Retailers Seen Suffering 'Promotion Fatigue' and Focusing on Better Customer Insight

Third year of global Retail CIO research reveals customer insight leapfrogs promotion management in key priorities

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Atlanta — March 17, 2011 — Retailers are suffering from "promotion fatigue" and are switching their focus to getting a more comprehensive view of their customers, according to a recent survey from retail solution provider Aldata.

In its "2011 Global Retail CIO Survey," Aldata found that almost half (46 percent) of the 130 retail CIOs surveyed said their companies, after the initial emphasis on promoting products through the current recession, now plan to switch their attention to gaining a "360-degree view" of their customers (in-store, online and via catalog) to better understand buying patterns and improve margins.

Allan Davies, chief marketing officer of Aldata, said that the ongoing economic situation has altered the way the retail industry operates and forced a change in tactics in the fight for customer spend. Promotion management changing from the number one investment priority in 2009, fourth in 2010, to now ninth in 2011.

"Going forward into 2011 and during the coming three years, 'promotion fatigue' will give way to more focus on understanding consumer buying behavior better and getting a full view of what, how and where customers are buying," said Davies.

Forecast for Demand

Other key findings show that as the cost of raw materials and fuel dramatically increases, 39 percent of CIOs will invest in enterprise demand forecasting to reduce overstocking and optimize the frequency and delivery of supplier orders to meet customer demand to further reduce transport and wastage costs.

The retailers are betting that this, together with implementing a more complete view of customers and their buying patterns, will give decision makers improved visibility and improve customer satisfaction across all channels, Aldata said.

"The 2011 survey clearly shows that retailers are reducing the emphasis on promotions and are now prioritizing customer knowledge to support the optimization of demand-driven supply chains," Davis said. "The new retail reality is to gain competitive edge by enabling customers to buy exactly what they want, when and how they want it and, above all, manage goods flows more efficiently."

The Aldata Global Retail CIO Survey was conducted by retail industry research specialists Martec International to assist retailers in benchmarking their IT strategy and use of technology against their peers.

The "2011 Global Retail CIO Survey" incorporates the views of retailers from 26 countries generating from $50 million in annual revenue, whose combined sales represent $555 billion from more than 117,000 stores. This equates to 8 percent of the total retail market in the Americas and Europe by sales.

A total of 136 CIOs and IT directors in category-management-style retailers were interviewed for this report. The survey provides insights into current retail spending plans and priorities.

A summary of the report is available (registration required) here

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