Canadian retailers increase IT investments 45 per cent

Canadian retailers increased their IT budgets in 2001 in reaction to competition from at home and abroad, according to a study.

According to The Canadian Retail Technology Survey, not only will retailers spend more on new and emerging technologies, but the role of IT within organizations will rise as well. The Retail Council of Canada and the J.C. Williams Group released the findings collected from 45 retailers on Friday.

Of the 45 respondents, 19 had revenues of more than $200 million, nine fell between $30 million and $200, and 17 between $2 million and $30 million. The data was collected between June 1 and July 6.

Retailers, on average, raised their IT budgets by 45 per cent over 2000 from 1.3 per cent of sales volume to 1.8 per cent. Mid-size companies are leading the way at 2.6 per cent followed by small companies at two per cent. IT investment by large retailers, however, remains flat at 1.2 per cent.

Rena Granofsky, senior partner, technology, with J.C. Williams, says the big players aren’t investing more because they are more concerned with cost pressures. This decision, she warns, could prove expensive down the road as foreign competitors continue to invest heavily.

“The problem here is that there’s a great opportunity to use technology as part of that strategy to really go in a different direction by using technology,” says Granofsky. “If there isn’t enough money allocated to the technology area, then that just can’t happen.”

Some of the extra funding will be spent on kiosks and personal digital assistants (PDAs), according to the report. Robin Lynas, chief information officer of Mark’s Work Warehouse, says it plans on investing in kiosks. He says he plans on using them as multi-purpose tools serving customers, employees and the enterprise. For example, customers could use them to inquire about their status in a loyalty program; employees could research the company’s health program; while the company could use them as an advertising vehicle.

“We can do uniforms for you. We can do those golf shirts for your company and embroider them,” Lynas says. “That’s a big part of our business that a lot of people don’t know about, so we’ll be trying to use those kiosks to advertise that when people are in the store.”

On the PDA side, Ihor Saplywyj says everyone is looking into PDAs, but the ship hasn’t arrived yet.

“I haven’t really seen anything that practical that’s out there yet,” says the director of the consumer packaged goods retail practice for Canada at Pricewaterhouse Coopers. “There are a lot of ideas that need some thought given to them on how to execute them at a realizable and practical level.”

Customer relationship management (CRM) systems also remain a bit of mystery to retailers. According to the study, many are disappointed with the return on investment of their CRM application. Granofsky says the root of the dissatisfaction is twofold.

“CRM holds a lot of promise, but the question is it being used effectively to really know your customers and manage those relationships. The first thing that’s needed is a consolidated view of the customer across all channels, and there’s not a lot of that happening yet,” says Granofsky.

“The overall effectiveness of the applications are failing, and that has to do, I think, with the ability of retailers to use the information well enough.”

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Jim Love, Chief Content Officer, IT World Canada

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