Magazine Article | January 22, 2008

Grocery Tech: Not A Commodity

Source: Innovative Retail Technologies

If you think your technology is no better than the next guy’s, you’re probably just not using it right.

Integrated Solutions For Retailers, February 2008

When I was a kid, there was a little convenience store down the road from my house called FreshMart, owned by a regional grocer called Bell's. Bell's and FreshMart sold private-label merchandise that was as generic as one could possibly imagine. Its branding was simply bright yellow packaging with a bold, black, san-serif font that indicated the contents of the package. Frozen corn came in a yellow bag marked corn. Milk came in a yellow carton marked milk. Beer even came in a yellow case full of yellow cans marked, simply, beer. The retailer's private-label products focused on commodities — and perpetuated the further commoditization of them — by their very presentation. What you saw was what you got.

Do You Get More Than You See?
Technology buyers shouldn't purchase retail hardware and software with the same nonchalance with which one buys generic frozen vegetables. But that statement (which admittedly comes off like a gross generalization) is countered by countless conversations with retail tech buyers who think a box is a box, a display is a display, transaction software is transaction software. Increasingly, this is flawed thinking. Here's why: Retail hardware and software vendors are driven by the demands of retailers in the same way retailers are driven by the demands of consumers. You make changes to your merchandise mix and customer-serving technology based on what you know your customers want. Vendors make changes to their offerings based on what they think you want. That's how software evolves, how functionality gets 'built in.'
Take POS software, for example. Five years ago, most POS software resided at the POS with one task at hand — to process transactions all day long. Today, most 'POS' software vendors bundle, at a minimum, inventory management, time and attendance, and CRM (customer relationship  management) functionality into their packages. But not all retailers use these features. Dare I say most don't. This evolution of POS software to retail enterprise software is taking place in response to the demand of retail's noisy minority, those few retailers that leverage their vendor relationships for the greater good. As a result, off-the-shelf retail software is actually moving away from commoditization, because vendors are turning out products with features that enable differentiation. Still, it can be argued that the commoditization of retail technology is true to the extent that retailers ignore features and functions and all use it for nothing more than its base functionality.
The best technology implementations I've written about are those in which the retailer was actively involved in the integration of the vendor's software, or even better, actively involved in its development. At a minimum, retailers can do a better job getting to know the nuances of the tech they're buying. They can also improve the training of their associates on proper use of that tech's features. Exploiting the full functionality of your investments and helping your technology providers set the direction of their releases are guaranteed commoditization-busters.