Multi-channel Retailing in a Service-oriented Future (Review Report)

This report combines all three briefs from the Retail Technology theme for Q1 2007: multi-channel retailing in a service-oriented future. By addressing the market, strategy and technology aspects of this topic, this Review Report provides an holistic picture of the subject. Forecast data also offers projections for the future direction of the SOA market in the retail sector.

Report Highlights


As the growth in eRetailing continues, retailers are increasingly looking to offer a multi-channel approach. Customer expectations are high, however, as retailers refine their offerings to offer a seamless and fully-integrated experience. SOA will need to be deployed to provide this level of service and remain competitive. The roll out a multi-channel offering brings with it a variety of business challenges that will need to be overcome. While SOA may provide the answers, it brings with it more challenges, both at a technical-level and an organization-level. SOA provides a flexible and cost-effective solution for multi-channel retailing compared to traditional approaches. While SOA uptake has been slow in the retail sector, growth is set to rise, and retail SMBs could represent a sizeable portion of the SOA market size if vendors can adapt their go-to-market strategies accordingly.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
EXECUTIVE SUMMARY 2
Introduction 2
Next-generation retailing: the importance of service-orientation (Market Focus) 2
Meeting retailing challenges in a multi-channel environment (Strategy Focus) 2
The technological demands of modern multi-channel retailing (Technology Focus) 3
SOA forecast for retail industry, 2006-2012 (Databooks) 3
NEXT-GENERATION RETAILING: THE IMPORTANCE OF SERVICE-ORIENTATION (MARKET FOCUS) 8
Summary 8
eRetail is an increasingly effective channel to drive global retail revenues 8
eRetail is driving growth in non-store retail channels 8
Broadband uptake is a significant driver in the growth of eRetail 9
Catalog retailing is being undermined by the virtues of online shopping but hope remains 10
eRetail growth is apparent across all global regions 10
Growth in eRetailing is being led by the electronics retail sub-sector 12
Customer expectations are driving retailers to offer a multi-channel retail approach 13
Customers expect seamless purchase and delivery options across channels 13
Customer expectations are continually raised as retailers develop their multi-channel offering 14
Case Study - Circuit City 15
Exploiting cross-channel shopping and increased opportunities for brand equity are also key drivers 15
The competitive landscape is changing as retailers embrace multi-channel retailing 16
Hypermarkets and supercenters move into mass merchandise format 17
New technologies are a tool for helping retailers differentiate themselves from competitors 17
Small retailers can compete by embracing an eRetail approach 18
Effective IT integration is the key that is providing multi-channel retailers with a competitive advantage 19
MEETING RETAILING CHALLENGES IN A MULTI-CHANNEL ENVIRONMENT (STRATEGY FOCUS) 20
Summary 20
Achieving cross-channel visibility is a key business challenge for multi-channel retailing 20
It is critical to achieve visibility across channels for efficient retail management 20
A single customer view is vital for effective marketing efforts 20
Cross-channel tracking allows accurate forecasting and inventory management to prevent lost sales 21
Cross-channel promotions and pricing effectiveness data is needed to refine strategies 23
Unified multi-channel customer service is important for improving the customer experience 24
Consolidated real-time order information across channels is needed for successful fulfillment 24
Multi-channel IT solutions must support the ability for change and growth if costs are to be contained 25
Overcoming a lack of knowledge about SOA adoption is the biggest technology challenge 26
Service oriented architecture is a natural solution for the challenges of multi-channel retailing 26
SOA in the 'real-world' 27
A lack of knowledge about SOA is a key impediment to implementation 28
Many businesses are not familiar enough with SOA to feel confident deploying it 28
Security is another crucial area that needs to be addressed if SOA uptake is to rise 29
