Posted Date: 1/5/2011
Fast Changes, Slow-Motion Economy
By Lee Holman and Greg Buzek
Economic conditions in the U.S. and abroad have dominated retailing in the
past year, so it is important to not only look at the changing nature of the retail technology landscape, but also how the macro-picture has impacted (and will impact) technology buying decisions.
The last two years were tough ones for retailers, and many fell by the wayside. Most disappeared because economic forces were too harsh to allow them to continue with current business practices and too punishing to allow them enough time to change. Of retailers that survived (if not thrived), there are many who were shaken and stirred by economic events.
Clearly the slow-motion recovery is having a major impact on the retail business and how retailers invest in technology. Based on results from the 2011 Annual RIS/IHL Store Systems Study we can say that retailers are aligned with the fragile state of the economy and have remained fairly consistent with technology investment plans compared to the previous two years. However, things get interesting when the discussion turns to mobility, where retailers are being driven to embrace a game-changing technology by empowered customers and fast-moving competitors.
Top Concerns for 2011
By a 50% margin, retailers are more concerned about Unemployment/Underemployment than any other factor. The only retail segment that did not put Unemployment/Underemployment at the top of the list was Convenience/Gas, which put Fuel Prices on top.
Credit/Discount Rates ranked second as a major concern for both Specialty Soft Goods and Hard Goods retailers, while Healthcare ranked second for Food/Grocery retailers. The Healthcare issue is an interesting datapoint because Food/Grocery retailers see it as being twice as concerning as Specialty Hard Goods retailers, who in turn see it as twice as important as Specialty Soft Goods retailers.
Aside from these worries, however, there are some exciting takeaways to be drawn from the data:
- Retailers expect to expand for the first time in two years with 69% of respondents planning to open new stores in 2011 and 42% planning to increase IT head count.
- This expansion parallels IT investment with average IT spending growth of 4.3% over 2010 levels.
- POS shipments are showing healthy signs of growth as we begin the next round of replacements.
- And mobile technology is looming large in retailer plans. Study data shows we are hitting the tipping point for mobile device deployment for associates and consumers.
After two tough years retailers are optimistic about prospects in 2011. All the signs point to light at the end of the tunnel, but if the recent past has taught us anything, let’s buckle up just in case.
Lee Holman (left) lead retail analyst, and Greg Buzek, president, of the IHL Group are the authors of the just released 2011 RIS/IHL Store Systems Study. For more about the IHL Group go to www.ihlservices.com. To download a copy of the 2011 Store Systems study go to
www.risnews.com/research.
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