E-commerce is retailers’ top IT investment priority

Retailers’ investment in IT remains stagnant this year but the sector is planning to spend more on technology as the economic situation improves.

That’s the key finding of a Martec International’s new IT in Retail report, which surveys the top 100 companies and is sponsored by BT Expedite for the second year.

The anticipated growth in IT spend is due in part to the likelihood of retailers investing in replacement or new technology in the near future, says the study. The report shows store systems re-emerging as the top application for replacement by 23% of retailers. Ageing store and merchandising systems are struggling to keep pace with the rapidly changing requirements of multi-channel operations, says Martec.

However, the report suggests IT budgets may not return to pre-recessionary levels.

Brian Hume, managing director, Martec International, said:   “Although IT spend is still at recessionary levels, it’s heartening to see retailers are once again planning to invest in technology. But IT directors will need to get better at building business cases if they are to gain the share of scarce investment capital they need to turn their plans into reality.”

The last five years have seen the shift to multi-channel retailing and now the growth of mobile internet access and m-commerce. The gap between investing in store systems and e-commerce is reducing, showing the increasing importance of e-commerce and multi-channel retailing. For the leading non-food retailers, e-commerce is the top investment priority (24%), with store systems ranked second (18%).

E-commerce, multi-channel and m-commerce are the new retail battlegrounds, as non-store sales for retailers with a store network average 6.3% of total sales, up from 4.8% last year. Some leading fashion retailers report non-store sales well in excess of 10%, underlining the return achievable from this investment. The increasing significance of non-store retailing is underlined by 88 % of retailers believing non-store sales will increase next year.

Retailers’ investment in e-commerce extends from setting up a transactional web site for the first time to improving the customer experience by adding more features, products, ranges or brands, internationalising the site, data security, encryption of payment data and multi-channel integration.

Richard Lowe, CEO, BT Expedite, said:  “The increased importance of multi-channel retailing stands out as the area of growth, reinforcing the power of the web and store working together, as sales channels blur. This is the age of the smart shopper, who use a variety of channels to shop and search for information about stock availability, pricing, promotions and product features.

“It’s an exciting time and a key factor is the application of innovation, instrumental to enabling retailers to keep pace with their customers’ expectations.”