Retailers are prioritizing spending on IT innovation

Five years ago, retailers spent less than 20 percent of their IT budgets on innovation, according to IHL. A recent IHL report shows that in some industries, notably department stores (GMS) and hotels, the innovation portion of the IT budget is currently as high as 40%. Retailers with more than 10% sales growth are spending more on IT than companies with lower growth. These high-growth companies also spend more on technological innovations such as updated POS systems, Electronic Shelf Labels, localized marketing, and mobile devices. 

"High-growth retailers are more likely to optimize their online-offline integration than below-average retailers, with more than 39% likely to optimize BOPIS/Click and Collect," the report said. Systems and processes that optimize online purchases for local delivery with a probability of over 120%.

The epidemic has made retailers more aware of the changes in the industry in the past two years. According to Gartner, the scope of investment in innovative technologies by retailers includes contactless interaction, delivery execution, cost optimization and work efficiency improvement. As retailers upgrade their technology, consumers no longer focus on online or offline shopping, but instead integrate the consumption experience. High-growth retailers are increasing their spending on inventory management to fulfill online orders by 411%, IHL said. Over the next two years, they will deploy robotics in their inventory operations at a 600 percent growth rate.

Retailers increase their budgets for innovative technologies for a dual purpose. First, to meet the needs of an omni-channel strategy. As reflected in the report, consumers no longer focus on a single channel, but are more inclined to integrate online and offline channel experience; in addition, Technological innovation can fill the shortage of personnel and work efficiency caused by labor shortages, so as to adapt to the development trend of the industry under the new normal.