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The Way Business Is Moving

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Issue Date: May 2008

Using technology for competitive advantage

22 May 2008

Most of today's market pressures such as consumer fragmentation, declining media effectiveness and new sales channels have presented retailers with a major challenge.
It is becoming increasingly difficult for retailers to stand out from their competition as consumers are increasingly inundated with numerous products and services which are often similar.
This is according to Derek Engelbrecht, Retail and Consumer Products director at Ernst & Young, who believes that the strategic use of information technology (IT) can contribute to leading companies maintaining their edge, allowing them to respond quickly to shifts in demand and streamline their supply chain.
"Cutting-edge IT can be used to understand and influence customer behaviour through affinity groups, loyalty programmes and virtual simulations. Enhancements to the product design or service offering may generate substantial savings and also result in better and more relevant products that create a compelling value proposition in order to stay ahead of the competition. Failure to implement various types of new technologies may put companies at a major competitive disadvantage in relation to their peers," he says.
A pool of analysts was asked to list and to rate (on a scale of one to 10, with one having the least impact) the 10 most significant trends or uncertainties that may impact retail and consumer companies. Industry panellists who were surveyed rated cutting edge technology as one of the top 10 challenges for 2008.
Engelbrecht says that technology facilitates both efficiency and growth, and that the majority of analysts cited strategic use of advanced IT as a tool that helps companies stay ahead of competition.
"One panellist noted that SAP had provided a leading consumer products company with data studies that show what is selling and what is not, allowing these companies to adapt rapidly. Another predicted that the need for customer service contacts would more than double by 2010 and therefore the industry would need to venture into self service and automated systems," says Engelbrecht.
Retail and consumer products companies are implementing enterprise resource planning systems (ERP) to standardise and improve processes (driving down cost) and to give management better access to data, which will allow them to use the information to make better decisions.
"As these companies seek to implement ERP platforms, they are looking to improve processes within the finance organisation to decrease costs and improve overall performance. For many companies, the move to an ERP platform can be painful and lengthy, and benefits can be obscured by exposure to new risks. Once up and running, the shutdown of an ERP system can be highly disruptive," he says.
Engelbrecht concurs that at the end of the day, a return on investment is critical and retailers must be willing to face the risks involved as buying too soon into a new technology cycle can be just as risky as waiting too long.
He concludes: "The market has become saturated with similar products thereby increasing consumer choice but also decreasing the market share for the retailer who is not innovative. Inevitably markets erode so therefore it is imperative that companies adopt more innovative approaches when they develop their go-to-market strategies."


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