Company News • 24.05.2022

Retailers are prioritizing innovation in IT spending

IT spendings went up from 20 % to 40 % in the last five years in some sectors

Retailers are increasing their IT budgets and allotting a bigger portion of those budgets to innovation. They are investing in cloud-based and automation solutions to replace aging technology to meet customer demand for omnichannel experiences and cope with a severe labor shortage.

Five years ago, according to IHL, retailers were spending less than 20% of their IT budgets on innovation. Currently, the innovation share of the budget is as high as 40% in some sectors, specifically general merchandise stores (GMS) and hospitality, a recent IHL report reveals. 

Retailers with sales growth of more than 10%, defined as “winners” in the report, are spending more on IT than those with lower growth. The winners also are allocating more of that spend to innovations such as updated POS systems and automated cash handling, localized marketing and mobile devices for managers.

Supplier
Logo: APG Cash Drawer

APG Cash Drawer

4 The Drove
BN9 0LA Newhaven
UK
A man smiles while using a tablet
Source: APG Solutions

“Winning retailers are 67% more likely than below-average retailers to have fully optimized their Buy Online-Ship from Warehouse channels,” the report says. “They are 39% more likely to have optimized BOPIS/Click and Collect systems and processes, and 120% more likely to have optimized Buy Online for Local Delivery than below-average retailers.”

Pandemic lessons

Not surprisingly, lessons learned by retailers during the pandemic are a major factor in IT investment decisions. Retailers recognize the industry has fundamentally changed in the last two years, requiring them to adapt. Areas of investment, according to Gartner, include touchless interaction, fulfillment execution, cost optimization, and employee enablement and effectiveness. Automated cash handling systems are a major part of facilitating touchless interactions with the large amount of customers who prefer to pay with cash.

As retailers make investment decisions, they no longer can choose to focus on digital or in-store shopping. “Consumers want both,” IHL says. “Both are here to stay, and retailers must invest in technologies to make all of these journeys profitable on their own.”

Two women looking at a tablet
Source: APG Solutions

Areas of major investment involve order fulfillment. Winning retailers are increasing the amount they spend on managing local inventory to fulfill ecommerce orders at a rate of 411%, IHL says. In the next two years, they will deploy robotics in inventory operations at a growth rate of 600%. 

This aggressive spending has a twofold purpose – meet demand for omnichannel strategies and fill staffing gaps caused by the labor shortage. IHL posits that retail’s labor woes resulted from a worker shift to supply chain and delivery jobs. Lack of new technology like mobile POS, improved cash management, and automated cash handling systems have also played a part. 

During the pandemic, the report says, “close to 4 million workers began working in warehouse and delivery positions in companies such as UberEATS, DoorDash, Amazon, Postmates, instead of in stores. This created a massive labor shortage for front-end retail positions.”

Technology drag

One area that separates winning retailers from those with average growth is technology. Retailers with older systems that are costly to maintain spend more of their IT budgets on running those systems than on innovation, however investments in technology like mobile POS systems and automated cash handling can help reduce the amount of in-store labor needed. 

A person is using a smartphone to pay
Source: APG Solutions

“Retailers overall report that 63% of their IT budgets are spent just to keep the lights on for the existing systems,” the report says. 

To better compete in the new normal, those retailers need to invest in innovation and transformation. For some, it could be small investments in mobile POS systems, cash management and automated cash handling, while for others it may require bigger integration solutions and automation projects.  

As Kelsie Marian, a senior research director at Gartner, wrote in RetailDive article, retailers should be “capitalizing on the momentum of transformational activities to build and maintain the flexibility that is demanded of doing business today. For the foreseeable future, changes in consumer behavior will have a greater impact on value in retail than any other single factor.”

The full report can be downloaded here.

related articles:

popular articles:

Thumbnail-Photo: New German vending partner for ITL
30.11.2023   #Tech in Retail #cash management

New German vending partner for ITL

Innovative Technology (ITL) have recently announced Bernd Boddart as their latest trading partner

Bernd Boddart will be supplying their cash validation and biometric age verification solutions to the German vending market. Bernd Boddart, based in Mönchengladbach, Germany, have 30 years of experience in the field of coffee machines, table ...

