RSR Research: The Retail IT Brain Drain

Jun 29, 2012

Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.

There’s a significant lack of IT talent available to retailers. It causes project delays, higher costs in general (as those with specific skills become contractors for hire) and deterioration in quality.

I can’t believe we’re the only industry with this problem and I’m not sure whether or not we’re the only country having the same issue, but in any case, it’s a real head banger for me. I’m thinking our outsourcing chickens have really come home to roost.

When I started out in IT, I remember being so excited that I’d gotten into a profession that was both reasonably lucrative and most definitely portable. Even if you were quasi-good, you could still find work. Outsourcing changed all that.

One of the people I spoke to at the recent RIS News Retail Executive Summit conference suggested that parents are very careful with their college-aged children and they are steering them away from IT. All things considered, I can’t really blame them. We’ve just spent a decade hearing stories about technology-related jobs disappearing. I knew programmers and software engineers who remained unemployed for several years.

However we got here, we are here now. When I think of all the interest groups who should be caring about this issue, my head spins. Let’s take a look.

Politicians: We’re in an election year. With a structural unemployment rate that hovers at (depending on who you include) between nine and 15 percent, you’d think someone would glom onto this as an opportunity.

Trade Associations: The NRF has a whole website dedicated to the premise that "retail means jobs." But when you look at the initiative’s agenda here, there isn’t a single word about improving our technology competitiveness. That’s really unfortunate given that at least one very large retailer has blamed a failed technology initiative on the inability to find the right talent in just the past year alone.

Industry and University Leaders: Macy’s has done a fabulous job hiring new merchants and store operations personnel through the Lundgren Center at University of Arizona. But where are the matching technical programs?

Left to itself, the problem is only getting worse. One executive I talked to said he’s expecting 30 percent of his programming staff to retire next year, not because he’s running a sweatshop, but because they’re all baby boomers like me. And, well, it’s just that time for many of us.

So what are we going to do? Are we just going to continue to pay too much for our tech projects because we haven’t made the up-front effort? Are we going to rely on people a half-a-world away to solve our critical business issues? Or are we going to step up and be leaders?

Discussion Questions: To what degree is a shortage of IT talent undermining the retail industry? What, if anything, can be done to improve the talent level of retail IT departments?

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12 Comments on "RSR Research: The Retail IT Brain Drain"

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Verlin Youd

The challenge exists today and will only become greater if serious action isn’t taken. Our retail client business executives consistently indicate that business initiatives, even those with proven clear and compelling ROI, are being slowed by lack of adequate internal IT resource capacity.

Adrian Weidmann
The better question isn’t about IT talent as much as changing the perception and philosophical mindset of retail IT. Over the past 15 years retail IT has used its technical savvy to dismiss marketing challenges and requests to solve marketing problems. Fancy explanations have been used to tell marketing teams why something couldn’t be done rather than understanding the consumer reality and embracing the challenge, thinking ahead and trying to address the challenge. That same frustration can be seen today with the increasing use and role of video as the core communication vehicle. All too often, IT departments simply do not understand ‘video’ and use traditional data and IP logic to address the problems. With video, IT departments typically claim that the problems will be solved with more bandwidth, routers, switches, etc., rather than take the time to understand what their customers (internally and externally) want and expect. This disconnect has forced marketing and the media-centric departments to circumvent their own IT departments to address their requirements. This in turn has, in part, led to an ever increasing interest and use of SaaS and ASP services. Perhaps if retail IT departments and leaders would be more innovative, progressive and focused… Read more »
Ed Dunn
5 years 3 months ago

Information Technology (IT) and Information Systems (IS) are two seperate areas of expertise. I believe the retail industry needs IS talent.

Most IT talent is good at configure and maintaining hardware and software systems and this can be outsourced. But IS talent focus on logistics, workflow, big data and information intelligence.

The problem is I’m learning everything about retailing and I/S outside of the USA. QR codes, contactless implementations, RFID tracking, supply chain automation and drop shipping I learned from my colleagues from the Pacific Rim and not America.

I do believe retailers need to make stronger demands on American universities and other forms of higher education to create coursework on IS skills for retailers because it is not there.

Frank Riso

The problem is very real, and for a number of reasons that are just too many to list here. The economy, outsourcing, expense vs. capital expense, you name it and it can be attributed to the cause and effect of lack of skill available for retail in general, as well as our IT departments. I think that, like any other industry, it is cyclical and will come back, but not before we elevate the role and by that I mean the industry begins to pay a premium for IT staff. We have seen this before with engineers and teachers, so I am confident that IT will have its day once again, but not until the industry makes the first move.

Steve Montgomery

The issues may have many different causes, but certainly how retailers historically perceived IT is part of the issue. Rather than seen as an integral part of the team, many companies perceived them as someone who was to carry out the wishes of other departments.

