Build a Retail Business-Aligned IT Strategy
Success in retail has been an art for a long time; it is the technology that makes it a science. It is vital to leverage technology through a retail business-aligned IT strategy.
- Retail is an exceptionally competitive industry with low barriers of entry. With the advent of e-commerce, technology is becoming a key competitive differentiator.
- However, most organizations struggle to chart out their IT strategy and roadmap. According to our Management and Governance Diagnostic, 74.6% of organizations have an ineffective IT strategy. Moreover, 23.6% of business CXOs feel that their goals are unsupported by IT because IT fails to effectively communicate the value IT adds to the business (CEO-CIO Alignment Diagnostic).
- CIOs who do not formulate a business-aligned IT strategy face issues related to business misalignment and prioritization.
Our Advice
Critical Insight
About 75% of CEOs value tech leaders who bring strategic perspective and operational experience (CIO Journal, 2022), however….
- Most CIOs are seen as order takers by business CXOs, resulting in the demands on IT far outstripping the IT budget.
- Initiatives and projects are not aligned with business objectives and are delivered late OR put on hold because of mismatched expectations.
Gaps in client-facing technology can be a source of shadow IT because IT is not seen as sufficiently knowledgeable or engaged with business.
Impact and Result
This retail industry-aligned blueprint helps you:
- Use Info-Tech’s industry-focused approach to discern the business context.
- Clearly communicate to business executives the value IT adds to the organization’s key objectives and initiatives using the Strategy Presentation Template.
- Make project decisions holistically by using Info-Tech’s Prioritization Tool to identify the most valuable initiatives to become part of the IT strategic roadmap.
Build a Retail Business-Aligned IT Strategy
Success depends on clear alignment of IT initiatives to business goals, IT excellence, and driving technology innovation in the retail industry.
Analyst Perspective
Success in retail has been an art for a long time; it is the technology that makes it a science.
Shopping is more than just a transactional experience – it's a multidimensional journey that is influenced by a customer's current state of mind. Sometimes, it's a necessary chore to purchase essential goods, while other times, it's a therapeutic escape known as retail therapy. That's why, sometimes it is said –
When the going gets tough, consumers go shopping!
Understanding the customers, giving them what they came for, and influencing some impulsive purchases, without infusing buyer's remorse later, sweetens the deal for retail businesses and keeps customers coming back for more.
For years, retailers have been trying to attract the right customers and ensure they don't leave empty-handed by serving their exact needs and impulsive behaviors. Technology is the answer to those efforts as it gives the edge to those who know how and where to use it. In short, the future of retail is a dynamic and exciting landscape that requires a keen understanding of customer behavior and the strategic use of technology.
This is where the Build a Retail Business-Aligned IT Strategy comes in. An adaptation of Info-Tech's Build a Business-Aligned IT Strategy blueprint, it keeps the "business vision, mission, and priorities" at the center while guiding a retail CIO team in formulating an IT strategy that aligns with their industry context and specific business goals.
Manish Jain
Principal Research Director
Analyst Profile
Executive Summary
IT strategies are often nonexistent or ineffective.
Retail is an exceptionally competitive industry with low barriers of entry. With the advent of e-commerce, technology is becoming a key competitive differentiator.
However, most organizations struggle to chart out their IT strategy and the roadmap. 74.6%1 of organizations have an ineffective IT strategy. Moreover, 23.6%2 of business CXOs feel that their goals are unsupported by IT because IT fails to effectively communicate the value IT adds to the business.
CIOs who do not formulate business-aligned IT strategy face issues related to business misalignment and prioritization.
About 75%3 of CEOs value tech leaders who bring strategic perspective and operational experience, however…
- Most CIOs are seen as order takers by business CXOs, resulting in the demands on IT far outstripping the IT budget.
- Initiatives and projects are not aligned with business objectives and are delivered late or put on hold because of mismatched expectations.
Moreover, gaps in client-facing technology can be a source of shadow IT because IT is not seen as sufficiently knowledgeable or engaged with business.
Follow Info-Tech’s approach to developing a strong IT strategy.
This retail industry-aligned IT strategy blueprint helps you:
- Use Info-Tech's industry-focused approach to discern the business context.
- Clearly communicate to business executives the value IT adds to the organization's key objectives and initiatives using the Strategy Presentation Template.
- Make project decisions holistically by using Info-Tech's Prioritization Tool to identify the most-valuable initiatives to become part of the IT strategic roadmap.
