The 'Store Experience Study 2018' highlights the increasing focus of retailers on technology investments, reflecting a 5.6% growth in IT budgets and significant expansions in store counts and remodels amidst a competitive retail landscape. With expectations of a 6.2% sales increase, the study emphasizes the shift towards unified commerce and the adoption of cloud-based solutions, particularly in store systems and customer experience personalization. Key insights reveal that retailers are embracing technological advancements while adapting to ongoing changes in consumer behavior and market dynamics.

1. RESEARCH PARTNER TITLE SPONSORPRODUCED BY
• Technology
Budgets
• Store Investment
Trends
• Top Technologies
& Strategies
• Unified Commerce
• Digital Transformation
• Emerging Technologies
INSIDE:
YEAR-OVER-YEAR
TECH BUDGETS
UNIFIED
COMMERCE
AI’S IMPACT ON
THE WORKFORCE
TOP IT TRENDS
& STRATEGIES
RETAIL TECHNOLOGY SPEND TRENDS
THAT HAVE AN UP-CLOSE-AND-PERSONAL
IMPACT ON SHOPPERS’ LIVES
STOREEXPERIENCE
STUDY 2018

2. STORE EXPERIENCE
STUDY 2018
The Store Systems Study becomes the Store Experience Study to better reflect the
store’s up-close-and-personal impact on shoppers
In-Your-Face Retailing:
The Store Experience
Joe Skorupa
Editorial Director
RIS News
If you focus on the big three — convenience, great products and competi-
tive prices – you will win shoppers every time. Of course, much more is
required to achieve long-term success, however most of the rest can be
summed up in five words — give customers what they want.
This fundamental truth is especially relevant when talking about stores,
where everything a retailer stands for smacks customers in the face every
time they walk in the door. By everything a retailer stands for, I mean prod-
ucts, prices, associates, marketing, merchandising, design, format, services,
training, culture, logos, graphics, visuals, technology, sensibility, mindset,
the whole shebang.
RIS, with the help of the IHL Consulting Group, has been covering stores and the technology
used in them for the last 15 years, which is a long time in dog years and even longer in
technology years.
This year we have decided it is time for a change. Starting with this report we are changing the
name to the Store Experience Study, which better reflects the essential importance of walking a
mile in a shopper’s shoes and looking at everything in the store through a shopper’s eyes.
The study will continue to cover the topics you expect – IT budgets, store investments, tech
investments, strategic priorities, major challenges, Unified Commerce, mobile capabilities,
omnichannel capabilities and employee engagement — plus it will add new elements covering
customer engagement, digital transformation, emerging technologies and disruption.
Unlike digital retailing, everything about a successful store is transparent, immediate and per-
sonal. It engages all five senses with a high-energy, full-contact, in-your-face experience where
the customer is king.
These are truths we have always known and have always applied to this report’s coverage, but
it was time for a name change. Nothing remains the same in retail for long. Survival, according
to a finding discovered long ago by Charles Darwin, is not guaranteed for the strongest or for the
most brilliant. Survival is guaranteed for those who are most responsive to change.
Our plan is to embrace change and look ahead to opportunities that await in 2018.
3 JANUARY 2018 I RISNEWS.COM
E D I T O R ’ S N O T E
STORE EXPERIENCE
STUDY 2018

3. STORE EXPERIENCE
STUDY 2018E X E C U T I V E S U M M A R Y
Newtechnologies and trends emerge in an era ofhealthy revenue increases and rising ITbudgets
BY LEE HOLMAN AND GREG BUZEK
Rapid Change Is the Only Constant
Fifteen years ago, RIS News and IHL Group
began a collaboration to bring the retail
industry the definitive study that exam-
ines coming trends for the year in the area
of technological advances. At that time,
Windows XP had just been released, the
iPhone was still a pipedream, and the first
cat video had yet to be seen on YouTube.
Since then, we have witnessed some
interesting events and significant changes
in the industry. In terms of economics, the
retail industry has experienced recession,
stagnation, and growth.
From a rules and standards perspective,
the industry has responded to Sarbanes-
Oxley, minimum wage increases, health-
care legislation, PCI standards for security,
and the EMV mandate.
In technology, we have seen the Win-
dows-Linux war, the rise-fall-rise of RFID,
and the overall transition from single-
channel to multi-channel to cross-channel
to omnichannel and, finally, to unified
commerce.
