June 27, 2013
I was intrigued to read in StorefrontBacktalk about Target’s plans to reduce its spending on IT. Apparently, investors warmed to the message, but most of our readers tell us that it’s not how much you spend, but how well you spend it that really determines whether investors see a good return on IT investment. In this research, we asked retailers which IT investments yield a quick financial return and which have the most potential to drive superior returns.
We found that pricing and promotion technologies can have a quick impact on financial performance and forecasting and that allocation and assortment optimization applications have the most potential to drive inventory turn and margin to generate favorable returns. Years ago, I heard of the brilliant success of retail entrepreneur Mike Ashley, which was attributed to his attention to assortment planning. However well you execute, you can’t make money in retail without a plan that ensures that the right merchandise is available in the right location at the right time and price.
We are re-running the survey to see how retailers’ views have changed. Please complete the survey to add your voice to our research (please be patient; it takes a little while).
Update/Correction: Target has told Forrester that, far from reducing IT spending, it actually plans to increase its IT initiatives in 2014. All the more reason to consider your own IT investment priorities!