A variety of other issues are also inhibiting SOA adoption, including a general lack of awareness 29
The need to overcome governance issues surrounding SOA is vital once implementation has occurred 30
SOA Program Governance 30
SOA Design-time Governance 31
SOA Run-time Governance 31
SOA Change Management 31
Organizational challenges revolve around the need to align business and IT strategies 32
Successful SOA strategies require internal collaboration among business and IT stakeholders 32
Deciding on the right organizational approach to take is critical to SOA success 33
Modeling SOA maturity and the business goals is a useful starting point 34
The growth of a hybrid approach is gaining ground over top-down or bottom-up execution strategies 34
THE TECHNOLOGICAL DEMANDS OF MODERN MULTI-CHANNEL RETAILING (TECHNOLOGY FOCUS) 36
Summary 36
Legacy integration infrastructure will struggle to deliver an efficient multi-channel offering 36
Traditional integration methods result in complexity, lack of scalability or expensive integration 36
Point-to-point integration creates costly complexity with multiple applications 36
Hub and spoke integration is more manageable but suffers from bottlenecks and a lack of scalability 37
Message bus architecture allows a scalable solution but proprietary requirements make it expensive 38
SOA using an ESB reduces complexity and provides a more flexible and cost-efficient approach 39
SOA in the multi-channel retailing industry 40
Case Study: Harrods, UK 41
SOA offerings for SMBs represent an important opportunity for vendors 42
Current adoption levels suggest the retail sector has some way to go in implementing SOA 43
Regional variations 44
Growth of SOA in the retail sector is forecast to be impressive 45
Growth in the retail SOA market is dependent upon an uptake in the SMB retail market 46
Vendors' go-to-market strategies need to be refined for a more widespread uptake of SOA 48
Vendors need to develop more non-IT material for demonstrating the benefits of SOA 48
Lower pitched marketing material will help business management understand SOA 48
Parallel systems that help demonstrate ROI will be useful for IT management 49
Vendors can help the SMB market move to SOA by focusing on the flexibility and scalability it offers 50
SOA approaches customized to the vertical market will help retailers differentiate between vendors 50
SOA PENETRATION FORECAST FOR RETAIL INDUSTRY, 2006-2012 (DATABOOK) 52
Introduction 52
SOA penetration forecast for retail industry in APAC, 2006-2012 53
SOA penetration forecast for retail industry in Australia, 2006-2012 54
SOA penetration forecast for retail industry in Japan, 2006-2012 55
SOA penetration forecast for retail industry in New Zealand, 2006-2012 56
SOA penetration forecast for retail industry in Singapore, 2006-2012 57
SOA penetration forecast for retail industry in Taiwan, 2006-2012 58
SOA penetration forecast for retail industry in North America, 2006-2012 59
SOA penetration forecast for retail industry in Canada, 2006-2012 60
SOA penetration forecast for retail industry in United States, 2006-2012 61
SOA penetration forecast for retail industry in Western Europe, 2006-2012 62
SOA penetration forecast for retail industry in Benelux, 2006-2012 63
SOA penetration forecast for retail industry in France, 2006-2012 64
SOA penetration forecast for retail industry in Germany, 2006-2012 65
SOA penetration forecast for retail industry in Italy, 2006-2012 66
SOA penetration forecast for retail industry in Nordics, 2006-2012 67
SOA penetration forecast for retail industry in Rest of Western Europe, 2006-2012 68
SOA penetration forecast for retail industry in Spain, 2006-2012 69
SOA penetration forecast for retail industry in United Kingdom, 2006-2012 70
SOA MARKET SIZE FORECAST FOR RETAIL INDUSTRY, 2006-2012 (DATABOOK) 71
Introduction 71
SOA market size forecast for retail industry in APAC, 2006-2012 72
SOA market size forecast for retail industry in Australia, 2006-2012 73
SOA market size forecast for retail industry in Japan, 2006-2012 74
SOA market size forecast for retail industry in New Zealand, 2006-2012 75
SOA market size forecast for retail industry in Singapore, 2006-2012 76
SOA market size forecast for retail industry in Taiwan, 2006-2012 77
SOA market size forecast for retail industry in North America, 2006-2012 78
SOA market size forecast for retail industry in Canada, 2006-2012 79
SOA market size forecast for retail industry in United States, 2006-2012 80