Info-Tech Insight
A CIO has three roles: run an effective and efficient IT shop, enable business productivity, and drive technology innovation. A good IT strategy must reflect these three mandates and how the IT organization strives to fulfill them.
1: Info-Tech, Management and Governance Diagnostic; n=1,931
2: Info-Tech, CEO-CIO Alignment Diagnostic; n=863
3: CIO Journal, 2022
Executive Summary
Retail Industry – an overview
- A retail business sells products of various types directly to individual or organizational customers. Some retailers provide or ship the purchased goods directly. In other cases, they deal with partners executing a complex delivery chain and last mile delivery network.
- Retailers range from small neighborhood shops to large global companies (such as Walmart, which generated US$573 billion in sales in FY2022,1 and Gap, Inc., which posted US$16.7 billion in sales in FY20212).
- In the increasingly digital era, retailers are also shifting from brick-and-mortar stores to online sales (this shift has been accelerated by COVID-19). For example, Gap Inc. had 57% growth online (versus 2019) and represented 39% of total net FY2021 sales.2
- With the rise of online shopping, consumers can quickly shift where they buy items easily. It's essential that retailers understand shifting consumer patterns to manage inventory and store locations.
- With the ubiquitous access to mobile and internet connectivity, search cost has dropped significantly, allowing shoppers to leverage multiple channels before making a purchase.
Picture: A customer in a retail store comparing the prices and other technical aspects of the product on a major ecommerce site before deciding to make the purchase in store.
Source: Author
Sources:
- Walmart Inc.
- Gap Inc.
Executive Summary
Opportunities for Retail beyond the shelf space
Most of them find their genesis in technology.
Traditional opportunities can be improved with technology
New capabilities can be built through technology
Info-Tech Insight
Opportunities for Retail business have gone beyond the shelf space in brick-and-mortar stores they offer to the producers or manufacturer of goods and shoppers visit them.
In addition to having expanded channels for goods and merchandise, retailers are well equipped not only to offer relevant services to their consumers and new capabilities to producers and wholesalers but also to monetize the data they collected in different ways.
However, almost all these opportunities can only be leveraged through strategic use of information technology (IT).
Identify what opportunities your organization is already leveraging and which ones can be the sweet spot for you without diverting too much from your organization's vision and objectives.
Executive Summary
Evolution of retail: traditional to omnichannel
Does your team have good understanding of the overall maturity of your organization and what your key touchpoints are? If it does, let's articulate the road to the next stage of maturity.
Refer Info-Tech's Future of Retail Performance Monitoring Metrics for more details.
Executive Summary
Key competing factors in retail
Product, availability, delivery, and pricing on the customer side:
Retailers must compete on the following from the purchasers' perspective:
- Product selection
- Pricing
- Availability through selected channels and various geographies
- Delivery features and timing
Vendors and inventory on the supply side:
From an operational perspective, retailers compete on:
- Reliable vendors and partner ecosystem of supply chain
- Effective inventory management to provide availability without excess inventory
Identify the key competing factors your organization is focusing on to sustain and grow its position in the market.
Executive Summary
Strategic opportunities IT can unlock in retail
- Data quality
- Improve quality and timeliness of data available for decision making.
- Improving customer experience
- Track what customers want to see and what they click on to open opportunities for retailers to customize products and services. It can help improve the customer experience through appropriate in-store technology and a competitive quality on the web channel.
- Privacy of customer records
- Ensure the privacy of customer records is protected from inappropriate access from both external intruders and internal staff.
- Contactless payments
- Leverage mobile payments and QR codes to provide a safer and more convenient way for customers to pay for their purchases. Save cashier time and improve customer experience.
- Mixed reality
- Explore the use of mixed reality (MR), augmented reality (AR), and virtual reality (VR) in retail to enhance customer experiences, for instance, enable customers to virtually try on clothes or see how furniture would look in their homes.
Identify the key opportunities IT can unlock. Which can directly be linked to your organization's objectives?
Executive Summary
Critical IT challenges in retail
- Analytics
- Analytic capability is generally inadequate due to data shortages and poor analytics tools. A siloed marketing infrastructure makes it expensive and difficult to get messages to consumers and track consumer data effectively.
- IT capacity
- Retail organizations struggle with IT capacity. The business requires constant revision of its customer-facing technology to keep pace with the online shopping revolution while attempting to reinvent the in-store customer experience.
