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Almost a third of retailers believe falling profits will prevent them from investing in technology

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With half of retailers prioritising investment in IT infrastructure, as many as a third believe that they will not be able to due to falling profits, trapping them in a Catch 22 situation.

According to research commissioned by REPL Group, half of UK retail CIOs and CTOs are focusing their technology investments on backend IT infrastructure as they look to futureproof their organisations in a challenging environment. However, while 92% of CIOs and CTOs have increased investments in tech over the past five years, falling profits mean that almost a third (31%) say they will be unable to invest in technology moving forwards.

Conversely, 29% revealed that the decline in the retail sector has inspired them to increase investment in technology. Data security (37%) and digital operations, such as apps and websites (24%), were revealed to be main priorities. 

The survey, conducted by Censuswide, also found that these investments are being driven by a number of factors but most commonly cost-savings (35%), answering customer demand (32%) and getting ahead of the competition (32%) are top of their agenda. However, only 8% of CIOs and CTOs surveyed are investing in workforce management, highlighting a concern that retailers may be neglecting the shop floor and customer experience.  

Most retailers are found to plan these investments up to two years ahead (40%), which is likely to be too far in advance in order to stay competitive, with smaller investments made more often being a more beneficial approach.

Among the barriers to implementing new technologies, retailers cite the complexity of integrating new technology with existing systems (33%) and a lack of any additional budget (33%). 

Mike Callender, executive chairman, REPL Group, says: “Due to the reported retail challenges, we have asked CIOs and CTOs at the front line how they are actually responding to these struggles, and what more they could be doing to tackle them.”

He continues: “Bricks-and-mortar retailers should indeed be planning their spend – but not exactly what it’s for. They must instead think about spend in two ways: for infrastructure systems, which requires long-term planning, and agile small spends to react to the changing market. For this, it’s time high street retailers took inspiration from online retailers by doing pilots and A/B testing and being more agile in terms of delivery. It’s important that they focus on ring-fencing their core systems and allow for agile projects to integrate to them.”

“Additionally,” he says, “instead of trying to keep all costs inhouse, retailers should also look at what can be outsourced to free up their technical teams so they can make a real, value-added difference to the business and to customers.” 

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