Retail Market Remains Sluggish, Elusive - Commercial Integrator

February 08, 2013 | by Tom LeBlanc

It?s no surprise that the retail vertical market is growing more slowly than the rest of the commercial integration market. Retailers have been and continue to be hit hard by five years of recession and slow economic recovery.

Since retail integration clients don?t necessarily have swelling budgets, it?s necessary for integrators to provide them with real, quantifiable return on investment (ROI).? The need not only to understand the clients? organizations, but to understand their customers? experience is essential. The goal of providing meaningful technology solutions that spur sales is lofty. The consultation process and lead times for retail projects are exceedingly long.

In short, retail integration isn?t for every integrator. Within the challenges, however, are opportunities for those integrators that can effectively serve retail clients.

Crunching the Numbers

Only 35 percent of retail market integrators surveyed by CI Research say their revenue from that vertical was up in 2012 versus that of 2011. Meanwhile, only 47 percent expect their retail market integration revenue to climb higher in 2013.

Those are modest expectations compared to how integrators overall feel that their businesses will grow in 2013. Taking all commercial vertical markets into consideration, 62 percent of integrators expect their companies? revenue to increase in 2012, according to a separate CI Research survey.

Surveyed integrators might be overly pessimistic about the retail market. There are clear indicators that retail clients are back to spending money after several recession years in which they generally did not. One reason for optimism is that construction spending in the retail market was up 6.2 percent in 2012 and is projected to be up another 9 percent in 2013, according to the American Institute of Architects.

Construction spending trends don?t necessarily reflect technology purchases, but they do reflect clients that have money to spend. Consider that General Growth Properties, the second largest mall owner, was on pace to spend $1.5 billion on redevelopment projects between 2012 and 2013, according to a Wall Street Journal report. CBL & Associates Properties, which owns 93 U.S. malls, was involved in redevelopment projects at 20 of its properties during 2012; and Westfield Group, owner of 47 U.S. malls, plans to spend $3 billion on redevelopment over the next three years compared to the $800 million it spent over the previous three years, according to WSJ. Not all, but some, of that enormous chunk of capital will be spent on technology solutions.

Need for Reinvention, ROI

The state of the retail market depends in some ways it depends on who you ask about it. For integrators that excel at providing and articulating ROI to retail clients, the market isn?t bad at all.

Selling integrated technology solutions to retailers can be ?a constant battle to show ROI,? says Edwards Technologies? Roberta Perry.

It?s noteworthy that the mall spending data cited by WSJ continually refers to ?redevelopment? plans. That?s because brick-and-mortar retailers understand that in order to set themselves apart from online competitors, they need to add value to their in-store experiences. Technology is one way to do that, says Roberta Perry, VP of business development for El Segundo, Calif.-based Edwards Technologies.

?The retail community knows they have to do something to further engage the consumer,? she says. ?They have to find better ways to convert shoppers into buyers, more effective ways to find traffic. They know that.?

Source: http://www.commercialintegrator.com/article/retail_market_remains_sluggish_elusive

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