- Client-facing technologies
- Customers want a seamless, easy purchasing experience. Check-outs, especially online, need to be straightforward and easy. Client-facing technology can be a problematic source of shadow IT, often because IT is not seen as sufficiently knowledgeable or responsive.
- Security validation
- Ensuring that security is truly adequate requires validation through a formal assessment.
- Innovation leadership
- Innovation leadership is lacking while the interest to digitally transform is only increasing
Identify the key challenges your business is throwing at IT teams. Which can directly be linked to the organization's objectives?
Executive Summary
Key performance indicators that IT in retail needs to align with
Source: Info-Tech Research Group Analysis
Refer Info-Tech's Future of Retail Performance Monitoring Metrics for more details.
Having a good understanding of the business' KPIs is vital for IT leadership to align the IT strategy with the business and earn the business' trust. Identify the KPIs most important to your business executives and how can you translate them into IT initiatives.
Executive Summary
Info-Tech's approach to formulating IT strategy
1. Establish the Scope of Your IT Strategy
Establish the scope of your IT strategy by defining IT’s mission and vision statements and guiding principles.
2. Review IT Performance From Last Fiscal Year
A retrospective of IT’s performance helps recognize the current state while highlighting important strategic elements to address going forward.
3. Build Your Key Initiative Plan
Elicit the business context and identify strategic initiatives that are most important to the organization and build a plan to execute on them.
4. Define IT’s Operational Strategy
Evaluate the foundational elements of IT’s operational strategy that will be required to successfully execute on key initiatives.
Executive Summary
Info-Tech's methodology for IT Strategy
| 01 Business Context | 02 Key Initiative Plan | 03 Operational Strategy | 04 Executive Presentation | |
|---|---|---|---|---|
| Inputs |
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| Outputs |
Business Context Information for Step 2:
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IT Strategy Information for Approval:
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Operational Strategy Information for Step 4:
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Executive Presentations for:
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| Service |
Pre-Workshop |
IT Strategy Workshop |
IT Strategy Workshop |
IT Strategy Workshop |
Executive Summary
Info-Tech's methodology for IT Strategy for Retail
Blueprint deliverables
The IT Strategy Workbook supports each step of this blueprint to help you accomplish your goals:
Key deliverable:
IT Strategy Presentation Template
A highly visual and compelling presentation template that enables easy customization and executive-facing content.
Goals Cascade Visual
Elicit business context and use the workbook to build your custom goals cascade.
Initiative Prioritization
Use the weighted scorecard approach to evaluate and prioritize your strategic initiatives.
Roadmap/Gantt Chart
Populate your Gantt chart to visually represent your key initiative plan over the next 12 months.
Populate your Gantt chart to visually represent your key initiative plan over the next 12 months.
Info-Tech offers various levels of support to best suit your needs
DIY Toolkit
“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”
Guided Implementation
“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”
Workshop
“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”
Consulting
“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”
Diagnostics and consistent frameworks used throughout all four options
Guided Implementation
What does a typical GI on this topic look like?
A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.
A typical GI is between 8 to 12 calls over the course of 2 to 4 months.