SOA market size forecast for retail industry in Western Europe, 2006-2012 81
SOA market size forecast for retail industry in Benelux, 2006-2012 82
SOA market size forecast for retail industry in France, 2006-2012 83
SOA market size forecast for retail industry in Germany, 2006-2012 84
SOA market size forecast for retail industry in Italy, 2006-2012 85
SOA market size forecast for retail industry in Nordics, 2006-2012 86
SOA market size forecast for retail industry in Rest of Western Europe, 2006-2012 87
SOA market size forecast for retail industry in Spain, 2006-2012 88
SOA market size forecast for retail industry in United Kingdom, 2006-2012 89
APPENDIX 90
Definitions 90
Extended Methodology 91
Further reading 91
Ask the analyst 92

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Table 1: Number of retail establishments, 2006, by region 48
Table 2: Return on Investment (ROI) calculation for measuring SOA benefits 49
Table 3: SOA penetration forecast for retail industry in APAC, 2006-2012 53
Table 4: SOA penetration forecast for retail industry in Australia, 2006-2012 54
Table 5: SOA penetration forecast for retail industry in Japan, 2006-2012 55
Table 6: SOA penetration forecast for retail industry in New Zealand, 2006-2012 56
Table 7: SOA penetration forecast for retail industry in Singapore, 2006-2012 57
Table 8: SOA penetration forecast for retail industry in Taiwan, 2006-2012 58
Table 9: SOA penetration forecast for retail industry in North America, 2006-2012 59
Table 10: SOA penetration forecast for retail industry in Canada, 2006-2012 60
Table 11: SOA penetration forecast for retail industry in United States, 2006-2012 61
Table 12: SOA penetration forecast for retail industry in Western Europe, 2006-2012 62
Table 13: SOA penetration forecast for retail industry in Benelux, 2006-2012 63
Table 14: SOA penetration forecast for retail industry in France, 2006-2012 64
Table 15: SOA penetration forecast for retail industry in Germany, 2006-2012 65
Table 16: SOA penetration forecast for retail industry in Italy, 2006-2012 66
Table 17: SOA penetration forecast for retail industry in Nordics, 2006-2012 67
Table 18: SOA penetration forecast for retail industry in RoWE, 2006-2012 68
Table 19: SOA penetration forecast for retail industry in Spain, 2006-2012 69
Table 20: SOA penetration forecast for retail industry in United Kingdom, 2006-2012 70
Table 21: SOA market size forecast for retail industry in APAC, 2006-2012 72
Table 22: SOA market size forecast for retail industry in Australia, 2006-2012 73
Table 23: SOA market size forecast for retail industry in Japan, 2006-2012 74
Table 24: SOA market size forecast for retail industry in New Zealand, 2006-2012 75
Table 25: SOA market size forecast for retail industry in Singapore, 2006-2012 76
Table 26: SOA market size forecast for retail industry in Taiwan, 2006-2012 77
Table 27: SOA market size forecast for retail industry in North America, 2006-2012 78
Table 28: SOA market size forecast for retail industry in Canada, 2006-2012 79
Table 29: SOA market size forecast for retail industry in United States, 2006-2012 80
Table 30: SOA market size forecast for retail industry in Western Europe, 2006-2012 81
Table 31: SOA market size forecast for retail industry in Benelux, 2006-2012 82
Table 32: SOA market size forecast for retail industry in France, 2006-2012 83
Table 33: SOA market size forecast for retail industry in Germany, 2006-2012 84
Table 34: SOA market size forecast for retail industry in Italy, 2006-2012 85
Table 35: SOA market size forecast for retail industry in Nordics, 2006-2012 86
Table 36: SOA market size forecast for retail industry in RoWE, 2006-2012 87
Table 37: SOA market size forecast for retail industry in Spain, 2006-2012 88
Table 38: SOA market size forecast for retail industry in United Kingdom, 2006-2012 89


Figure 1: Global retail spend 2006-2012, by channel 9
Figure 2: Regional breakdown of global retail spend, 2006 11
Figure 3: Online as a percentage of total retail revenue 2006-12, by region 12
Figure 4: Top 3 pressures driving retailers to integrate multi-channel initiatives 14
Figure 5: Browse/Buy relationships between channel during holiday shopping season 16
Figure 6: Global retail spend through hypermarkets and supercenters, 2006-12 17
Figure 7: Differing customer details across channels need to be consolidated into a single record 21
