Everyone keeps asking about the year of the store -- when will it get here? 2005 came close -- retailers reached the halfway point in modernizing their POS systems, and bandwidth penetration increased faster than predicted, giving retailers the foundation they need to transform the in-store experience. But the in-store experience is less about the store than it is about the person coming into the store -- the consumer. So here's my theory: Retailers who are thinking about stores in 2006 are going to miss the boat. Retailers who win this year will have spent the year thinking about, and getting closer to, their customers, however they choose to interact with the retailer. What does this mean for the industry?

• Consumers drive how they want to be reached. This implies a high degree of flexibility on the part of the retailer -- consumers may resist cell phone marketing the way that marketers envision it, for example, but then turn around and start adopting price and availability SMS messaging. While a retailer's first instinct may be to resist these consumer-driven innovations, the retailers who embrace them stand to gain the most: consumer intimacy and their hearts as well as minds. It's also clear that consumers want more from the retail experience -- as the products consumers buy get more complex, retailers may find themselves in the business of selling experiences, not products, to remain successful.

• The retail enterprise suite makes a comeback. How can we go from talking about consumer centricity to enterprise suites? Easy -- consumer-centric retailers need to bust down product and organizational silos, and one side effect has been the need for tightly integrated systems to support this reorientation of the business. But another side effect making waves through retail IT is the need to put consumer data -- long held within the store itself -- into the center of the enterprise. This is driving convergence between enterprise and store systems, enabled by retailers' increased ability to put stores on the network.

• Online gains a new context. While eCommerce sales continue to grow, the importance of online is evolving -- becoming less focused on being a sales channel, and more on being a portal for consumers to access the retailer's branded experience. This has big implications for the platform that retailers use to manage their online channel, as well as how leveragable the online experience can be across multiple channels.

We're looking forward to seeing the fruits of retailers' efforts to become more consumer-centric, from a technology point of view -- as technology increasingly plays a role in delivering the consumer experience and in enabling consumer interactivity -- but also as consumers! On one level, it feels strange to talk about retail getting more consumer-centric -- as an industry, shouldn't we doing that anyway? But on another level, consumer centricity is much more sophisticated than it ever was before, significantly altering the way retailers think about their customers -- and the experiences they deliver to those customers.

Kind regards,

Nikki Baird
Senior Analyst

Research Referenced In This Issue 2005 US eCommerce: The Year In Review (38809) Are Cell Phones Ready For Retail? (38126) Choosing The Right Point-Of-Sale Migration Path (36612) Commerce Platforms: Build Or Buy? (38124) Customers Prefer In-Person Experiences (38396) NRF 2006: Boredom Is Exciting (38843) Oracle Acquires 360Commerce: The Platform Wars Come To The Store (38842) Sell Digital Experiences, Not Products (38277) Smarter Stores: Are We There Yet? (37497) Trends 2006: Multichannel Retail (38417) Trends 2006: Online Retail (38380)

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