We have witnessed the rise of dollar
stores, fast fashion and independent health
and beauty retailers, and the fall of some
well-known brands. We have said hello to
some newcomers like Amazon (as a retailer
and as a technology partner), and we have
said goodbye to some industry friends like
Barry Wise, who many in retail knew.
Last year, we saw that retailers were
displaying a willingness to finally transition
out of the historical channel focus. Indeed,
retailers were embracing transformative
technologies that ultimately will enable
them to streamline offerings and services
to their customers regardless of channel.
We called this unified commerce, and it has
become a major component of this study.
Major Trends for 2018
Retailers plan to increase their overall IT
spending (called Enterprise IT Spending in
this study) for the coming year by 5.6%,
which is up from last year’s 4.5%. They ex-
pect to increase their Store IT spending by
5.8%, which is up from last year’s 4.7%.
These figures represent the largest
increase for both Enterprise and Store IT
spending since 2008. The year-to-year
comparison shows the increase is 14.3% for
Enterprise and 13.7% for Store IT spending.
The following are some key takeaways
from the study:
• Retailers are expecting an average
sales increase of 6.2% in 2018. This is a 19%
jump from last year.
• Retailers expect to continue to expand
their store counts by 5.6% overall and ex-
pect to conduct 5.5% more store remodels
than in 2017.
• IT has to support the increase in store
count and remodels and this is a major
factor in the 5.8% increase already noted
in the Store IT budget over 2017 levels. The
main technology investment areas will be
mobile for managers, mobile for associ-
ates, and mobile POS.
• In last year’s study we found that 2017
was going to be a big year for POS sys-
tems implementations and evidence of this
work shows up in 2018 data, where we see
that up-to-date POS systems increased
by 62% for POS hardware and 135% for
POS software. After such a busy 2017, this
means that 2018 will not be quite as active
with just 6% of retailers reporting they plan
to make a decision for POS hardware this
year and just 9% for POS software.
• For POS plans, the data shows that
Tier 1 retailers are the most likely group to
make a POS software decision in 2018 —
11% plan to do so. For POS hardware, Tier 3
4 JANUARY 2018 I RISNEWS.COM
6.2%
Overall estimated
growth in sales
in 2018
5.6%Estimated
new store
count growth
in 2018
STORE EXPERIENCE
STUDY 2018

4. STORE EXPERIENCE
STUDY 2018
IHL Group is an independent business-consulting
organization headquartered in Franklin, TN. It
specializes in business consulting, professional and
technology referral, market analysis and business
planning for retailers and technology companies that
focus on the retail industry.Anyone who wants more
detailed data and analysis about this study
can contact IHL Group at www.ihlservices.com.
LEE HOLMAN
Lead Retail Analyst
IHL Group
GREG BUZEK
President
IHL Group
retailers are the most likely group to pursue
implementations at 9%.
• Overall, retailers say 30% of their
software spending in 2018 will be on cloud-
based solutions, which is up from 26% in
2016. Leading the way in this category is e-
commerce software, where 43% of budget
dollars will be for cloud solutions. The next
heaviest cloud-solution investment areas
are store systems (31% of software spend-
ing), and sales/marketing and BI/analytics
(both at 29%).
• As we discovered last year, there con-
tinues to be a growing amount of software
that is internally developed. Many top
retailers are shifting back to writing their
own code for applications as mergers/
acquisitions and cloud platforms create a
need and opportunity for standardization.
Possessing custom-built applications is a
way for acquiring and maintaining com-
petitive advantage.
• Nearly 28% of retailers currently use
four or more of the Unified Commerce ca-
pabilities presented in this study.
• Checking inventory at other stores
and shipping products from stores were
selected by 43% of retailers as the top
functions they are investing in this year to
expand their Unified Commerce capabili-
ties. Next on the investment list is Order
Management at 35%.
• Click & Collect (also known as Buy On-
line Pickup in Store or BOPIS) shows a huge
67% jump in investment from 2016. The
next-fastest growing capability is Shipping
from Stores, which has a 30% increase.
• Only 21% of retailers claim they have
true holistic merchandise management
and/or assortment planning across all
channels. Although still a minority of
retailers, it represents an increase of 17%
from last year.
• 20% say they currently outsource e-
commerce fulfillment, which is essentially
flat from last year.
