Positive developments in Western European retail revenues, profits, and inventory levels, have had a significant impact on both retail CEO and CIO attitudes toward investing more on IT as a fundamental enabler of profitable growth, according to the first of a series of studies by Manufacturing Insights (an IDC company) focusing on IT adoption in the Western European retail and wholesale sector.
Overall, the report suggests, retail buyer sentiment is on the rise across Western Europe. However, it is also important to note differences on a country and retail sub-segment level in the way retail companies will be allocating higher or lower shares of their IS budgets to different IT areas.
According to Ivano Ortis, programme manager for retail, CPG and transportation at Manufacturing Insights, indirect sales channels dynamics are expected to shift to new evolutionary paths, while survey results have provided a clear indication to IT vendors about the key selection criteria and most critical areas to improve.
The study found that, while overall retail and wholesale respondents are indicating the strongest short-term investment plans for security technologies, ERP, and CRM solutions, the following investment trends are emerging on a sub-vertical and on a country level:
- Security technologies
Security technologies continue to represent the enterprise IT solution area with the highest level of adoption both in retail and wholesale, while remaining the top priority in both sectors going forward into 2007.
- Supply chain applications
During the next 12 months, 27.1% of respondents are planning to invest in supply chain applications, while on a sub-vertical level there is a significantly higher focus in retail compared to wholesale. Italy is the country where most organisations are indicating plans to invest in the next 12 months in supply chain applications, as reported by 47.7% of respondents. Spanish respondents show a strong focus on integrating supply chain applications with other enterprise IT solutions.
- Retail-specific applications
The strongest short-term investment plans indicated by retail and wholesale respondents were for warehouse management, purchasing/order entry, point of sale solutions, and inventory management applications (as reported by approximately 30% of respondents). In addition, more than 20% of respondents indicated short-term investment plans on store operations and merchandise management applications, online shopping tools, mobile workforce solutions, ESL, and RFID (radio frequency identification) technology (see The Wise Marketer's sister publication, Using RFID).
- Industry-specific applications
The UK remains the overall main driver for industry-specific application investments, as it is showing up as the only country among the top 5 Western European countries with a higher-than-average percentage of respondents planning investment in all industry-specific application areas. In France and Germany, the top areas of focus as indicated by this survey are expected to be warehouse management and point of sale solutions, while the fastest growing opportunities for RFID in 2007 are expected in Spain.
The new studies draw upon the results of IDC's European Vertical Market Survey (carried out from June to August 2006 in France, Germany, Italy, Spain, and the UK), which examined 169 retail and wholesale companies that have more than 20 employees.