Figure 8: Tracking projected and actual SKU sales allows stock revisions to be made if necessary 23
Figure 9: Multiple order fulfillment systems that are poorly integrated jeopardizes meeting customer needs 25
Figure 10: SOA meets the technology requirements that multi-channel retailing brings 27
Figure 11: Lack of knowledge is an important obstacle for SOA adoption 28
Figure 12: Attention needs to be given to four levels of SOA governance 30
Figure 13: IT must be able to demonstration the ROI of an SOA initiative over time 33
Figure 14: Maturity Model for Multi-Channel Retailing 34
Figure 15: Messaging bus architecture allows scalability but can suffer from high costs 37
Figure 16: Messaging bus architecture allows scalability but can suffer from high costs 39
Figure 17: An ESB uses open standards to integrate applications on different platforms 40
Figure 18: Case Study: Harrods - SOA provides clarity of across multiple channels 42
Figure 19: Adoption levels of SOA by vertical industry 43
Figure 20: Deployment of SOA among large retailers (250 employees+) in 2006, by country 44
Figure 21: Market size for SOA products and services in retail sector, 2006-2012, by region 45
Figure 22: Penetration of SOA products and services in retail sector, 2006-2012, by size of retailer 46
Figure 23: Market size for SOA products and services in retail sector, 2006-2012, by size of retailer 47
Figure 24: SOA penetration forecast for retail industry in APAC, 2006-2012 53
Figure 25: SOA penetration forecast for retail industry in Australia, 2006-2012 54
Figure 26: SOA penetration forecast for retail industry in Japan, 2006-2012 55
Figure 27: SOA penetration forecast for retail industry in New Zealand, 2006-2012 56
Figure 28: SOA penetration forecast for retail industry in Singapore, 2006-2012 57
Figure 29: SOA penetration forecast for retail industry in Taiwan, 2006-2012 58
Figure 30: SOA penetration forecast for retail industry in North America, 2006-2012 59
Figure 31: SOA penetration forecast for retail industry in Canada, 2006-2012 60
Figure 32: SOA penetration forecast for retail industry in United States, 2006-2012 61
Figure 33: SOA penetration forecast for retail industry in Western Europe, 2006-2012 62
Figure 34: SOA penetration forecast for retail industry in Benelux, 2006-2012 63
Figure 35: SOA penetration forecast for retail industry in France, 2006-2012 64
Figure 36: SOA penetration forecast for retail industry in Germany, 2006-2012 65
Figure 37: SOA penetration forecast for retail industry in Italy, 2006-2012 66
Figure 38: SOA penetration forecast for retail industry in Nordics, 2006-2012 67
Figure 39: SOA penetration forecast for retail industry in RoWE, 2006-2012 68
Figure 40: SOA penetration forecast for retail industry in Spain, 2006-2012 69
Figure 41: SOA penetration forecast for retail industry in United Kingdom, 2006-2012 70
Figure 42: SOA market size forecast for retail industry in APAC, 2006-2012 72
Figure 43: SOA market size forecast for retail industry in Australia, 2006-2012 73
Figure 44: SOA market size forecast for retail industry in Japan, 2006-2012 74
Figure 45: SOA market size forecast for retail industry in New Zealand, 2006-2012 75
Figure 46: SOA market size forecast for retail industry in Singapore, 2006-2012 76
Figure 47: SOA market size forecast for retail industry in Taiwan, 2006-2012 77
Figure 48: SOA market size forecast for retail industry in North America, 2006-2012 78
Figure 49: SOA market size forecast for retail industry in Canada, 2006-2012 79
Figure 50: SOA market size forecast for retail industry in United States, 2006-2012 80
Figure 51: SOA market size forecast for retail industry in Western Europe, 2006-2012 81
Figure 52: SOA market size forecast for retail industry in Benelux, 2006-2012 82
Figure 53: SOA market size forecast for retail industry in France, 2006-2012 83
Figure 54: SOA market size forecast for retail industry in Germany, 2006-2012 84
Figure 55: SOA market size forecast for retail industry in Italy, 2006-2012 85
Figure 56: SOA market size forecast for retail industry in Nordics, 2006-2012 86
Figure 57: SOA market size forecast for retail industry in RoWE, 2006-2012 87
Figure 58: SOA market size forecast for retail industry in Spain, 2006-2012 88
Figure 59: SOA market size forecast for retail industry in United Kingdom, 2006-2012 89

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