This type of environment doesn’t create an environment where IT personnel felt valued. True, much of this has changed with all the great things happening in retail now, but still what is more attractive to a young person — working for Google, Facebook or Macy’s or a supermarket?

Ken Lonyai
Paula, overall I agree with you except for “…parents… steering them (children) away from IT?” There are initiatives everywhere to put software development into grade schools. Aside from that… when ScreenPlay InterActive (my company) started developing interactive kiosks for retail in the late ’90s, only a few retailers saw potential for anything beyond bridal registry kiosks. We learned fast that many of the cutting edge (even by today’s standards!) interactive software things we were doing to boost customer experience at retail locations were a hard slog to sell. We we were told by everyone that retail is very slow to move forward and innovate. Man, that was true then and it’s not much better now. And that’s what I believe is the key to today’s retail IT issue. In most areas, and for more retailers than not, they don’t move. So from crying about Amazon and staring at Apple stores with their jaw dropped, to complaining about their IT problems (as you’ve reported) it sure seems to me that they are the architects of their own peril. Sure, with Facebook and Instagram and VC money, who dreams of sitting in a retail IT sweat shop “working for the man” when… Read more »
Herb Sorensen

Retailing is an incredibly conservative industry. Anyone paying attention will notice that society is undergoing fundamental transformation, the third wave being essentially an INFORMATION age. Lots of creative IT people are beavering away creating imaginary tech solutions to retail problems. These people are mostly not in retail, per se.

The traditional supply chain facing retail is simply not going to attract the best, most creative, IT minds. See “‘Googling’ the Store.”

Mel Kleiman

Most retailers suffer from the mentality that employees are just another commodity. This attitude not only affects store level employees, it affects all employees.

How many retailers out there can come up with a list of 10 great reasons that an IT worker or any worker should really want to come to work for them?

As for the point of people not going into IT, I think more and more people are entering the field. The problem is it will take time to fill a vacuum that was created 10 years ago.

gordon arnold

It is no secret that many corporations actively recruit the top grads from the top schools for specific needs that are well known and defined. Retail is ever present in the search for buyers and planners, but obviously absent from the IT graduate pursuit. As I have stated many times, the problem is at the executive level. There is no appreciation of the IT industry as an investment in all aspects of the total business enterprise. It is instead considered a bear trap in the middle of the career path of the key decision makers or even worse, an endless waste of money. This is because many businesses have continuously invested in gadget-ware and vaporware instead of enterprise systems designed and developed to communicate to whatever the latest be all and end all hand held electronic voodoo doll is out there. It is simply the obligation of the enterprise structure to communicate to those listening devices (gadget) that the customer and supplier is now using and spending time with.

Ed Rosenbaum

Paula did good in putting the problem in an understandable format and I appreciate the professional manner displayed to say “Hey, wake up retailers!”

Retail, as we know and has been stated, is a slow industry to respond to any change. They always have been and there are no indications this trend is changing. Take JCP as an example. They bring in an outsider hoping this will be a change agent; and what happens, they end up shooting themselves in the foot.

Lorrie Rogge
Lorrie Rogge
5 years 3 months ago
There are many reasons for why we are in this spot — as to how to fix — will definitely be the challenge. I agree with many of the points made below. My company will be seeing a great deal of the workforce retire in the near future — I heard a figure that over 70% of the IT workforce is over age 55. My company is also not hiring because of market conditions and financial performance. The solution my company is using is to outsource — offshore and near shore — purely for cost reduction reasons and that has really turned talent away, resources have been leaving the company, and positions are being eliminated. Due to that, the remaining workforce is feeling the pressure to cover for those that have left and carry more because the learning curve for the outsourced resources. Additionally, from what I see and experience the outsource resources do not have the retail knowledge, and communication gaps are a huge factor in my company’s ability to deliver. Personally, I see a death spiral in the making. Young folks don’t see the glamor in retail, and if the IT shops are becoming sweat shops and majority… Read more »
Bill Bittner
Bill Bittner
5 years 3 months ago
Since I am posting this the next day, I am probably writing to myself but the question posed is so critical to retail I felt compelled to write a response. I am not a deeply religious person, but for some reason I have always remembered the Sunday school story from the Bible that described the building of the Tower of Babel. As I recall the story, in an effort to prevent the completion of the tower, God cast different languages on all the workers and dispersed them around the world so they would not be able to complete the project. To some extent, I believe that the current IT environment has become its own example of the Tower of Babel. It is the failure of retail organizations (and businesses in general) to recognize this transition that has become the challenge. I remember running a whole corporate payroll and store order and billing process for over 3,000 stores on a dozen mini-processors that were 64K each. That meant the whole operating and application environment was housed in less memory than probably exists in a typical electronic watch today. I am not bemoaning the good old days (okay, maybe a little) but… Read more »

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