Recession hits retailers

According to a survey by Martec International for the IT in Retail it is clear that the recession has hit the industry. The retail report sponsored by BT Expedite, questioned 100 companies and shows that the highest number of companies in seven years has dropped out of the list due to liquidation, including MFI, Woolworths and Zavvi.

Despite this reflection of the current economic market, there is a shift to multi-channel retailing and continuing growth of mobile internet access and m-commerce. Retailers’ IT budgets dropped with 20 per cent over the past year, down from 1.3 per cent to 1.1 per cent as a percentage of sales. The previous trend towards an increase in outsourcing has been reversed this year.

Brian Hume, managing director, Martec, said: “Many retailers have cut their IT budgets, with 15 per cent making large changes to bring their costs down, some by as much as 50 per cent. There’s also a clear trend to bring things back in-house to minimise redundancies.”

One area that has enjoyed a steady growth over the last five years is mobile technology. In 2005, 70 per cent of retailers did not use it in-store, now the majority (57 per cent) use it or plan to use it to increase productivity. The main uses are for stock management, price checking and delivery scanning. Mobile technology is also increasing in the supply chain, with use rising from 53 to 62 per cent.

The increasing focus for retailers is reflected in the report, which shows e-commerce and web sites to be the second most important area for investment. Non-store sales are one area of retail that is showing growth and that has not been adversely affected by the recession, showing a significant increase over last year, now accounting for 4.8 per cent of sales, up from 4.4 per cent. The majority of retailers now also have a transactional web site, and this has increased from 68 to 74 per cent.

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