Highlights of key findings on the systems used by the leading 100 UK retailers
The latest Martec IT in Retail research, sponsored by BT Expedite, is now available. The report is an analysis of the systems used by the 100 leading UK retailers in 2010-11.
It’s the eighth annual study carried out by Martec International and is undertaken by interviewing CIOs in the leading retail companies. The results represent 75 per cent of the UK retail market by sales. This year, the survey also features for the first time a report on the systems used by the 100 leading non-food retailers.
IT spend frozen at recessionary levels
IT spend remains at 1.1 percent of sales, the same as last year, after remaining at 1.3 percent of sales for the previous four years. It seems as if companies reduced IT budgets in response to the recession last year, existing systems coped and there were few major disasters, and everyone learnt how to do more with less. So IT budgets may never return to pre-recessionary levels.
Home shopping retailers spend most on IT
The non-food report shows that IT spend outside the food sector is higher. The average for the leading 100 non-food retailers is 1.6 percent of sales. Home shopping retailers spend most on IT – an average of 3.4 percent of sales, as they don’t have the cost of a store network to maintain and their systems must do the job of a storefront. Grocery retailers with lower margins and greater economies of scale have the lowest IT spends, at 0.7 per cent of sales.
IT spend
Plans to invest are now back on
There is evidence that retailers are now planning to invest in replacement or new technology for their businesses. Store systems emerged as the top application – with 23 per cent of the leading 100 retailers and 26 per cent of the leading 100 non-food retailers planning to replace or implement store systems. This is quite a significant level of activity and shows that the days of doing nothing and just surviving are over. The next most important application is e-commerce for the non-food retailers (19 per cent planning to replace and five per cent to implement for the first time). For the leading 100 retailers, it is labour scheduling with nine per cent planning to replace systems and 12 per cent to implement for the first time.
It is likely that this is an underestimate of investment plans as some companies do not want to articulate replacement plans until they have the funding secure and are firmly on the replacement trail.
Level of replacement – IT in Retail Report 2010-11
Level of replacement – IT in Retail Non-Food Report 2010-11
Investment priorities – e-commerce becoming as important as store systems
The last five years have seen the shift to multichannel retailing and now the growth of e-commerce. As well as tracking which systems are being replaced or implemented we also ask CIOs about their priorities for investment. Top of the list for retailers is store systems (22 per cent), followed very closely by e-commerce (17 per cent). The gap between the two gets less each year, showing the increased importance of e-commerce and multichannel retailing. And in fact for the leading non-food retailers e-commerce is the top investment priority (24 per cent), with store systems coming second (18 per cent).
IT investment priorities – IT in Retail Report 2010-11
IT investment priorities – IT in Retail Non-Food Report 2010-11
Importance of multichannel
Of the leading 100 UK retailers, 69 per cent have transactional web sites, with a further five per cent planning to implement them. Non-store sales as a percentage of total sales are now 6.3 per cent; significantly up from last year when it was 4.8 per cent. This is for retailers that have a store network, so excludes purely home shopping retailers. And in
the case of the leading 100 non-food retailers the figure is even higher at 8.5 per cent of sales. Mixed goods and department store retailers achieve the highest level of non-store sales as a percent of the total at 9.9 per cent. Most of the retailers in this category are well established e-commerce retailers with good brand names.
These figures show that non-store retailing is now very significant indeed. And 88 per cent of retailers believe non-store sales will increase next year so we have not yet reached the limit of internet growth in retail.
Non-store sales as a percentage of total sales – Leading 100 UK retailers
The report in PDF format available at RetailWeek
For more information about BT Expedite visit www.btexpedite.com