Thumbnail-Photo: EuroCIS 2024: Go beyond today!
16.10.2023   #retail #Tech in Retail

EuroCIS 2024: Go beyond today!

27 to 29 February 2024 will see the Who’s Who of Europe’s retail technology sector meet in Düsseldorf

Go beyond today! EuroCIS at the end of February will once again show solutions and products for the retail of the future @Messe DüsseldorfIn late February, numerous companies will again exhibit solutions and products for retailers to shape and ...

Thumbnail-Photo: Toshiba Launches New ELERA™ Security Suite to Address the Industry’s...
22.09.2023   #cashpoints #customer experience

Toshiba Launches New ELERA™ Security Suite to Address the Industry’s Challenges Around Shrink

Toshiba’s A.I.-powered solution empowers retailers across the globe to better manage loss prevention and protect profits

Security Suite from Toshiba Global Commerce Solutions empowers retailers to minimize shrink...

Thumbnail-Photo: Out of Stock in Retail and innovative solutions to avoid them...
07.11.2023   #brick and mortar retail #customer satisfaction

Out of Stock in Retail and innovative solutions to avoid them

Due to various events, the availability of goods in retail will be increasingly restricted from 2022, with the result that customers cannot find in food retail the products they wish to buy, because those products are sold out, are temporarily ...

Thumbnail-Photo: The global state of autonomous stores
18.12.2023   #Tech in Retail #self-checkout systems

The global state of autonomous stores

The stores are located in various retail segments such as food retail, fashion, electronics, convenience stores and fast food.

In a highly competitive global retail landscape, autonomous stores are an emerging force that addresses changing consumer behaviors, reduces operational costs, improves profitability, and powers revenue growth strategies. Advancements in autonomous ...

Thumbnail-Photo: MPREIS Transforms Operations with Zebra Workcloud Task Management™...
06.11.2023   #customer experience #software developement

MPREIS Transforms Operations with Zebra Workcloud Task Management™ Software Solution

Austrian food retailer to streamline communication in around 300 stores to improve staff engagement, inventory optimisation, and customer satisfaction

MPREIS has around 300 Austrian stores in regions across Tyrol...

Thumbnail-Photo: Nedap teams with Foot Locker to extend RFID project...
05.10.2023   #omnichannel #software applications

Nedap teams with Foot Locker to extend RFID project

Foot Locker successfully matches supply and demand in newly opened stores in Eastern Europe using RFID technology

Nedap the global leader in RFID solutions, announces that multi-brand sports fashion and apparel retailer Foot Locker has successfully extended Nedap iD Cloud to its new, Eastern European stores. The objective is to offer the best possible ...

Thumbnail-Photo: EuroCIS 2024 - technology special
11.12.2023   #online trading #e-commerce

EuroCIS 2024 - technology special

The latest technology solutions and trends for you and the retail sector

At EuroCIS 2022 from February 27 to 29, 2024, the Leading Trade Fair for Retail Technology, we will be looking at all the important and current topics relating to technology in retail: AI and Machine Learning, Payment, Connected Retail, Seamless Store and Smart Energy Management and many more.

Thumbnail-Photo: Unified Commerce Platform in focus
24.10.2023   #omnichannel #software developement

Unified Commerce Platform in focus

Handover at REMIRA: Dirk Bingler supersedes Stephan Unser as CEO

REMIRA is setting the course for future development of the company: On November 1, Dirk Bingler (48) will become the new CEO of the supply chain and omnichannel software expert headquartered in Dortmund. The previous CEO Stephan Unser (62) moves to ...

Supplier

REMIRA Group GmbH
REMIRA Group GmbH
Phoenixplatz 2
44263 Dortmund
Captana GmbH
Captana GmbH
Bundesstraße 16
77955 Ettenheim
Zebra Technologies Germany GmbH
Zebra Technologies Germany GmbH
Ernst-Dietrich-Platz 2
40882 Ratingen
Innovative Technology Ltd.
Innovative Technology Ltd.
Innovative Business Park
OL1 4EQ Oldham