Global Retailers IT Spending Expects to Rise 3.1% in 2010

 

According to IDC Global Retail Insights, the IT spending of food stores worldwide is expected to increase by 3.1% to $15.6 Billion this year (2010), as reported by SN.

 

The reason cited for higher IT spending of grocers is to meet the consumers’ requirement through innovative ways. The retailers will aggressively invest to support new business models and to reduce the traditional IT costs.

 

Moreover, the food retailers will implement tactical reductions in the IT infrastructure in order to become leaner in technical capabilities but they will fund some projects to do better analytics and forecasting as well as provide better customer service. As the retailers have planned to get leaner in technical capabilities, they may consider their hardware investments and may focus on consolidation and virtualization of various instance of application together with the improvement of data management.

 

The focus areas for retailers to go forward will be client retention, customer care and wallet share growth enabling technologies. The selection of focus areas is based on key learning for retailers during the global economic turmoil is to retain the current customer base.

 

Application on which retailers will emphasize comprise of order and replenishment management. Apart from this, it is expected that there will be an increase in spending on price/promotion optimization, quick ROI (Return on Investment) and IT infrastructure.

 

The supply chain efficiency is one the top IT priorities for food retailers. With the initiative of e-procurement, suppliers agreements are analyzed in real time and optimized along with the consolidation and rationalization of warehouse operations. Spending on the development of these areas will improve customer service and enhance productivity.

 

According to a Research Analyst at RNCOS, “Higher IT spending will help in profit margins of food retails. In 2009, the IT spending of food stores was significantly low due to the global economic slowdown, which also affected their profit margin. But the pressure will ease in 2010 with the economic recovery and retailers will focus on technology integration which will give them more gains.”