Retail Innovation Starts At Store

By year's end, RadioShack Corp. will have upgraded all its point-of-sale systems in more than 5,200 stores to Microsoft Windows XP Embedded, a retail-hardened operating system for building customized, task-centric devices such as point-of-sale terminals. The electronics retailer has already rolled out 8,000 systems running XP Embedded as part of an effort to get its operations onto a common platform.

That will be critical as RadioShack prepares for adoption of technologies such as radio-frequency identification, says Ron Cook, VP of strategy and technical operations. "The issue we've always faced with adopting new technologies is a common platform."

Microsoft is looking for more customers like RadioShack to fuel its growing retail business. Its retail and hospitality business has grown an average of 26% a year over three years, Microsoft says. There's good reason for the growth, says Janet Kennedy, managing director of Microsoft's retail and hospitality organization: Retailers of all sizes need to get their infrastructure in order to deal with new technologies and applications that will help them compete against fierce discount competitors such as Wal-Mart Stores Inc. and satisfy more savvy consumers with access to a wealth of product-pricing information.

Microsoft last week unveiled its Smarter Retailing Initiative, a program designed to help retailers build a cohesive infrastructure that includes Windows XP Embedded, Microsoft SQL Server for native retail analytics and reports, and BizTalk Server. More than 20 companies are committed to delivering applications and services for the initiative using Microsoft's .Net Framework, including Accenture, Cap Gemini Ernst & Young, CRS Retail Systems, Dell, Hewlett-Packard, Intel, JDA Software Group, Manhattan Associates, and Wipro.

"Innovation is going to be at the edge" of the enterprise--at the store--where retailers interact with customers and can use new technologies such as smart phones, digital assistants, and self-checkout terminals, Kennedy says.

For example, most managers don't have real-time access to information to make decisions that can impact store performance, Microsoft says, and often the most loyal customers wind up in long lines and don't perceive themselves as getting any more special service or discounts than others. To help counter this situation, Indian IT-services provider Wipro is using Microsoft's BizTalk Server and Sharepoint portal to provide predictive data analysis to store managers. Accenture's Shopping Cart Assistant tool lets shoppers scan and pay for items as they're selected and provides discounts tailored to individual shoppers.

Others agree that big changes are afoot for the retail industry. "One of the first steps a retailer needs to take is to go through some sort of consolidation, get to a single instance of information," such as using an Oracle database running on Linux on Intel servers, says Tom Madigan, VP of retail at Oracle. Many retailers spend more than 70% of IT resources on maintaining legacy systems and custom applications, and they wind up with fragmented data, Madigan says. They "can't manage by fact," he says.

Oracle has identified retail as a growth area, and it offers workflows to its E-business apps to help retailers manage real estate, as well as optimize sales associates' performance. And with Oracle's 10G database and application server, companies can do online transaction processing and analytics in the same environment, Madigan says. So instead of waiting for Monday morning reports, managers can instantaneously kick off new transactions.