Retailers lag on core system integration, survey finds

Research by PMC and Retail Economics found that seven in 10 direct-to-consumer brands have yet to fully integrate their core systems. More than half of retailers also linked fragmented systems to weaker margins and a poorer customer experience.

The survey of more than 100 senior retail and brand leaders examined progress towards unified commerce across systems including enterprise resource planning, point of sale, customer relationship management and order management.

Among direct-to-consumer brands, 70% said their core systems were not yet fully integrated, a gap the researchers said can lead to siloed operations and slower decision-making. Omnichannel retailers appeared slightly further ahead, with 62% saying they were already on the path to fully integrating the main systems in their technology estates.

The findings point to both commercial and operational pressure. Some 56% of retailers said fragmented systems were affecting profitability and customer experience, while 54% said operational effectiveness had been compromised.

Operational strain

The research suggests many retailers are still struggling to match their unified commerce ambitions with the practical work of connecting legacy and newer systems. That matters as retail groups face growing demands to manage stock, orders, marketing and customer data across stores, websites and other sales channels.

Richard Lim, Chief Executive Officer of Retail Economics, said the challenge is likely to deepen as the retail environment becomes more complex. Customer journeys are becoming “infinitely more complex”, he said, shaped by new channels, resale formats and the spread of artificial intelligence.

That rising complexity is likely to increase the burden on retailers that have not addressed gaps in how their systems exchange and use data. Without better integration, the report argues, businesses risk slower responses to changes in demand and less visibility across operations.

Potential gains

Retailers that had made more progress in unifying their technology stacks reported a range of benefits. Some 58% said centralised data flows led to faster decision-making, 45% reported significant cost savings and 48% said they had seen measurable revenue growth.

Those figures suggest the issue extends beyond information technology teams to finance, trading and customer service functions. Better-connected systems can affect how quickly a retailer updates pricing, manages fulfilment, responds to inventory issues and tracks customer activity across channels.

Rich Lowe, Chief Executive Officer of PMC, said businesses that modernise integration can make better use of their existing technology. “Retailers using modern integration technologies are able to unlock far greater value from their core systems, creating a continuous flow of data that improves visibility, streamlines operations and enables faster decision-making,” he said.

He contrasted that with older approaches to system integration. “Yet where legacy approaches persist, they create unnecessary complexity and innovation drag,” Lowe said.

Margin pressure

The findings come as retailers continue to look for ways to protect margins while maintaining service levels and keeping pace with changing customer expectations. Fragmented systems can add costs through manual workarounds, duplicated processes and delayed access to information, all of which can affect performance.

For direct-to-consumer brands in particular, the data points to a significant gap between growth ambitions and operational readiness. Many rely on rapid responses to customer demand and clear oversight of fulfilment, returns and marketing performance, which become harder to maintain when systems are poorly connected.

Omnichannel retailers may be slightly more advanced, but the figures indicate that many are still in transition rather than at a completed stage. That leaves a large share exposed to the risks identified by the survey, even if integration work has already begun.

Lowe said retailers need to simplify system complexity to improve performance. “By unifying data through clean, connected and modern systems architecture, retailers can start to untangle that complexity to unlock growth,” he said. “And, as retailers prepare for Peak Trading, agility becomes even more critical; brands need the interoperability to act fast, stay in control and capitalise on revenue opportunities.”