Selling the benefits of IT

Mosaic Fashions' brands benefit from electronic stock management tools

While consumer spending falls and many household names on the high street suffer, retailers are turning to technology to improve profitability.

Some forecasts expect the sector to suffer more than most in the downturn, with one survey last month predicting UK retailers’ investment in software and IT services will decline by 5.9 per cent this year, the equivalent of £2.77bn.

But a new global survey by consultancy Martec International in association with IBM and Aldata says that less than a quarter of retail firms plan to cut their IT budgets.

Of those surveyed, 51 per cent predict that IT spending will be flat, and 26 per cent believe funding will increase due to projects aimed at getting more value from existing systems.

The IBM study highlighted areas such as automatic product replacement ­ the main concern for 30 per cent of those who took part in the poll ­ followed by demand forecasting (27 per cent), both seen as important tools to improve service levels as well as sales.

The recession hit Mosaic Fashions hard after the collapse of a key investor, Icelandic group Baugur. But the firm’s chief information officer John Bovill said stock management is so core to business strategy that IT has to respond.

“We have been investing heavily in that area for some time because we have acquired businesses and integrated them. But having a clear view of what is happening with our stock is even more crucial to us now, so we are introducing additional functions to our existing systems,” he said.

Making wise pricing decisions and estimating the quantity of products that consumers will purchase is another challenge, said Bovill, which will highlight the importance of systems tackling specialist areas such as demand forecasting and space planning.

“Retailers are under a lot of pressure around promotions and pricing. As a consequence, activity in replenishment and product allocation has become more important as trading gets tougher,” he said.

Making better use of customer data was also highlighted as a priority by the Martec research, with improvements in customer relationship management systems planned by 29 per cent of those polled.

Client data management is one of the main focus areas for travel group Thomas Cook. E-commerce director Russell Gould said it is possible to introduce improvements that benefit the business and customers without spending too much.

“While customers continue to demand a multi-channel capability, the focus on the internet and driving business through this channel is bigger than ever as companies seek better efficiencies in the current economic climate,” he said.

“E-commerce provides a huge opportunity to realise savings and growth.”

How retailers are investing in IT in 2009

• Supermarket chain Morrisons committed to a major four-year IT transformation that will streamline supply chain and distribution operations.
• Domino’s Pizza will focus on analysing client behaviour to boost sales through its existing purchasing data as well as social networking web sites.
• The Co-operative Group is investing in business intelligence to improve decision-making based on customer shopping behaviour.
• Clothing retailer Fat Face has upgraded its supply chain platform to improve stock allocation and replenishment, halving the time spent on such processes.
• Tesco will look at improving the way stores are operated, including systems
  to enhance store shelf replenishment and warehouse stock management.
• Fashion retailer New Look has rolled out a service-oriented architecture platform as part of a major IT re-engineering aimed at standardising processes and measuring the impact of markdowns.