UK retail IT investment stagnates

Sixth annual report on IT in retail has revealed that investment levels remain the same as last year, while refresh cycles are getting longer.

The 2008/9 UK IT in Retail Report just published for its sixth consecutive year has found investment is stagnating, but customer-centric investment in-store and online can still loosen the purse strings.

The report, as carried out by market researcher Martec International, found IT investment remained around 1.3 per cent of sales and the same level as last year.

Martec's primary research carried out with the UK's 100 leading retailers that together represent 76 per cent, 170 billion in annual sales and 50,000 stores of the UK retail sector, also found store systems, followed by merchandising or website and e-commerce systems remained their main investment priority.

Just less than a third (28 per cent) said they had plans for electronic point of sale (EPOS) upgrade and extension projects. And mobile technology was a rapidly growing area of investment with the majority (56 per cent) already using or planning to use this technology to improve store productivity. Meanwhile, losses due to shrinkage have led 58 per cent to use specialist data mining or tagging systems, with an increasing number planning to invest here in the next year.

But while the report noted that the replacement lifecycles of UK retailers' IT systems were growing longer in an effort to sweat existing assets, the refresh lifecycle of merchandising systems was shortening in an effort to get the right products to the customer in a more timely manner.

Doug Hargrove chief marketing officer of Torex, the retail vendor and report sponsor, said: "The focus point for this year's investment is where retailers feel they can add most value: enhancing the customer experience."

The majority said (68 per cent) they now have a transactional website and an overwhelming 91 per cent expect non-store sales to increase beyond an average 4.4 per cent of revenue.

And retailers haven't lost their appetite for outsourcing, with website, marketing, supply chain and data warehousing leading in this area of cost-saving focus.

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