cultural events such as movies, TV or even concerts can create instant sensations with heated demand for a hot product. Analytics could help retailers understand how quickly they can jump on an emerging trend and capitalize on the sudden interest in bowties, studded eyeglasses or that funny hat Pharrell wears.

Capturing the early adopters and the middle of the bell curve before the trend fizzles can add significantly to the bottom line. And just as Amazon’s massive size gives it volume-pricing advantages, it is also the giant’s largest liability. Nimble retailers that identify trends and act quickly can take the lion’s share of sales before Amazon even sees it coming. That’s how they stay ahead of Amazon. Integrating analytics with control tower solutions, not DOM systems, will get them there.

For a detailed look at Control Tower solutions, check out our Value Matrix at http://bit.ly/1CkWy9r