Workshop Agenda
Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889
| Session 0 (Pre-Workshop) | Session 1 | Session 2 | Session 3 | Session 4 | Session 5 (Post-Workshop) | |
|---|---|---|---|---|---|---|
| Elicit Business Context | Establish the Scope of Your IT Strategy | Build Your Key Initiative Plan | Build Your Key Initiative Plan (cont'd.) | Define Your Operational Strategy | Document Strategy | |
| Activities |
0.1 Complete recommended diagnostic programs. 0.2 Interview key business stakeholders, as needed, to identify business context: business goals, initiatives, and the organization’s mission and vision. 0.3 (Optional) CIO to compile and prioritize IT success stories. |
1.1 Review/validate the business context. 1.2 Construct your mission and vision statements. 1.3 Elicit your guiding principles and finalize IT strategy scope. |
2.1 Identify key IT initiatives that support the business. 2.2 Identify key IT initiatives that enable operational excellence. 2.3 Identify key IT initiatives that drive technology innovation. 2.4 Consolidate and prioritize (where needed) your IT initiatives. |
3.1 Determine IT goals. 3.2 Compile goals cascade. 3.3 Build your IT strategy roadmap. |
4.1 Identify metrics and targets per IT goal. 4.2 (Optional) Identify required skills and resource capacity. 4.3 Discuss next steps and wrap-up. |
5.1 Complete in-progress deliverables. 5.2 (Optional) Set up review time for workshop deliverable. |
| Outcomes |
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Workshop Requirements
| Launch Diagnostics | Business Inputs | IT Inputs |
|---|---|---|
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Launch the CIO Business Vision diagnostic. Launch the CEO-CIO Alignment diagnostic. Launch the Management and Governance diagnostic. Gather all historical diagnostic reports (if they exist). Contact your Account Manager to get started. |
Gather business strategy documents and find information on:
(If this doesn't exist for your organization, contact your Info-Tech Account Manager to get started.) Interview the following stakeholders to uncover business context information:
Download the Business Context Discovery Tool |
Gather information on last fiscal year's strategy. Particularly information on:
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Phase 1
Establish Scope of Your IT Strategy
Phase 1 |
Phase 2 |
Phase 3 |
Phase 4 |
|---|---|---|---|
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1.1 Mission & Vision Statement 1.2 Guiding Principles 1.3 Finalize Scope |
2.1 Business Value Realized 2.2 Diagnostic Data Analysis 2.3 Additional Year-in-Review Data 2.4 Finalize Year-in-Review |
3.1 Elicit Business Context 3.2 Identify Key Initiatives 3.3 Build Initiative Profiles 3.4 Construct Strategy Roadmap 3.5 Finalize KIPs |
4.1 Establish Governance 4.2 Evaluate Organizational Changes 4.3 Evaluate Budget 4.4 Build Functional Support Roadmaps 4.5 Finalize IT Strategy |
This phase will walk you through the following activities:
- How to build IT mission and vision statements
- How to elicit IT guiding principles
- How to finalize and communicate your IT strategy scope
This phase involves the following participants:
- CIO
- Senior IT Team
To complete this phase, you will need:
IT Strategy Presentation Template
Use the IT Strategy Presentation Template to document the results from the following activities:
- Mission and Vision Statements
- IT Guiding Principles
Case Study
Acme Corp. – A Canadian retail company
INDUSTRY: Retail
COMPANY: This case study is based on a real company but was anonymized for use in this research.
This blueprint includes example slides for our case organization Acme Corp.
Acme Corp. is a 100-year-old Canadian retail company operating in the hardware, automotive parts and services, sports goods, seasonal outdoor items, apparels, and housewares appliances retail sector. Its past attempts to expand beyond Canadian borders failed, and therefore, it decided to focus on Canadian markets and expanding to other categories beyond its core area of automotive parts.
The company's loyalty program is as popular in Canada as Amazon Prime is in the United States.
In the post-pandemic world, although customers have adopted digital, the footfall in the stores is not going down either. Therefore, it is significant that 90% of Canadians live within a 15-minute drive of an Acme store, and the company is also growing online sales.
As the organization is moving into the new digital era, it is focusing on providing a great experience for its customers.
The organization's mission is to deliver products and merchandise to its customers through the channels they are comfortable with, at the price they find competitive, and with an experience they find unmatched.
The Acme Corp. aims to become the largest Canadian retailer of consumer-oriented hardware goods including automotive, sports, leisure, and housewares.
About Info-Tech
Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.
We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.
What Is a Blueprint?
A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.
Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.
Need Extra Help?
Speak With An Analyst
Get the help you need in this 4-phase advisory process. You'll receive 8 touchpoints with our researchers, all included in your membership.
Guided Implementation 1: Establish scope of your IT strategy
- Call 1: Discuss business context and customize your organization’s capability map.
- Call 2: Identify mission and vision statements and guiding principles to discuss strategy scope.
Guided Implementation 2: Review performance from last fiscal year
- Call 1: Assess year-in-review data and evaluate performance.
- Call 2: Discuss diagnostic data results and success stories.
Guided Implementation 3: Build your key initiative plan
- Call 1: Identify strategic initiatives and required information.
- Call 2: Discuss how to build your roadmap.
Guided Implementation 4: Define your operational strategy
- Call 1: Discuss and identify appropriate operational strategy components.
- Call 2: Summarize results and plan next steps.
Contributors
- Denis Goulet, Senior Workshop Director, Info-Tech Research Group
- David Wallace, Vice President, Industry Research, Info-Tech Research Group
- Rahul Jaiswal, Principal Research Director, Retail Industry Research, Info-Tech Research Group