Retailers must embrace big data and digital skills if they are to succeed in a sector increasingly influenced by modern technology, according to a government report.
The Sector insights: skills and performance challenges in the retail sector (PDF) report by the UK Commission for Employment and Skills warned that retailers must embrace modern technology in the supply chain through to the shop floor.
The report said that big data harvested from customer loyalty schemes and online activity can play a significant role in marketing products to customers and boosting sales.
The retail sector has been at the forefront of big data use, which helped it to weather the recent recession by using information gleaned from data analysis to boost supply chain efficiency and revenues.
However, the report said that properly embracing such technology requires retailers to have employees with the right digital skills.
"This requires new ICT-related skills to take advantage of new business opportunities facilitated by social media for advertising and marketing," the report said.
"Larger retailers are leading the uptake of new, innovative technologies which are creating shifts in the way that customer service is delivered and managed, changing the profile of the marketing function to incorporate an increased focus on data.
"This leads to a pressing need to attract and retain appropriately skilled workers in order to respond to these changes.
"Smaller retailers are at risk of being left behind unless they recognise the impact of these changes and respond by investing appropriately in their own skills and knowledge, to think more strategically about their business, and embrace appropriate new technologies."
The report explained that the pace of technology is putting the retail sector at risk of misaligning the skills it has with the needs of businesses looking to use IT to drive performance.
The report also found that the integration of hardware such as beacon technology, self-service tills and virtual ‘browse and order' hubs is forcing the need for shop workers and managers to develop skills that make use of new technologies that help the business and improve customer service.
"Retailers will need to continue to upskill existing staff to respond to the growing use and sophistication of technology," the report said.
"Findings from the primary research confirm that in-store technologies are also requiring diversification and a higher-level skills base on the shop-floor.
"For example, staff are increasingly required to not only use more advanced technologies, but to interact with customers face to face and to guide them through the retailer's online presence using mobiles and tablets."
This is being driven in part by the need to have staff that can deal with customers who are better informed about a company's products and prices because they have access to multiple shopping options provided through online retail and mobile shopping apps and services.
But the report warned that improving the digital skills of shop floor workers may infringe on their selling ability.
"There is a risk that the focus on IT skills and product knowledge can overshadow the importance of sales skills," it said.
Furthermore, the report suggested that the skills gap is more pertinent with the older generation of retail workers who will need to be taught new skills, while at the same time businesses will need to keep attracting younger, digital-savvy workers.
"New technology requires workers to have up-to-date IT skills, which can be a challenge for older workers who are less likely to have good IT skills than younger workers," it said.
"To continue to attract younger workers, the opportunity to use and develop technology-based skills and knowledge within a retail career should be promoted."
The opportunities in the retail world to tap into big data and other technologies are well known, but finding the right skills amid the UK's digital skills gap will not be easy for some retailers, despite Tesco's dismissal of such challenges.
Furthermore, the recent launch of Apple Pay in the UK has brought more contactless payment options into the retail world, and the sector is likely to see increasing use of technology in physical outlets.
Alternatively, technology could replace staff completely, as seen with IBM Watson Analytics used to generate big data in London's unmanned Honest Café coffee shops.
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