Now in its ninth year and sponsored by BT Expedite and BT Fresca for the third year running, Martec International has just published the IT in Retail Survey 2011-12. The study covers 150 of the largest retailers in the UK and represents something like 75% of all retail sales. Data is gathered by interview with CIOs or other executives responsible for IT and two versions of the report are published – the Top 100 Retailers and the Top 125 Non-Food Retailers.
The first key finding is that IT budgets as a percentage of sales have declined yet again. Now at 1% sales overall, they were 1.1% sales for the two previous years and 1.3% of sales for the 4 years before that. By segment, the range is wide with grocers averaging 0.7% sales and non-store retailers averaging 3.4%. Recent years have been tough for CIOs managing shrinking budgets, a problem compounded by the growing spend on e-commerce and mobile commerce applications.
E-Commerce sales were 8.5% of total sales for the non-food group, an increase of 9% on last year. For the top 100 retailers which includes: grocers, e-commerce sales were static at 6.3% sales. However, this is distorted by the fact that new entrants to e-commerce pulled the average down while established retailers grew their online sales. For the first time ever, two retailers said that they expected to do smaller online sales as a percentage of total sales, both companies with a high online share, which might start to indicate that for brick and mortar retailers moving online, somewhere in the range of 30%-40% of total sales is where the online share might top out.
2011 was the year that mobile commerce took off. Amongst the top 100, 16% are using mobile commerce already and 12% plan to in the next year. Amongst the top 125 non-food retailers 14% are using mobile commerce and 18% plan to in the next year. Kiosk usage is also expected to be a lot higher.
Martec asked retailers to identify their top spending priorities and for the first year ever, e-commerce was the front runner in the top 100 retailers and the top 125. Store systems came second in both cases but the percentage of retailers planning store systems improvements is well down on recent years.
Retailers have been forced to invest in e-commerce and mobile commerce and because of shrinking budgets they have had to cut elsewhere. In recent years there has been a rise in outsourcing and off-shoring though this year’s survey shows no growth in that area, probably because those inclined to do it have done so already. However, there are many retailers planning to replace or upgrade applications like merchandise management and supply chain and add applications like CRM and merchandise planning.
Martec believes that this year may be the last in which retailers can manage on reduced budgets and that they will have to start going up again soon. If 2012 is the year of the recovery, it will put greater pressure on retailers and their systems. The wise among us will start investing now to grab market share as the economy improves.
Blog post by Brian Hume, Managing Director - Martec International
For more information or to download a summary of the IT in Retail reports click here