Retail invests in information technology

In line with the fair, the latest EuroHandelsinstitut (EHI The International Retail Network) study, “Retail IT investment” will be released on 7 May. Key results from the study will be presented and discussed with top-level IT experts from retail at the Retail Innovation Congress, staged parallel to EuroCIS 2003. As part of the run-up to EuroCIS, EHI reveals an extract sneak-previewing the study:

IT expenditure in the German retail industry amounts to on average roughly 1% of gross turnover. This translates into some EUR 3.7 billion invested annually in information technology. On average, about half of that accounts for internal outlay on payroll costs, leaving some 1.8 billion for external spending (hardware/software, infrastructure and external services).

Companies reaping high returns tend to plough more back into information technology than the average. In some instances, IT company budgets amount to up to 2% of gross turnover; in others, however, they lie below the 0.5% mark.

IT budgets hold steady at an elevated level

In general, IT budgets are not calculated as a fixed percentage of gross turnover, but can fluctuate significantly from year to year depending on project needs. This means that major projects, such as the introduction of standard software during a project run/period of depreciation, can trigger a significant budgetary surge.

Following the upward trend of recent years resulting from, among other things, the euro and Y2K conversions, budgetary expansion is expected to stabilise in the coming years. Despite difficult economic conditions, retail continues to invest strongly in information technology. Strategically important projects or those with clearly quantifiable benefits are usually not put off for economic reasons.

This highlights the important role that IT plays in today’s company strategies. In retail companies, IT investment is used especially to power an increase in efficiency and productivity, with cost reduction as the end effect. High on the agenda are the vertical integration of business processes, linkup of network systems from branches to suppliers as well as optimisation of the merchandising system. The expansion and enhancement of customer loyalty systems carry particular weight with companies in the non-food sector.

Based on 120 personal interviews with IT heads at retailers in German-speaking regions, the EHI study “Retail IT investment 2003” documents short-, medium- and long-term IT strategies and investment plans in retail.

The study will initially be presented at the “Retail Innovation Congress”, staged in conjunction with EuroCIS 2003, International Trade Fair for Communications, Information and Security Technology in Retail. EuroCIS will be open daily on 6 to 8 May 2003 from 10 am to 6 pm in Halls 1 and 2 of the Düsseldorf Trade Fair Center. One-day tickets for the fair are available for EUR 20, while students and trainees can attend at half price. For participants in the “Retail Innovation Congress”, the congress fee includes admission to EuroCIS. What’s more, tickets to the trade fair are also good for round-trip travel to and from the Trade Fair Center on VVR public transport network services.

Further information on the IT study is available from EHI, Ulrich Spaan, Tel.: +49 (0)221 / 5 79 93–23 or via e-mail: spaan@ehi.org.