The UK's top 100 retailers are turning to outsourcing to
improve the effectiveness of their IT budgets, which have remained
static at 1.3% of sales for the past three years, according to
research fromMartec International.
A report based on interviews with the UK's top 100 retailers,
found that nearly all are expanding their use of outsourcing, and
8% of the respondents had outsourced all their IT. They include
Matalan (to Capgemini),
Somerfield (to Tata
Consulting Services), and DSG (to
HCL Technologies).
The most popular functions to outsource are the website, EPOS,
content management and logistics. Middleware, merchandise planning
and e-procurement are the least popular.
Martec found retailers' top priority for investment are their
in-store systems, but this dropped slightly as investment to meet
Chip and Pin anti-fraud requirements tailed off, it said.
Their next most important priorities are their enterprise
resource planning systems and the need to integrate their existing
systems. "ERP is down on last year, a sign that most significant
ERP implementations in UK retail are underway," said Martec.
The web is an increasingly important sales channel for
retailers. None believed that web sales would decrease, and only 5%
thought they would be static. Non-store sales now account for 4.4%
of sales (worth around £5.2bn) among retailers with both a
transactional website and a store network, excluding web-only
outlets.
Martec found 95% of the top 100 retailers have a website, but
only 56% have one where customers can order and pay for goods.
Martec expects two-thirds of retailers to have a transactional
website within a year, and for at least a quarter to redevelop
their websites to make them more user and transaction-friendly.
Security is a low priority, however. Somerfield was the only
retailer to mention conformance with the
Payment Card
Industry's Data Security Standard (PCI:DSS) as a priority,
although credit card companies have threatened to fine retailers
that do not conform to the standard.
"We did the research before we had TGX (which lost at least 45
million customer names and associated card details to data thieves)
and the US credit card companies started levying fines on
retailers," said Frances Riseley, practice manager for Martec. "I
think they all know they should be doing PCI DSS, but you always
need a bit of a scare to move things up the agenda."
Riseley said retailers regarded events such as
Y2K and Chip and Pin
largely as profit-making excursions for suppliers and saw PCI:DSS
in much the same light. "To be fair, many of them may have it built
into larger projects such as their ERP plan," she said.
Oracle and
SAP are clear market
leaders in retailers' financial and data warehousing applications,
according to the research. Torex, which includes Retail J and Anker
Systems, and in-house systems are preferred for in-store and point
of sale systems.
Martec said the average age of the EPOS systems currently
installed was 5.9 years, up from 4.5 years in 2005. The
introduction of Chip and Pin forced many retailers to replace their
EPOS kit prematurely, it said. Retailers now plan to replace them
after 9.3 years on average, up from 7.8 years last year.
Mobile technology is becoming more important both in-store and
in the supply chain, Martec said. It is used mainly for stock
management such as stocktaking, price checking, markdown pricing
and delivery scanning.
In 2004 only 30% of firms were using it in-store, but this rose
to 54% last year. Another 10% of respondents are piloting or
implementing projects based on mobile technologies in the next year
or so.
The
British Retail Consortium said UK retail sales were worth
£256bn in 2006.