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Retailers boost tech spending 3% as markets, operations grow

Retailers boost tech spending 3% as markets, operations grow

Dan O'Shea Retail Dive

Dive Brief:

  • The retail markets in North America as well as Europe, Middle East and Africa (EMEA) each are expected to grow about 3% annually in the next five years, reaching $5.5 trillion in North America and €4.4 trillion in EMEA (or $5.4 trillion), according to projections from IHL Group featured in Zebra Technologies' 2017 Retail Transformation Study.
  • Additionally, IHL projected that retailers will increase their technology spending by about 3% over the next three years as they look to build out omnichannel capabilities and improve customer experiences.
  • The report further found that about 42% of retailers experienced a net increase in the number of stores they operate, with retailers that operate more than 50 stores opening a total of 4,080 new stores through October of last year. Meanwhile, only 15% of retailers had a net decrease in the number of stores they operate.

Dive Insight:

Retail store openings are expected to continue outpacing store closures through 2021, according to the study, a data point that could help mitigate some of the retail apocalypse panic that became such a dominant theme during 2017.

But these new stores could look very different than ones opened in years past. Several reports from the National Retail Federation's Big Show in New York City this week outlined the ways technology must change the industry, suggesting 2018 could be a big year for technology investment by retailers.

For many retailers, that means in-store mobile investment. For example, in-store mobile devices and other mobility endeavors are in the game plans for many retailers surveyed as part of this study. Many of them plan to invest in devices like mobile barcode or thermal printers, handheld barcode scanners, and mobile computers within the next three years. (Those purchases play directly into Zebra’s wheelhouse as a provider of such devices.)

Zebra contributed to the study several observations on the activities of its own customer base, which the company characterized as consisting of particularly aggressive retail technology investors. Zebra said these players spend more on IT gear than the broader retail market — two to three times more than the average retailer.

Retailers may be willing to spend more because they are directly connecting it with enough potential sales growth to warrant more investment, as opposed to investing on hopes of some eventual bottom line effect. For example, 60% of North American retailers expecting growth of more than 5% cited faster sales growth as the key driver for changes in store operations. That's better logic than investing in technology just for the sake of innovating.

About redPanda Software

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