FINANCE

Survey: Retailers, cash rich, plan to increase IT spending; expect modest revenue growth in 2012

BY Marianne Wilson

New York City — An overwhelming majority (72%) of retailers report having a “great deal” of cash on their balance sheets and nearly half of them plan to invest some of it on information technology going forward, according to a survey by KPMG. At the same time, the executives’ assessment of the overall business outlook reflects only modest improvements in revenue and hiring in 2012.

According to the survey, 47% of the retailers said they intend to increase spending in information technology over the next year, by far the highest priority investment area. Other significant areas of investment for retailers are geographic expansion (29%), investment in new products and services (27%), and acquisition of a business (22%).

“Retail executives are more fully understanding the economic picture and are not as confident of an economic rebound as they were a year ago," Mark Larson, KPMG global retail leader. "What they will do to gain a competitive edge is invest in technology to add new customers and grow revenue from existing customers. Data analytics is moving far higher as a leadership agenda item with each passing day."

Seventy-two percent of the executives said they have a "great deal" of cash on their balance sheets, and 44% say they are already investing that money or will do so before the year closes. That capital will be directed toward expansion into new markets and technology, including cloud and data analytics. Sixty-nine percent regarded data analytics as a "core component of strategy and planning."

"With consumer behavior, spending and demographic profiles changing rapidly," Larson said, "a key to success will be investing in technology to harness the vast amount of data that resides in a company. That data can drive the insights that will allow retailers to interact with consumers more effectively and capture more ‘wallet-share.’ It may also reveal information on new markets, new strategies and new operating models that will ultimately generate growth and profitability."

The majority (56%) of retail executives in the KPMG survey expect the economy, revenue, and employment to moderately improve next year. Respondents were greatly divided on the timing of a full recovery. Only 12% believed it would happen within the next year, while 26% said the end of 2012, 40% the end of 2013 and 22% the end of 2014 or later.

In terms of revenue projections, 68% expect moderately higher increased. According to the executives surveyed, the biggest drivers of that revenue growth will be the retention and addition of customers, innovative merchandising, market expansion and increased consumer spending.

"Retail leaders clearly have their work cut out for them, with high national unemployment and decreased consumer confidence," Larson said. They’ve indicated to us that pricing pressures, lack of customer demand, and increasing input costs are significant barriers to growth over the next year. The good news, however, is that many retailers have significant cash to invest and they are putting it in play."

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B.Brent says:
Nov-30-2012 03:25 pm

Eventually this will pay off.
Eventually this will pay off. To me, spending on IT will have its advantages. The business will not be able to feel it now, but they will harvest certainly on the future. - Garrett Hoelscher

B.Brent says:
Nov-30-2012 03:25 pm

Eventually this will pay off. To me, spending on IT will have its advantages. The business will not be able to feel it now, but they will harvest certainly on the future. - Garrett Hoelscher

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OPERATIONS

Study: In-store technology critical for growth, helping customer relationships

BY Marianne Wilson

Palo Alto, Calif. — Seventy percent of retailers are empowering their employees with technology-enabled touch points to help their businesses to differentiate and evolve, according to a recent RSR Research report cosponsored by HP.

The study finds that by arming their associates with a range of technologies that provide relevant and timely information — such as digital signage, self-service kiosks, mobile devices and advanced point-of-sale systems — retailers can increase productivity and boost multichannel selling opportunities.

Other key findings in the survey of nearly 100 retail executives from around the world include:

  • Retailers see valuable support in self-service kiosks (43% ) and cross-channel customer and inventory synchronization technologies through real-time updates (70%).
  • Seventy-eight percent of retailers listed their modern POS systems as an important factor in the customer experience. Offering in-store rewards or coupons also is seen as critical (75%).
  • Fifty-seven percent of retailers believe delivering information to store-owned phones, tablets and PDAs has a lot of potential value. By contrast, in 2010, only 21% perceived these solutions as valuable.

“Customers have raised the bar, and successful retailers realize that the traditional means of educating employees and interacting with customers is no longer enough,” said Ray Carlin, VP Retail Solutions Global Business Unit, HP. “We provide a flexible store platform to help retailers deliver multichannel selling opportunities and a more engaging shopping experience.”

The research report is available for download here.

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C-SUITE

Microsoft Talks Up the Future

BY CSA STAFF

The Microsoft Worldwide Partner Conference (WPC) is taking place this week (July 10 – 14) in Los Angeles, with some 15,000 from around the globe in attendance at the Staples Center. It’s a huge event, with over 100 breakout sessions each day, 22 regional keynotes and country breakouts. To kick-off the show, CEO Steve Ballmer said that, thanks to partners, Windows 7 has sold more than 400 million licenses in less than two years, and is still the fastest-selling operating system in history.

Here are some other interesting tidbits from the conference:

  • More than 50,000 businesses and organizations have started trials of Office 365 — a rate of more than one every 25 seconds in the two weeks since the cloud-based productivity service was released.
  • The next update of Microsoft Dynamics CRM Online will be available in fourth quarter 2011. Microsoft currently has more than 30,000 Dynamics CRM customers and more than two million users.
  • Xbox Live TV will be available for the holiday season!
  • Lots of talk about cloud-computing — 58% of partners attending the event have been working with Microsoft cloud solutions.
  • For every dollar Microsoft makes, partners make $8.70.
  • Microsoft believes the company and its partners can cut the costs of smartphones running the company’s mobile operating system by as much as half over the next year as a plethora of new devices hit the market.
  • Microsoft is ramping up its retail expansion, with 75 more Microsoft retail stores over next 2-3 years, according to Kevin Turner.

Among the most interesting exhibits in the hall is Microsoft Surface, a multi-touch “Windows” display table that is very cool — with great applicability for retail stores. In fact, it already is being deployed in Microsoft freestanding stores, where it helps customers learn about various products, and also in Hard Rock Café locations in Las Vegas, Seattle, Orlando, Los Angeles and Berlin.

Click here for past C-Suite entries.

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