RSR Research: A Model for Delivering Sophisticated Technology to SMB
By Nikki Baird, Managing Partner, Retail Systems Research
Through a special arrangement, what follows is an excerpt of a current article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
Small and mid-sized businesses (SMBs) – particularly the mid-sized retailers, those between $250 million and $1 billion in revenue – have long recognized the value of sophisticated tools, but the segment continues to be a difficult market to penetrate for technology providers. From our recent pricing survey as one of many examples, SMB is more likely to disdain consultants and turn to custom development to get what they want. Vendors, for all the talk of “quick start” or “hosted” capabilities, are still challenged to create a business model that meets their profitability objectives at a price point where SMB will buy.
That’s why a recent announcement by Willard Bishop Consulting, KSS, and Retalix puts an interesting twist on the business model for serving SMB retail. Typical partnership announcements provide for a “paper” relationship where the consulting company has a few consultants trained on the solutions in question, and the tech vendors have pledged to integrate their solutions. The WBC-KSS-Retalix announcement is different, with a couple of customers already in progress. The announcement focuses on price optimization capabilities: WBC will help retailers define and codify their pricing strategy, taking them through a pricing “health check” that becomes the basis for defining business requirements that will map to KSS’s price optimization capabilities, which in turn are in the process of being integrated into Retalix’s merchandising and store solutions.
I’ve struggled for a long time with the concept that you should re-engineer your processes before you implement the technology to enable the process. I don’t think this is the right approach. If you only optimize along one dimension, you risk sub-optimizing the whole, and the process only makes up one piece of a puzzle that also contains technology and people. If you really want to optimize a process, you should re-engineer the process in the context of the technology that you’re going to use to enable that process (and the skills or roles of people who will use the process). This way, you don’t come up with a super-efficient or productive process and then find that there is no solution out there able to support it.
Retalix, WBC, and KSS are helping retailers optimize their pricing process in the context of solutions that already play well together. It gives an SMB retailer access to world class consulting capabilities and sophisticated price optimization technology, but already tuned and streamlined for the world of SMB. It requires an important tradeoff: to access this kind of solution at a price you can afford, you need to buy in that you’re going to follow a pretty tight methodology, and that the methodology is going to lead you to a semi-preconfigured solution with preconfigured integration points. That means giving up on a lot of customization, and being open to process changes that will enhance the value you can get out of the technology. But I just can’t see that as a bad thing…
Discussion Questions: What do you find are some of the overall challenges of bringing retail technology to the SMB retail space? What do you think of a merged solution such as the one from Willard Bishop Consulting, KSS, and Retalix as a way to reach SMB?