Global IT budgets reduced but retailers getting closer to customers

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Aldata: sponsor of Global Retail CIO survey

Aldata: sponsor of Global Retail CIO survey

Global IT budgets have been cut but retailers are looking to get closer to customers across all sales channels.

Those are the key findings of the Martec Global Retail CIO Survey, sponsored by retail and distribution optimisation software supplier, Aldata; and presented at its Gold User Association event in Ireland, 28-29 September 2011.

The study is based on interviews with 136 CIOs in 26 countries, representing 8% of the total retail market, and focused on food and category management-style operators.

According to Frances Riseley at Martec International, IT spend as a percentage of sales has fallen to 1.1% this year from 1.3% in 2010.

“IT budgets are getting clawed back and CIOs are doing more with less money,” she said.

Food retailers, selling high volumes but lower margin products, spend less on IT as a percentage of sales – 1.0% – compared with non-food retailers,1.2%, said Riseley.

Looking ahead, half of all CIOs think IT budgets will remain the same and 29% believe they will increase, 

Multi-channel CRM is top of the CIOs’ shopping lists and 46% plan to implement technology in order to have one view of the customer across all sales channels in the next three years.

Promotions, top of the list in 2009, are not considered as important for IT spend this year.

According to Riseley, retailers implemented blanket promotions in reaction to recession but there is now promotion fatigue.

Retailers are now focusing on individual customers, she said. Enterprise resource planning (ERP) has been ranked highly over the last three years and will remain a priority for spend, said Riseley.

Mobile commerce is also up there with 43% of retailers planning to install mobile commerce in the next three years.

Business issues driving IT investments include the economy with 22% of CIOs stating coping with the economy dominates their lives, followed by increasing sales and market share, and competing with competitors.

In terms of category optimisation, retailers are squeezing better returns out of existing assets, said Martec. Demand forecasting, assortment and replenishment planning are therefore key and retailers are putting in new systems or upgrading to address these issues.

In summary, Riseley said reduced IT budgets would be the norm. Staying in business and being profitable is the top priority, she said.

“Retailers are being proactive and looking to get closer to customers across all sales channels and they are reacting to increases in raw materials and fuel costs by investing in technology to reduce inventory costs and optimise order frequency.”