This weekend I went to a major warehouse club and bought paper towels and a new TV. You know times have changed when you can fit both in a standard sized shopping cart, and the paper towels take up more room in the trunk of your Mustang than the TV does. You also know times have changed when you’ve selected this TV because all the on-line reviews said the sound quality is better than other, cheaper models of similar size.

For sure, technology has changed a LOT. Last weekend, a video popped up on Facebook showing the hosts of the Today Show in 1994 trying to figure out exactly what the internet was and debating the pronunciation of the @ sign. Oh Katie, I’ll bet you wish that one was expunged from your permanent record. Katie’s not alone. I haven’t checked stats lately, but I suspect my next mobile phone might have more computing power than my first IT job’s mainframe did.

Technology in the hands of consumers is changing EVERYTHING. Retail is changing and the customer is driving the change. Nikki has done a great job highlighting trends we see for 2011, but calling these changes trends is like calling a tsunami light chop. Neat organizational boundaries no longer apply, and it’s not clear that most retailers get it.

Last week Walmart CEO Mike Duke was quoted in Barron’s as saying retailing looks like it will see a technology inflection point this year. “‘More and more the customer is shopping with a cell phone to check prices, for example’, he said. ‘The use of site to store, is growing, too.’ “

Ya think? We’ll be just a little bolder. We believe the inflection point has passed. We’re actually at a reaction point. The sense of urgency around customer, inventory and order transparency across all channels is growing by the day. And that urgent change affects the very core of retailing as we’ve known it.

New Organizational and Compensation Structures Needed

It would simple to say “Just install wireless in your stores and everything will be fine. “ But that just takes care of one piece of the puzzle — providing the ability to deliver offers to shoppers in the store. In fact, the demands of 21^st century retailing require whole new organizational structures. For example, merchandise planning has always been in the domain of…well…merchandising. But when fulfillment of on-line orders falls into the hands of stores, distribution centers and vendors, who should create inventory plans for those channels? Who owns the receipt plans? The labor schedules? And who is the responsible party for buying the technology that will create the transparency and accountability across them? For example, if the DC runs short of product, and stores must step in to fill the breach (and the orders), who authorizes the additional payroll needed? Who gets penalized for incorrect alllocations? Or rewarded for sales growth?

Ironically, mid-market retailers are at a distinct advantage in this new age. They are generally benevolent dictatorships where change can be forced across all departments. But a mega-retailer? We’ve had vendor clients tell us they’ve been in rooms where the representatives of supply chain and merchandising were introducing THEMSELVES, rather than being introduced to the vendor. How are these groups going to select appropriate technology and work in a synchronized way when they don’t even know each other? It’s a serious problem, and we have to find inventive ways to solve it.

Finally, this really highlights the need and value of a strong IT governance model. With technology so central to retailers’ success in the coming years, who can afford to avoid a strong and activist Executive Steering Committee? Yet, RSR’s data continues to report that even the largest retailers don’t get too involved in IT decision-making. If we use the consumer analog, deciding to implement parental controls on a home computer is an executive decision by concerned parents. And those same parents take responsibility for the decisions they make, and present a unified front to their children. We believe the same is needed in retail executive corridors.

You know times have changed when we take more responsibility for our home computers than we do for our multi-million dollar technology investments. We’re at a historically significant reaction point, and only the responsible and quick will thrive.