Big Spenders (Sort Of)

Sep 01, 2003 9:30 PM  By

Retailers are more frugal with their IT money than firms in other industries are, but they do splurge on some things, according to Forrester Research Inc.’s “Tech Spending Summary: Retail,” a report issued in June 2003. At mid-year, the retail sector was allocating 4.8% of its revenue to information technology, compared to other industries’ 5.6%. Retailers also spend less of their total IT budget on R&D than other firms do — 3.9% versus 4.2%. But a sizable 40% of retailers will deviate from their IT budgets this year, spending more than expected on apps and PCs. And 29% of retail companies — a far higher number than the 16% of firms in other sectors — are hiring full-time IT staff. This despite stringent budget restrictions: 44% of retailers require formal approval for all new IT outlays, compared to only 29% of companies in other industries (although, among retailers who set a fixed amount for executive approval, the latter is required only for investments higher than an average of $971,000). Retailers are also big on number crunching — 93% use ROI for IT cost justification, compared to 84% of firms in other industries, and 61% focus on payback periods, as opposed to 55% of merchants in other sectors.