Sainsbury's leads retailer IT spend

Retail spending on new technology is set to stagnate, but Sainsbury's plans 2011 upgrade

Retail spending on new technology is set to stagnate, with many of the UK's leading supermarkets and high-street stores reporting they have no plans to update systems which can be up to 20-years' old.

Tesco appears most content with the IT systems it already has in place, according to a report published by specialist retail sector consultancy Martec International last week.

Though its yearly IT investment is still estimated at £200m, the company said it had no plans to replace any of its systems, some of which were first installed in 1997, with the latest upgrade being performed in 2007.

Sainsbury's spends more on IT – £220m per year according to Martec – and has revealed firm plans to update 10-year-old e-commerce, supply chain and store systems in 2011. It will also replace an in-house system for staff time and attendance management in 2012/13. This was first installed in 1995.

Martec practice manager Frances Riseley said that many retailers do not like to reveal their IT upgrade plans for fear of alerting rivals to their intentions and opening the door to unwanted sales pitches from hardware and software vendors.

Of the 142 UK retailers polled, 19 per cent refused to reveal their top IT investment priorities on the basis that these were either too commercially sensitive or they had not yet formalised their IT plans for the next three years.

Marks & Spencer spends an estimated £180m a year on IT, followed by Morrisons (£100m), Asda (£80m) and Waitrose (£60m). Figures for the Co-op are harder to accurately assess because the retailer splits its organisations into multiple regional operations.

M&S updated its store and data warehouse systems in 2008/09, with further upgrades to its 15-year-old supply chain software set for 2011 and a migration of its 20-year-old merchandise management platform to SAP already underway. Morrisons performed a sweeping upgrade to most of its IT infrastructure in 2009, following its acquisition of Safeway in 2004.

Part of the John Lewis Group, Waitrose updated its e-commerce platform this year, and its store and customer relationship management (CRM) systems in 2006 and 2003 respectively, while its supply chain/logistics applications date back to 1992.

The average age of the systems in place at all UK retailers varied from almost 11 years for merchandise management, to four-and-a-half years for e-commerce platforms, though up to five per cent of retailers are set to implement e-commerce software for the first time.