IHL works closely with RIS to create this
report, but note that more data was col-
lected than could fit in these pages. A com-
prehensive version of this data is available
from IHL in a report titled “Transformation
of the Retail Enterprise 2018.”
For those interested in the longer,
more in-depth report please visit
www.ihlservices.com.
Methodology
In this year’s study 42% of the responses came from retailers with more than $1 billion in annual revenue. Of those, 12% had revenue
in excess of $10 billion. We define these respondents as Tier 1 retailers. Tier 2 retailers are defined as having annual revenue rang-
ing from $500 million to $1 billion and they were well represented with 18% of responses. Another 40% consisted of retailers with less
than $500 million in revenue, which we call Tier 3. Data was collected in October 2017 and only senior-level executives from head-
quarters are invited to participate in the study. No field-level or store-level personnel are included in the survey.
Job TitleRetail Segments Retail Revenue Tier
57%
CIO/CTO/
VP of IT
General
merchandise
32%
Food/Drug/
Convenience
11%
Hospitality
55%
VP non-IT
4%
Other
12%
IT Director/
Manager
27%
C-Level non-IT
2%
>$10 billion
12%
$1 to
$10 billion
30%
$500 million
to $1 billion
18%
<$500
million
40%
6 JANUARY 2018 I RISNEWS.COM
E X E C U T I V E S U M M A R Y
STORE EXPERIENCE
STUDY 2018

5. STORE EXPERIENCE
STUDY 2018
Debunking the ‘retail apocalypse’, uncovering the hottest retail tech investment trends, and examining the future impact of artificial intelligence
Store Experience Tech Trends
During the first few months of 2017,
there was no shortage of media stories
containing such catch phrases as ‘Retail
Apocalypse’ and ‘Amazon Is Taking over the
World.’ Digging into the articles, one would
find some variation on the theme that the
imminent demise of retail as we know it is
at hand and thousands of stores are closing
due to consumers flocking to online
retailers instead.
It all made for great headlines and
plenty of clickbait, but the problem was
it didn’t represent what was really tak-
ing place in retail. IHL published a widely
disseminated study titled “Debunking the
Retail Apocalypse,” which shed light on the
truth about what was happening. Instead
of an apocalypse, 2017 retail revenue has
grown at a rate faster than it has in the
previous five years.
However, it is true that not all segments
recorded growth. Segments recording
declines include department stores, auto
parts, electronics, women’s clothing, sport-
ing goods and office supplies. Still, despite
the fact that thousands of stores closed
their doors in 2017, thousands more opened.
Sticking to data from our study, we find
that respondents predicted a 5.4% increase
in revenue in 2017 and expect an increase of
6.2% in 2018. (See Figure 1.)
Taking a more granular look at the data,
we find the general merchandise segment
(GMS) has the lowest in-store sales growth
projected, which reflects the difficulties
encountered by department stores and
soft goods retailers in 2017. This is one area
where the “retail apocalypse” media reports
proved somewhat accurate. However, both
e-commerce and mobile sales are projected
to grow faster than the industry average
for GMS retailers, which should make up for
slower in-store sales growth. (See Figure 2.)
The growth in store counts for the food/
drug/convenience (FDC) segment is heav-
ily driven by convenience stores, which are
anticipating a 9.7% increase in the coming
year. The growth in store remodels, on the
other hand, is driven by drug stores, which
expect to see an 11.3% increase. Much of
this growth is attributable to merger-and-
acquisition activity, where large retailers
are getting bigger while smaller retailers are
being gobbled up. (See Figure 3.)
The effect on IT spending is obvious —
remodels and new stores require new tech-
nology and retailers planning an increase
in store counts for 2018 (and the increase
for the FDC segment is 59% higher than
the average) are expecting its Enterprise
and Store IT spending to be 36.4% and
88.6% higher than those who do not plan
an increase in store counts. Likewise, this
segment’s expectations for annual sales
growth in 2018 is also higher by 68.3%.
Enterprise IT spending is expected to
rise 5.6% in 2018, after a bump last year of
4.5%. Department store retailers expect a
jump of 7.2%, and mass merchants/ware-
house clubs plan an increase of 6.4% over
2017. With Store IT spending for this group
also increasing (up 5.8%), this represents
the largest increase for both Enterprise
and Store IT spending (14.3% and 13.7%,
respectively) since we began tracking this
data in 2008. Clearly, retailers have been
busy preparing their enterprise systems for
Unified Commerce.
