Perhaps more than any other industry, retailers are acutely aware of how the social, mobile, analytics and cloud technologies—what we call the SMAC Stack—affect their health and survival. Just ask Blockbuster, Borders or one of these companies.
For traditional retailers, the problem isn't accepting the reality and benefits of SMAC—it's funding initiatives amid stalled revenue growth, single digit margins, waning market share and aggressive online competition. But it can be done. Just ask Home Depot, Tesco, Macy's and other forward‑thinking retailers investing heavily in SMAC right now, despite the challenging climate.
The key is knowing where to look. In early 2014, Cognizant analyzed and studied the books of the top 30 retailers including merchandisers, grocers, supermarkets, clothiers and specialty stores. What we found were significant savings in selling, general and other non‑production administrative expenses for reinvestment in SMAC applications. While excluding sourcing beyond SG&A (such as private label manufacturing), we discovered particular gains in IT, HR, finance, call centers and procurement.
In short, SG&A savings free up more corporate dollars for SMAC investment than anywhere else for an industry facing tall odds.