Retailer Spend on IT Will Top $120 Billion 2007

Though retailers traditionally spend less on IT than other industries, the vertical will nevertheless spend more than $120 billion worldwide on IT and communication technologies in 2007, according to IHL Consulting Group. "Retailers individually spend well below other industries, about one-third of the amount per revenue dollar compared to financial services and insurance," says Greg Buzek, president of IHL Consulting Group. "However, what retailers lack in spending percentage of revenue they clearly make up in sheer volume due to their high revenues."

When broken out by retail verticals, the specialty hard goods segment is the largest spender, allocating $33 billion for IT and communication technology in 2007. Grocery follows with $23 billion in spend, and specialty soft goods retailers will spend $17.9 billion worldwide. Breaking the IT spend down by type of IT technology reveals that IT infrastructure alone accounts for 33 percent of IT spend, while store systems account for 22 percent.

The North American retail industry leads the pack with about 45 percent, or $54 billion, of the overall total in technology spend in retail. Europe, the Middle East and Africa account for 28 percent of the worldwide IT spend, while Asia and the Pacific represents 15 percent of the overall spend. The Asia/Pacific market is increasing at a rate of 20 percent annually and IHL estimates it will continue to do so for the next three years.

The new statistics released by IHL Consulting were generated by IHL's Retail Worldview, a new IT sizing service, which tracks the hardware, software, services and labor/overhead spend for retailers worldwide by region and retail vertical. The IT spend is further analyzed by 10 line-of-business criteria including: BI, store automation, merchandising and supply chain, e-commerce, sales/marketing and infrastructure. Each of these line-business categories is further analyzed by more than 100 specific technologies (BI, CRM, ERP). Using the statistics retailers can benchmark their own IT spend against the industry average.