Retail leaders will open up in tough times

An icy wind is blowing through the high street. The danger is that a downturn will bite into IT spending even though technology could be retailers' saviour, says Julian Goldsmith.

Just as the weather is starting to turn, the economic climate is beginning to get frosty for retailers. They are the organisations that feel the impact of smaller consumer pockets the most. Retail boards will no doubt feed that hurt down to their cost centres - and that invariably means cutbacks in IT projects.

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But the responses this week from some of the great and the good at the Retail Week Conference in London suggest that innovations in IT will actually be critical in weathering the coming chill.

In his keynote, Carphone Warehouse boss Charles Dunstone talked of 'radical transparency'. His premise is that retailers can no longer keep all that messy back-office stuff behind closed doors. His free broadband offer fiasco has taught him that it's better to come clean when you are in trouble.

He recalled less-than-complementary blogs from customers slating his offers and admits that retailers can no longer control the flow of communication about their brands in the web 2.0 age.

Carphone now has a website that shows customers a warts-and-all view of his broadband business, a step-child that his customer services team didn't want in the family at first. But it has proved that this open approach has engaged rather than alienated customers. Customer service is all the better for customer involvement.

The mobile phone side of the business will get the same treatment soon.

John Lewis Partnership chairman Charlie Mayfield echoed this counter-culture approach to anticipating tough trading times ahead. JLP is a quirky retailer in many ways, with profits shared out among all staff and its strong commitment to home-shopping through its shareholding of Ocado.

Mayfield was particularly proud of the Waitrose Foundation, a fair-trade initiative currently being conducted with a number of produce suppliers. Dunstone also advised that now was the time to think more creatively about supplier relationships, when other retailers will be instinctively putting the bite on them to offset poor trading and price competition.

There are clearly opportunities for innovation in IT to facilitate more flexible supplier relationships.

Finally, there was the spectre of internet shopping. The traditional retail heads were a little chary to say the i-word. Panellists Simon Burke, executive chairman of Irish grocer Superquinn, and Fat Face chairman Alan Giles bravely championed the high street but retailing elder statesman and fellow panellist Sir Geoff Mulcahy dealt a dose of reality.

Mulcahy, who headed up the retail giant Kingfisher and now chairs analyst company Javelin Group and the British Retail Consortium, told the audience that too many retailers have their heads in the sand where it comes to the internet.

He said the retail environment is changing out of all recognition and the retailers who succeed are those who know their customers better. The internet is killing off the hypermarket retail model and provides opportunities for specialists and local shops.

Any retailers that think they can treat their internet services and stores as separate entities, with different pricing models, are ignoring some important facts of modern retailing life.

Even though his career as a head of retail was drawing to a close when internet shopping took off, Mulcahy still has his finger on the pulse. The new generation of customers are not going into shops, they are increasingly buying their goods off the net, he argued.

It's encouraging to hear such words from all these retailers and an indication that even if the country suffers a slowdown, the sector leaders will still be innovating with IT. The rest have a chilly winter ahead.