Retailers hardest hit by IT spending slowdown

05 Mar 2009 View Comments
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shoppers at Marks & Spencer
M&S is carrying out an IT transformation, despite the recession

Investment in software and IT services by UK retailers will decline by 5.9 per cent this year, the equivalent of £2.77bn, according to research.

The study by analysts Pierre Audoin Consultants and TechMarketView indicates that even though IT transformation projects are taking place in retail, businesses in the sector will “slash or freeze their budgets for new applications software and IT project services, as they shelve expansion plans and focus on cost control”.

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Retail is being hit harder than other sectors, says the survey, with overall UK investment in software and IT services expected to fall by one per cent in 2009.

Large technology-led transformations underway in retail include the programme being carried out at Marks & Spencer. Other companies such as Tesco are also channeling investment to areas such as web shopping to boost sales.

“Dwindling consumer confidence coupled with the crisis in the financial markets has seen the disappearance of some of the country’s largest and best-known retail groups, which has led us to forecast that this sector will be one of the toughest for UK software and IT services players in the medium term,” said Nick Mayes, senior consultant at Pierre Audoin.

According to separate research from analyst Gartner, overall technology spend worldwide is expected to reach $2.7 trillion in 2009, a 0.5 per cent increase from 2008, as businesses remain uncertain about the depth and duration of the recession, and projects are deferred or cancelled as a consequence.

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