8 JANUARY 2018 I RISNEWS.COM
S TAT E O F T H E S T O R E
FIGURE 1: Estimated Sales Growth for 2018
RETAIL SEGMENT
Overall
FDC
GMS
Hospitality
2018 REVENUE GROWTH FORECAST
6.2%
7.2%
5.3%
7.2%
Enterprise IT spending,
which refers to the overall
tech budget, will rise by an
an average of 5.6% in 2018
as retailers continue their
digital transformation.
STORE EXPERIENCE
STUDY 2018
5.6%

6. STORE EXPERIENCE
STUDY 2018
Cloud-Filled Forecast
For the past two years, study data shows
retailers have been paying attention to the
positive benefits of using cloud-based solu-
tions. It is clear that cloud-based technol-
ogy is having a significant effect on retailer
budgets and digital transformation.
The biggest gainer in the cloud this year
occurs in the area of store systems, which
grew 14.8% from last year. This runs parallel
to data that shows retailers are busy get-
ting their POS systems up-to-date to take
advantage of the benefits of Unified Com-
merce. (See Figure 5.)
GMS retailers advanced 6.1% from last
year with the biggest gainers occurring in
merchandising functions (up 53%) and sup-
ply chain (up 28%). For FDC retailers, store
systems was the big gainer, increasing 25%.
When it comes to how to pay for cloud
solutions, retailers are more than twice as
likely to use operating expense (OPEX) bud-
gets rather than capital expense (CAPEX)
budgets to pay for cloud solutions.
(See Figure 6.)
Priorities and Timeframes
Asking retailers to name their top priori-
ties is a longstanding part of this study
and upgrading CRM/loyalty programs has
been among the top five (if not the outright
leader) for most of the years we have done
this study. Recently, however, retailers have
begun to realize that traditional approaches
to customer management is not enough.
As a result, the top priority this year is
personalizing the customer experience. This
is a smart priority for retailers to adopt,
but the question is how will they do it? (See
Figure 7.)
Complicating the situation is the fact
that in previous years we found 50% of re-
tailers couldn’t effectively use their existing
shopper loyalty profiles in the store. Retail-
ers can take heart, however, since in this
year’s study empowering store associates
(59%) and a single version of customer data
across all channels (54%) are among the
top five priorities. Both can be used to help
personalize the customer experience.
Adopting a single transaction engine
(46% of retailers see it as a priority) is a
technology that works in conjunction with
an enterprise order management system
and together they serve as a foundational
element for Unified Commerce. A single
transaction engine will also help with inven-
tory visibility, which saw a huge jump from
being selected by 48% of respondents last
year to 78% this year.
Fully 60% of retailers say they have
recently made a POS software purchase
decision. Note that for this study we use the
term “decision” to refer to retailers who cur-
rently have an up-to-date solution in place
and those who are currently implementing
a solution within the next 12 months. The
number for POS hardware shows that an
impressive 55% have recently made
a decision.
The numbers for mobile decisions made
are also impressive — mobile for managers
is up 84% from last year, mobile for associ-
ates up 75%, and mobile POS up 55%.
The key takeaway underlying this data
is that those retailers who said they were
planning to invest in POS hardware, POS
software and mobile actually did so and
the overall need to invest in these technolo-
gies in 2018 is less robust.
FDC retailers will spend heavily on mo-
bile technologies in 2018 with 35% looking
to make a purchase decision for mobile
POS, 31% for mobile for associates, and 29%
for mobile for managers. Within this group,
the biggest interest level is coming from
food/grocery retailers (45% plan a decision
for mobile POS, 45% for mobile for store
associates, and 33% for mobile devices for
managers) and from convenience stores
(50% for mobile devices for managers).
GMS retailers will also spend heavily
on mobile POS in 2018 with 31% making a
purchase decision in 2018. Within this group,
mobile POS will be big for department
stores (50% plan a decision), specialty soft
goods (31%) and specialty hard goods (23%).
