Activity in the UK Retail Sector Picks up With Marks & Spencers win

With significant attention being given to how organisations are reigning back on IT spend, particularly among the retailers and bankers, it was good to hear that all was not doom and gloom with the announcement of Marks & Spencers' deal with SAP and IBM to implement a suite of SAP Retail applications. M&S hopes to gain more accurate business data and robust core processes to enhance cost and operating efficiencies. It is in this way that the UK-based retailer hopes to gain a greater control over net margin.

While increased uncertainty and longer sales cycle is hampering IT spend, retailers that realise the importance to invest in IT to meet business objectives even in the toughest of conditions. As Pete mentioned in a previous blog - IT Outlook in the Retail Sector & NRF Wrap-up - "for those retailers that are still standing, I believe many will take this period to reinvent themselves to a degree, whether it be a shift away from stores to more multi-channel, creating more customer intimacy, or having the ability to diversify their product categories...."

There is no doubt that retailers are facing a tough time in the market. However, in order to overcome the market challenges, retailers must look at innovative ways to cut costs while standing apart from its competitors. Retailers realise that they need to look for ways to add value to their business and increase cost efficiencies.

SAP counts some 50 larger retailers as UK customers, with other key accounts including The Body Shop, Somerfields, Halfords and Matalan. However, competition is strong in the UK, where the software market is diverse, with approximately 200 players operating in the retail sector today. Specialist players such as Retalix and Torex retail, for instance, have demostrated some success in 2008 with new contract wins. On the other hand the larger players include the likes of Sage and SAP's arch-rival Oracle. Oracle won a major deal with Morrisons last year, one of UK's largest supermarket group, to implement a range of Oracle products over 5 years to help enable its business transformation programme.

IT vendors and their partners will need to articulate a clear message to the market to help retailers understand the need for investment. Investment in IT is very easy to overlook in the current economic climate but the likelihood of losing market share otherwise is one that retailers want to avoid!