Retailers need to be sold on ROI, not just product benefits, vendors find

ROI is much on the minds of retailers as they make technology buying decisions, vendors at NRF’s Annual Convention & Expo in New York this week say. “RFPs have been elaborate this past year, really getting into the details of your ROI assumptions,” says Peter Bell, product marketing manager of Endeca Technologies Inc., which produces site search and navigation technology.

At the convention, Endeca announced that ChristianBook.com had installed its search-and-browse technology and realized a tripling of conversion rates during the holiday shopping period. That tripling had a long-term effect in that sales plateaued after the holidays, rather than declining, as had been the case in the past. At the same time, Endeca reports, ChristianBook.com’s IT costs went down by 20%.

In presentations both at sessions and with customers in their booths, vendors were ready with detailed ROI presentations. In pitching Microsoft Corp.’s new deal with Citibank Merchant Services as part of the Microsoft Retail Management System for small merchants, for example, Brendan O’Meara, product unit manager for Retail Management Systems, laid out a step-by-step comparison of the savings for a retailer to go to a lower credit card discount rate in the Citibank/Microsoft arrangement. It concludes that a retailer who does $80,000 a month with 50% on credit cards can save $376 a month by moving from 2.5% discount and 25 cents per transaction to 1.6% and 23 cents under the Microsoft/Citibank arrangement, for a 0.5% improvement on the bottom line.

Similarly, says Greg Munster, director of marketing for IBM Corp.’s retail store solutions, which was promoting the e-business on demand solutions for retail store operations, “These days you can sum up retailers’ concern in three letters: ROI. Gone are the days when they would spend money on something that they weren’t sure what it does but it sure is cool.”

In fact, research just out from eMarketer Inc. reports that corporations are poised to spend on technology again. "Corporations have largely finished cost cutting and are now considering how to invest for growth," eMarketer says.

If a vendor can demonstrate the ROI, retailers will buy, Munster says. “Retailers will spend money to drive revenue or reduce costs,” he says.