For the hospitality segment, mobile de-
10 JANUARY 2018 I RISNEWS.COM
FIGURE 2: Estimated Sales Growth by Sales Channel
Overall
FDC
GMS
Hospitality
In-Store Desktop E-commerce Mobile Commerce Cross-Border
FIGURE 3: Store Investment Plans
Food/Drug/Convenience
General Merchandise
Hospitality
New Stores Remodels
S TAT E O F T H E S T O R E
4.8%
10.2%
13.1%
3.3%
6.1%
8.7%
12.8%
1.9%
3.8%
10.8%
13.5%
3.6%
6.2%
12.3%
9.5 4.7%
8%
7.7%
4.1%
3.9%
7.3%
6.3%

7. STORE EXPERIENCE
STUDY 2018
transform their stores into fulfillment hubs
include:
• Click & Collect — Also known as Buy
Online Pickup in Store (BOPIS). This ca-
pability has emerged as an up-to-date
technology for nearly half of retailers (48%)
and 24% say they plan on implementing it
within the next two years.
• Order online from POS — Last year we
vices for managers are a big decision (40%)
in 2018. The data shows that 60% of all
purchase decisions made for mobile devices
for managers will happen in 2018.
Unified Commerce Makes Headway
The survey results for the various Uni-
fied Commerce capabilities demonstrate
retailers are serious about this vision of the
future. Order management systems (OMS)
data shows half of respondents have made
a recent purchase decision and 52% of these
are Tier 1 retailers (annual sales of more
than $1 billion).
Ship from store is another important
capability for retailers and their customers.
Just over half (51%) of retailers have made a
recent purchase decision to implement ship
from store, which breaks out as 30% who
currently have it in place and are satisfied,
13% currently have it in place and are not
satisfied, and 8% are currently implement-
ing it. (See Figure 9.)
Checking Inventory at other stores
(where 52% have recently made a purchase
decision) has similar numbers at 29% for
implemented and satisfied, 14% for imple-
mented and not satisfied, and 9% currently
implementing.
Nearly half (48%) of the respondents
indicate they currently have the capability
to return purchases to the store regardless
of which channel they were purchased or
fulfilled. Another 10% plan to deploy
it in 2018.
Other capabilities that help retailers
FIGURE 5: Cloud Portion of IT Budget
43%
E-Commerce
31%
Stores systems
23%
Supply chain
25%
Core ERP
29%
Sales/
Marketing 26%
Merchandising
29%
BI Analytics
JANUARY 2018 I RISNEWS.COM 11
FIGURE 4: Tech Budget Increase by Retail Tier
Tier 1
5.3%
Tier 2 Tier 3
Store IT Budget Enterprise IT Budget
5%
6.4%
7.1%
5.9%
5.5%
STORE EXPERIENCE
STUDY 2018

8. STORE EXPERIENCE
STUDY 2018
found that 32% of respondents had this
capability, and another 30% expected to
make a purchase decision in 2017. As with
any plan, sometimes decisions get pushed
off to a later date. The way things currently
stand is that 47% of retailers have actu-
ally made this purchase instead of the 62%
projection from last year. However, 23% say
they will make a purchase decision for this
technology within two years.
• Order inventory from other stores cur-
rently stands at 41% and holistic merchan-
dising at 33%. Of the two, holistic mer-
chandising has the most projected future
investment growth at 40% within two years.
Let’s take a quick look at how retail-
ers who already have these capabilities
are performing relative to those who don’t
have them. Four of the above capabili-
ties correlate to increases in sales growth
greater than 5.5%. These four are: Ordering
online from POS (14.1% is the expected sales
growth in 2018 for those with this technol-
ogy up-to-date), order from other stores
(10.3% is the predicted growth in sales), ho-
listic merchandising across channels (6.3%
sales growth) and outsourced e-commerce
fulfillment (5.6%).
12 JANUARY 2018 I RISNEWS.COM
FIGURE 6: Funding for Cloud Solutions
Operating expense
Capital expense
Both/Depends
18%
47%
35%
As with returns, e-commerce fulfillment
is a complicated function that is sometimes
beyond the capability of retailers to do in-
house, particularly if it involves international
fulfillment. For this reason, third-party provid-
ers offer these services in a way that it is invis-
ible to the customer. Currently, 34% of retailers
say they use such services for e-commerce
fulfillment (rising to 44% next year).
Mobile Still Has Challenges
Along with interest in knowing when retail-
ers are planning to adopt mobile technolo-
gies, we also want to find out what kinds of
mobile tasks they are intent on performing.
