Survey reveals bright spots among recession-hit retail IT spending
Proof that the recession has hit retailers hard is clear from the list of top 100 companies according to a survey just released by market researcher, Martec International and sponsored by BT Expedite. The IT in Retail report shows that the highest number of companies in seven years has dropped out of the list due to liquidation, including MFI, Woolworths and Zavvi.
Proof that the recession has hit retailers hard is clear from the list of top 100 companies according to a survey just released by market researcher, Martec International and sponsored by BT Expedite.
The IT in Retail report shows that the highest number of companies in seven years has dropped out of the list due to liquidation, including MFI, Woolworths and Zavvi.
However, despite this reflection of the current economic market, it is far from doom and gloom for all retailers, with the shift to multichannel retailing and the growth of mobile internet access and ‘m-commerce’ continuing to shine.
The report found that retailers’ IT budgets had been slashed by about 20% over the past year, down from 1.3% to 1.1% as a percentage of sales. The previous trend towards an increase in outsourcing has been reversed this year.
Brian Hume, Martec managing director said: "Many retailers have cut their IT budgets, with 15% making large changes to bring their costs down, some by as much as 50%. There’s also a clear trend to bring things back in-house to minimise redundancies."
One area that has enjoyed a steady growth over the last five years is mobile technology. In 2005, 70% of retailers did not use it in-store, now the majority (57%) use it or plan to use it to increase productivity. The main uses are for stock management, price checking and delivery scanning. Mobile technology is also increasing in the supply chain, with use rising from 53 to 62%.
Five points down on last year, store systems remain the highest IT priority for investment for 19% of companies and almost a quarter of retailers are planning to replace their systems.
One area for optimism was non-stores sales, a resounding result, where no one felt that non-store sales as a percentage of total sales would decrease next year and, a staggering 85% felt they would increase.
This increasing focus for retailers is reflected in the report, which shows e-commerce and websites to be the second most important area for investment. Non-store sales were one area of retail showing growth that has not been adversely affected by the recession, now accounting for 4.8% of sales, up from 4.4%. The majority of retailers now also have a transactional website, and this has increased from 68 to 74%.
Richard Lowe, BT Expedite chief executive said: “Despite the obvious cutbacks, there are some bright spots for retail investment in IT, particularly in e-commerce, multichannel and PCI [Payment Card Industry] compliance.
"We’re also seeing retailers looking to sweat their existing assets as far as possible and this is sparking plenty of demand for small IT projects with quick payback. Where bottom line improvement can be demonstrated, retailers are more than willing to embrace new technology."