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 per cent 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 per cent last year to 23 per cent this year, outdoing investment in store systems, which has been the focus for the previous nine years.
E-commerce represents the only growth in sales for many and so it makes sense to invest in expanding their web sites, adding m-commerce and improving multichannel business. In fact, 16 per cent of the retailers already use m-commerce, a significant increase from five per cent last year, with a further 12 per cent planning to take it up.
For some of the leading 100 retailers, the investment is in setting up a transactional web site for the first time - 24 per cent of the top 100 do not have one, although five per cent are 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 site and improve multichannel integration.
Investment in new or replacement head office systems is also up, with 25 per cent of retailers planning to replace merchandise management systems, an increase of eight per cent over last year, 15 per cent intend to replace their merchandise planning systems and six per cent are implementing one for the first time.
BT Expedite believes it is well placed to take advantage of the expected growth in e-commerce spending by retailers highlighted by this report. BT Expedite's specialist e-commerce division, BT Fresca, which has 35 retail brands as customers, has recently designed the application behind Lyle & Scott's Facebook store and the relaunch of the brand's web site optimised for mobile use.
The Aurora Fashion brands Karen Millen, Coast, Oasis and Warehouse - are also on BT's industry-leading FrescaCommerce platform and recently launched mobile optimised web sites. Collaboration with Thomas Pink and Aurora Fashions led to three prestigious industry awards in 2010 for implementation of BT's "Click and Collect" multichannel solution.
Brian Hume, managing director, Martec International, 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."
The average IT spend by leading retailers, equivalent to 1.1 per cent as a percentage of sales, has marginally reduced to 1.0 per cent 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 seem to be postponing EPOS replacement plans due to the recession and e-commerce being a higher priority. Those planning to do this have fallen to 15 per cent compared to 23 per cent last year. For most, the investment in store systems is because of an EPOS replacement project, but others are adding mobile technology in store or systems to improve the customer experience with mobile tills and enhanced functionality or kiosks.
Richard Lowe, CEO, BT Expedite, said "Retailers are generally holding IT spending constant again in 2011, but there's a positive indication of an increase of retailers planning to upgrade key business systems to keep pace with the continuing shift to multichannel retailing, as well as the growth of mobile internet access and m-commerce. If this happens IT spend next year is likely to increase, but is dependent on both local, and increasingly, international economic factors."