Naturally, some (if not all) of these tasks
may be performed on the same device.
Order delivery is currently the most-
deployed mobile task and it may take the
FIGURE 7: Top 10 Strategic Priorities for 2018
Personalizing customer experience
Inventory visibility
Upgrading CRM/Loyalty programs
Empowering store associates
Single customer database across all channels
Single transaction engine
Digital transformation
Reducing supply chain costs
Workforce management
Store network upgrades
89%
78%
72%
59%
54%
46%
33%
16%
15%
12%
S TAT E O F T H E S T O R E

9. STORE EXPERIENCE
STUDY 2018
form of confirmation of a delivery in-store
or externally. The most-recognized form of
order taking in-store would be a waitress
taking a food order in a restaurant or at
a deli counter in a grocery or convenience
store. (See Figure 10.)
Returns and receiving/store inventory
are complimentary tasks that could easily
be incorporated into a single app. Ship from
JANUARY 2018 I RISNEWS.COM 13
FIGURE 8: Status of Store Technologies
POS software
POS client
Mobile devices for managers
Mobile devices for associates
Digital signage
Mobile POS
Consumer device checkout
Up to Date Within 12 Months 12-24 Months 24-36 Months
FIGURE 9: Status of Unified Commerce Capabilities
Check inventory at other stores
Ship from store
Centralized order management
Return online purchases
Click & collect
Order online from POS
Order from other stores
Omnichannel merchandising
Outsourced e-commerce fulfillment
store and click & collect have heavy buzz
associated with them today by retailers, yet
their adoption rates through 2018 trail most
of the other listed tasks.
Obviously, deploying mobile technolo-
gies requires much more than just hand-
ing a mobile device to an employee and
telling them to get out there and use it. As
complicated as a retailer’s original decision
to deploy POS, mobile implementations are
even more difficult due to the possibility that
devices could drop and break or walk off with
an employee or customer undetected.
Many other challenges abound and
retailers cite the following as their big-
gest concerns. Leading the pack by a wide
margin is the lack of high-value apps at
75%. In a previous study, we asked retailers
Up to Date Within 12 Months 12-24 Months 24-36 Months
52%
15%
8%
51%
5%
14%
5%
50%
8%
16%
10%
48%
10%
10%
3%
48%
7% 17%
5%
47%
2%
21%
5%
41%
10%
13%
3%
33%
12%
18%
8%
34%
10%
8%
3%
3%
STORE EXPERIENCE
STUDY 2018
9%
60%
10%
4%
6%
55%
12%
6%
23%
46%
11%
3%
19%
42%
8%
11%
40%
15%
17%
34%
31%
8%
27%
12%
20%
17%
8%

10. E X E C U T I V E S U M M A R Y
STORE EXPERIENCE
STUDY 2018
14 JANUARY 2018 I RISNEWS.COM
FIGURE 10: Status of Mobile Capabilities
Order delivery
Order taking in store
Returns
Receiving store inventory
Ship from store
Click & collect
Loyalty/CRM sign up
Clienteling
FIGURE 11: Top 5 Mobile Challenges
Lack of
high-value
apps
75%
Lack of
staff
Support
for mobile
devices
EMV/
Payment
options
Mobile
security
60%
60%
47%
45%
who they wanted to get their mobile POS
software from and they responded re-
soundingly by saying they wanted the app
to come from their existing POS software
vendor. The reasoning behind this desire is
more complex than just having one throat
to choke. It has to do with working with a
vendor that has a deep knowledge of how
a given retailer operates and interacts with
its customers. Clearly, retailers believe there
is some work still to be done in the mobile
app area.
Lack of staff (60% say it is a challenge)
pertains to being able to manage mobile
devices and users with an in-house staff.
Support for mobile devices (also at 60% on
the mobile challenges list) pertains to hav-
ing a support/help desk for devices, apps
and users, which can be managed in-house
or by a third-party provider. (See Figure 11.)
The relatively short lifecycle of typi-
cal mobile devices, coupled with heavy
store employee turnover serve to ensure
that both challenges continue to make an
appearance on the mobile challenges list.
Rounding out the top five mobile chal-
lenges are EMV/payment options (47%)
and mobile security (45%) and, frankly, it is
surprising that both weren’t ranked higher.
