The latest annual study of UK retailer IT investment priorities finds a shift from instore to online
The latest annual study of UK retailer IT investment priorities finds a shift from instore to online
For the first time ever, top retailers’ priority for IT investment is e-commerce and mobile commerce, according to the latest annual IT in Retail research of the UK’s leading 100 retailers by Martec International, sponsored by BT Expedite.
The annual IT in Retail report researches retailers with annual sales totalling more than £180 billion, representing 50,000 stores and 71% of the total UK retail sector, which is valued at £254 billion.
The main IT investment priority for leading retailers is e-commerce and m-commerce, growing from 17% last year to 23% this year, outdoing investment in store systems, which has been the focus for the previous nine years.
Investment follows multichannel growth
The research highlighted that e-commerce represents the only growth in sales for many and so it makes sense for retailers to invest in expanding their websites, adding m-commerce and improving multichannel integration. In fact, it found that 16% of the retailers already use m-commerce, a significant increase from 5% last year, with a further 12% planning to take it up.
For some of the leading 100 retailers included in the research, the investment is in setting up a transactional website for the first time – 24 of the top 100 did not have one, although five were planning to set one up. For others, e-commerce is an investment priority to improve the customer experience, add more products, ranges or brands, internationalise their web presence and improve multichannel integration.
Investment in new or replacement head office systems was also up, with 25% of retailers planning to replace merchandise management systems, an increase of 8% over last year; 15% intended to replace their merchandise planning systems, and 6% were implementing one for the first time.
Brian Hume, Martec International managing director, said: “Many retailers are struggling to keep pace with the rapidly changing requirements of multichannel operations with legacy systems slowing them down. Replacing these systems is vital for gaining competitive advantage. Consumers expect a seamless experience across all channels and retailers need to offer a single stock pool that can be accessed from all customer touch points, such as smartphones to check stock availability, pricing and product information.”
Efficiencies for doing more with less
The average IT spend by leading retailers, equivalent to 1.1% as a percentage of sales, has marginally reduced to 1% this year. The reason for this reduction is believed to be that e-commerce is being prioritised and for many retailers this is not categorised as IT spend.
This is set against a background of flat sales performance and understandable efforts to reduce IT costs, for example, by offshoring IT work outside the UK, although outsourcing overall is down from previous years.
Many retailers also seemed to be postponing electronic point-of-sale (EPoS) replacement plans due to the recession and e-commerce being a higher priority. Those planning to do this fell to 15% compared to 23% last year. For most, the investment in store systems is because of an EPoS replacement project, but others are adding mobile technology instore or systems to improve the customer experience with mobile tills and enhanced functionality or kiosks.
The study, based on primary research, was carried out in the spring and early summer of 2011 on the systems used by the UK’s 100 leading retailers. Martec International carried out a detailed telephone interview with the IT director or senior IT manager for each company covered in the report. The study represents 71% of the total UK retail sector.
