Retail CIOs Still Bullish, Despite Tough Economy

Despite difficult economic conditions, more than half of retailers (51 percent) expect their IT budget as a percent of sales to stay the same for next year, while 26 percent believe their IT budget will actually increase to address projects already underway, according to a recent study by retail industry research specialists Martec International and sponsored by global retail-wholesale software provider Aldata Solution, Inc and IBM.

“This survey was carried out at the end of 2008, when retailers were feeling the full force of the recession, which makes the results all the more encouraging,” said Allan Davies, CMO of Aldata. “It is quite clear that CIOs are not losing their nerve, and that retailers continue to see IT investment not as a luxury, but as a means of reducing cost and improving business performance over a comparatively short time period. This certainly fits with our experience over the last few quarters. There is little appetite to rip and replace entire systems, but a real focus on putting in solutions in specific areas such as automatic replenishment, where the gains can be felt in months, rather than years.”

The survey revealed that most retailers are looking to use IT investment to squeeze greater returns out of assets they already own, such as inventory and space. IT investment is planned for systems that help improve stock management and availability, increase sales from new channels, and improve promotional effectiveness. The survey also revealed that retailers are far less likely to consider investing in areas that do not deliver short-term ROI.

Globally, the survey showed that 87 percent of retailers either have, or plan to have, automatic replenishment applications within the next three years. The results were particularly striking in Europe, the Middle East and Africa (EMEA), where the figure was 97 percent, with almost half of the respondents either in the process of implementing upgrades or planning new systems. Thirty percent of retailers considered automatic replenishment the most important replenishment optimization and stock management application, followed by demand forecasting (27 percent).

In terms of logistics and distribution applications, the top application was real-time warehouse management, with 84 percent of U.S. respondents already using such systems, and a further 11 percent planning upgrades. Mobile applications also featured strongly, the data again showing U.S. retailers further advanced than their counterparts in EMEA.

In EMEA, 62 percent of retailers surveyed have already implemented mobile applications, with a further 29 percent planning to upgrade or implement new systems. One hundred percent of U.S. retailers surveyed are already using mobile applications in logistics and distribution, with 16 percent planning to upgrade over the next three years.

Enterprise master data management (MDM) was shown to be the most important application in this area, scored as such by 36 percent of respondents. This is the only instance in the survey where an application that is not the most widely implemented -- only 28 percent of respondents have already implemented MDM -- was the top priority for most retailers, with 48 percent of retailers either planning to upgrade or implement MDM within the next three years.

For the global retail CIO survey, senior-level IT executives were interviewed between September 2008 and January 2009, from North America and EMEA. Retailers interviewed had sales exceeding $100 million for nonfood category management retailers and $250 million for food retailers. The sales of the companies interviewed totaled $265 billion and represent 5 percent of the North American and EMEA retail market. The total number of stores for all retailers interviewed was more than 40,000.

Survey highlights can be downloaded at
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