Emerging Tech
Last year we looked at some of the emerg-
ing technologies that retailers have shown
an interest in deploying and our list includ-
ed predictive analytics, Internet of Things
(IoT), proximity/location-based marketing
and RFID. This year, we expanded the list to
include artificial intelligence (AI)/machine
learning and conversational commerce
(“Alexa, buy Whole Foods”), among others.
The ability to deploy emerging technologies
is directly dependent upon the willingness
of a retailer to innovate, which in turn re-
quires a deliberate process of setting aside
budget resources to devote to experimental
S TAT E O F T H E S T O R E
Up to Date Within 12 Months 12-24 Months 24-36 Months
45%
16%
8%
5%
44%
16%
8%
5%
42%
12%
5%
41%
11%
8%
10%
38%
7%
16%
3%
38%
13%
15%
5%
32%
23%
8%
6%
31%
5%
13%
8%

11. STORE EXPERIENCE
STUDY 2018
JANUARY 2018 I RISNEWS.COM 15
FIGURE 12: Growth in Spending for Emerging Technologies
Proximity/location-based marketing
AI/Machine learning
Predictive/Prescriptive analytics
Conversational commerce
Big data
Internet of Things
SD-WAN
Augmented/Virtual reality
RFID
7.3%
7.0%
6.7%
5.5%
5.3%
3.5%
2.8%
1.4%
1.3%
FIGURE 13: Estimated Staff Reduction by 2021 Due to AI/Machine Learning
Pricing
5.9%
Merchandising/
Purchasing
Warehouse/
Fulfillment
IT
Department
5.5%
4.5%
4.0%
initiatives that may or may not result in a
long-term program.
“AI and Robots Could Threaten Your Ca-
reer in 5 Years” was a recent story on CNBC.
“Is Your Job about to Disappear?” is a story
from Bloomberg. “You Will Lose Your Job to
a Robot — and Sooner Than You Think” is
one from Mother Jones. These are some of
the headlines in the past few months that
raise the issue of potential job losses due to
AI-related technologies. It is worth noting
that at the same time there were headlines
warning about “Retail Apocalypse,” which
was debunked by revenue figures that show
the retail industry is actually experiencing
healthy growth.
However, there is no doubt that retail
(along with every other industry) is under-
going a dramatic transformation and every
part of the retail enterprise will be touched
in some way by the big changes that are
occurring. As with all emerging technolo-
gies, and AI in particular, its adoption is
dependent on making the enterprise as
efficient as possible. In some cases, a
potential new-found efficiency may come
at the expense of the current structure of
the workforce. When this happens, a retailer
will have to assess its path going forward.
Whether affected staff will be retrained,
redeployed or let go is a decision that every
retailer will have to address. And retailers
are not alone. Every company will have to
address the workforce implications of AI.
We chose to step into the debate by ask-
ing retailers what they foresaw as potential
staff reductions due to AI moving into such
areas as pricing, merchandising/buying,
warehousing/fulfillment and the IT depart-
ment. Why these areas of inquiry? Obvi-
ously, they aren’t as sexy a deployment of
AI as self-driving cars, trucks or space craft,
but they are areas of keen interest to retail-
ers and core capabilities. (See Figure 13)
The fact that retailers are increasing
their AI-dedicated budgets for the next year
means retailers are already deeply involved
with the technology, although most deploy-
ments are likely in back-end enterprise ap-
plications. This study didn’t dive into which
specific applications are being impacted
by AI, but we know that deep learning is
involved in several key areas of merchandise
management and the supply chain, espe-
cially in warehousing and fulfillment.
We found an overall average of a 4.98%
reduction in staff due to increasing use of
AI/machine learning, but this is not a given.
It is a first estimate for what will prove to
be an evolving process. Also, the reduction
estimates here are forecast to occur over
the next four years — by the year 2021. If
memory serves correctly, that kind of reduc-
tion roughly corresponds to what retailers
experienced between December 2007 and
January 2009.
Increased productivity through emerging
technologies or through a Unified Com-
merce architecture in the cloud or just plain
upgrading of legacy technology as part of a
digital transformation is a healthy situation
for retailers to pursue. In fact, the pursuit of
productivity through emerging technolo-
gies has long been an engine of growth for
retail and the economy as a whole. Both
will adapt to the power and promise of AI in
coming years.
STORE EXPERIENCE
STUDY 2018

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