Magazine Article | August 1, 2003

Point-Specific Product Proliferation

Source: Innovative Retail Technologies

Retail is ripe with niche and point solution providers. Is it safe to buy their products?

Integrated Solutions For Retailers, August 2003
Matt Pillar

Think back to the trade shows you've recently attended, and consider the retail technology vendors who pound you with sales calls each day. Have you realized how many of those vendors are small, point-specific hardware and software solution providers?

With open systems architecture acting as the great enabler, retail point solution providers have come out of the woodwork. At trade shows of late, a few giants like retail enterprise software providers JDA, Retek, and SAP are surrounded by hundreds of small booths touting niche and peripheral solutions. Flanking the anchor booths (and even popping up inside of them) are vendors peddling Internet mapping software, biometric payment devices, event management solutions, store traffic analyzing tools, labor scheduling applications, many forms of loss prevention applications, and a whole host of loyalty and CRM (customer relationship management) programs, to name only a few.

One gets the sense that many of these point-specific solution providers are marketing their wares in earnest to the 360Commerces and Datavantages of the world (perhaps even more earnestly than they're marketed to you, the retailer), in hopes of getting bought out or somehow "picked up" by a big software company. It's interesting to watch as many of them do get picked up and bought out by the big players, as the value of point-specific solutions becomes evident by their popularity with retailers.

Will Vendor Consolidation Mimic Other Industries?
Other industries are further along the application provider mergers and acquisitions continuum, to the point that the major players are buying each other, rather than point-specific solution providers. This is evidenced by PeopleSoft's current bid for J.D. Edwards and Oracle's subsequent attempt at PeopleSoft. Will this be the case in retail? I won't venture a guess at which retail software giants might be working under the same roof in five years, but I do foresee change as the evolution continues. At Retail Systems and NRF (National Retail Federation) shows over the next couple of years, expect to see fewer point-specific vendor booth "villages." You'll see a bigger presence of enterprise software companies, who will be offering more feature-rich software suites - thanks to the innovative companies they either gobble up or enter into exclusive partnership with.

What does this mean to you, the technology buyer? It certainly does mean you should keep an eye on the mergers and acquisitions scene, but it certainly does not mean you should put purchasing decisions off indefinitely. If you see a good product on the market that solves a business problem for you, buy it with confidence. The same open systems revolution that brought with it the onslaught of niche and point-specific solution providers will ensure your applications will continue to work for you - whether they plug and play with your enterprise systems today, or they're part and parcel of them tomorrow.