Western European retailers to increase IT budgets

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By: Wise Marketer Staff |

Posted on May 11, 2004

Some 43% of retailers say they intend to spend more on IT in 2004 compared to 2003, according to IDC's latest European Vertical Market Survey. And even greater opportunities are likely to emerge in Italy, where more than 68% of retail organisations indicated a willingness to increase IT budgets in 2004.

"Survey results show that the Western European retail and wholesale market is one of the hottest markets to watch in 2004, thanks to the increased adoption of IT solutions by small and medium organisations, while VAR recruitment and partnerships with local players are also increasingly critical," said Cinzia Rinelli, senior research analyst for the retail and wholesale sector in IDC's European Vertical Markets expertise centre.

The IDC survey looked mainly at IT operating budget dynamics, channel selection, and company satisfaction with each company's primary IT supplier, and found that more than half of the surveyed retail and wholesale organisations spent the majority of their IT operating budgets externally in 2003. In 2004 those same organisations are expected to maintain that level of investment.

Growth opportunity
However, one-quarter said that they intend to increase external IT spending in 2004, which suggests there is a significant growth opportunity for IT vendors targeting the retail market.

With small and medium sized retail businesses moving toward increased IT adoption, VARs (valued-added resellers) will absorb the majority of IT budgets in the wholesale segment (51% of the sample identified VARs as their primary IT suppliers).

In the retail sector, system integrators, consultants, and software firms will play a significant role, representing the primary IT source for 38% of interviewed companies.

Different criteria
According to IDC, vendors should keep in mind that retail and wholesale companies have different criteria for choosing their primary IT supplier. In fact, for 64% of the retailers surveyed, "low cost of ownership" was found to be the most important criterion, while for 77% of wholesalers the most important criterion was "the availability of a wide portfolio of products".

IDC's study found that retailers are generally more satisfied than wholesalers with the technical skills and quality of services of their primary IT supplier but are less satisfied with technical superiority and innovation. In general, retail and wholesale companies alike were "very satisfied" with the financial stability of their primary IT suppliers.

The study
The study, entitled 'Western European Retail/Wholesale IS Operating Budget Dynamics, Channel Selection, and Customer Satisfaction' (available from IDC), draws on the results of IDC's European Vertical Market Survey, carried out in November and December 2003, covering 113 retail and wholesale companies (each having more than 20 employees) throughout the UK, France, Germany, Italy, and Spain.

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