By Claire West

With economic recovery set to stall in what has been described as ‘the autumn of discontent’, it is no surprise that many shoppers are retreating from the high street in favour of ‘e-retailing’ or shopping online. In a fragile and turbulent economic climate, increasing numbers of retailers are realising that a strong online presence is a vital element of their success. Consumers see e-retail as not only a more convenient but also a more cost effective way to shop. With petrol and rail prices set to increase, even getting to the high street has proved to be more expensive than ever before. Retailers have been forced to respond to the growing consumer trend for buying online by investing in IT solutions to attract traffic to their websites and retain customers. The biggest challenge they face is being able to respond to the growing consumer trend for online purchasing without having to compromise on encouraging good customer relationships. Online channels do not have the advantage of real life sales assistants and have to rely on virtual equivalents which may not be as effective.

Ravi Pandey, Snr Vice President of NIIT Technologies has identified this challenge for the retail sector as potentially damaging in a fragile and turbulent economy. Having provided IT solutions for up market UK based lifestyle brands, Ravi understands the challenges the industry are facing and offers affiliate sites, viral marketing and click-to chat services as a way of approaching these dilemmas. These are known as CRM (Customer Relationship Management) tools which can be employed as a method of retaining the kind of sales assistant/shopper relationship that can usually only be cultivated on a bricks and mortar shop floor. Figures show that in the UK, some £3.7bn is lost in sales to cart abandonment and Ravi puts this down largely to the lack of personal contact involved in e-retail.

Prudent investments in efficient technologies will help retail companies improve efficiencies to help ensure customer retention. More and more companies are realising that new technology models such as managed services will help them survive and grow in tough economic conditions.

Leading industry analysts at Forrester Research predict that in addition to the recent crisis, macro-economic factors, including rapid technology evolutions, a coming investment wave in information technology, and market constraints on capital, managed services is expected to have a bigger take up for companies operating in the retail sector.

Ravi Pandey, Senior Vice President and UK Head of NIIT Technologies says: “Companies are rapidly becoming aware of the commercial empowerment offered by the opportunity to release the cost burden of managing their IT operations internally, the added headache of investing in equipment and facilities, and the pressure of managing these rapidly evolving capabilities.” Companies are using managed services to manage these risks more efficiently and cost-effectively to safeguard against these rapid changes. The focus is on agreeing beforehand with the supply partner the efficiencies required for a smooth functioning of the business and then devising a contract to ensure those efficiencies are delivered. There is evidence that the nature of contracts is moving towards ‘transaction based pricing’ models with a greater share of ‘risk-reward’ element in the contract itself.

Pandey predicts: “We are sitting on the cusp of a technological investment cycle; despite the current economic crisis, as the IT industry enters a growth and innovation cycle, the challenges faced by the sector will place serious capital constraints on companies, which could potentially inhibit growth. Managed services allow businesses to concentrate on business decision and increasing revenue, not on IT management. Companies using managed services are reporting simplified operational management, improved quality and reliability, cost reductions and greater efficiency.”