Retailers’ IT budgets have fallen to a record low of 1% of sales following another year of cutbacks.
Spending on IT stood at 1.1% for the previous two years, and was 1.3% for the four years before that, according to Martec International’s latest IT in Retail survey of the UK’s top 100 retailers.
Retailers have also changed what they’re spending on – ecommerce and mcommerce became the top investment priority for the first time, with 23% of retailers saying it’s their main priority for the coming year.
Home shopping retailers without store networks continue to be the biggest IT spenders, with 3.4% of sales being spent this year compared to 3.5% last year. At the other end of the scale the grocers spend 0.7% of sales, although this still amounts to a budget of £250m for Tesco and £220m for Sainsbury’s.
DIY, electrical, furniture and carpet retailers spend around 0.8%, down from 1.2% last year and department stores are spending a static 1.4%.
Comet head of IS Kevin O’Brien said pressure is increasing on IT directors, who must work harder than ever to prove spending is worth it. “You’ve got to make sure your investment has a higher and a much quicker return,” he said. “A three to four year pay back when sales are going well is fine. When things are going less well, 12 months is more likely.”
He added that while IT teams are always looking to get better returns, budgets will have to stop falling soon. “You get to a point where you say we can’t go any lower or it will affect the business. That’s about having the strength to go to the board. But part of it is about looking at projects and seeing how you can get more bang for your buck.”