As Retailers Embrace Wi-Fi, CIOs Must Align With Business

For brick-and-mortar retailers, shoppers with smartphones have until recently been about as welcome as barbarians at the gate.  Specifically, the practice of “showrooming” – checking prices at a store and then going online to find cheaper alternatives – has posed a serious threat to in-store revenue.  Attitudes are changing, however, as retailers increasingly embrace mobility as a potential competitive advantage.

Indeed, over the past two years, retailers around the globe have scrambled to implement Wi-Fi infrastructures to enable free, high-speed internet access within their stores.  This infrastructure is being used to support and manage a wide range of applications. Examples include:

• Discount coupons and advertising promotions sent to smartphones when accessing in-store Wi-Fi
• Mobile check-outs and payments
• Loyalty programs
• Social network campaigns to build communities around a retailer’s stores or products
• Using purchasing preferences to enhance CRM database and, conversely, to target customer preferences

Today, simply giving away free Wi-Fi access in store locations isn’t enough. Rather, retailers seek to identify and deliver the mix of services that aligns with business strategy and customer demographics, optimizes benefits, and addresses major risks.  The challenge lies in finding that sweet spot in a relatively immature market where many players are struggling to find their way.

In this environment, CIOs have an opportunity to step up into the role of a true business partner by facilitating a dialogue with marketing executives around how to develop an effective “click-and-mortar” enterprise – one that leverages online technology to enhance rather than replace the in-store experience.  Marketing teams have to define what customers want and what the business would, ideally, deliver in terms of on-line offers, promotions and targeted campaigns that draw people into stores, keep them there to make purchases and then keep them coming back.

To clarify that business vision, CIOs need to explain what’s feasible from a technology perspective and what’s cost-effective.  Retailers have for years deployed hand-held bar code scanners and wireless-based logistics, supply chain and inventory systems to manage backroom and warehouse operations. The question now is how to apply those capabilities to applications that deliver value-added options to customers.

While the technology involved is relatively straightforward and within the realm of basic blocking and tackling, retailers are developing highly innovative applications. For example, ISG worked with a major retailer on deploying in-store Wi-Fi on a global scale for its bigger stores.  The uses the retailer contemplated for in-store Wi-Fi ranged from in-store 3D “sat-nav” applications to help customers find the right product in the right aisle and shelf, to applications that facilitate in-store shopping, such as a shopping list app, mobile scanning and mobile wallet technology.

In this instance, the CIO challenges include finding the right technology and the delivery model for a worldwide deployment. While the 802.11n standard is today’s preferred choice, providing business-grade SLAs for Wi-Fi – including end-user support for customers – on a worldwide basis requires careful planning.

An effective CIO/CMO dialogue can lead to a better understanding of how retailers can take advantage of in-store Wi-Fi to gain a competitive edge. Such a dialogue is also essential to understanding the market, defining options and building a business case to quantify the benefits of new initiatives and to sell the organizational change needed to implement innovative new programs.

For more information contact John Lytle, Director, ISG, or Julien Escribe, Partner, ISG, who contributed to this report.

About the author

John has more than 30 years of experience providing senior leadership with practical, yet strategic vision to drive meaningful change to complex, multi-national enterprises Programs that will extend business value through the effective and efficient use of today’s exploding digital capabilities. John is a critical leader for a diverse portfolio of ISG clients across diversified manufacturing, banking, insurance and retail industries. John leads the global Network Services and Telecommunications competency center and is regarded as a global thought-leader, regularly consulted regarding emerging technologies, cloud and the Internet of Things, Unified Communications and global partner capabilities.