In recent years, retail has undergone many turbulences that have permanently changed customer shopping habits. What currently unites medium and large retailers is the need to invest in technology. Nearly 3/4 of companies in the industry declare that their expenditure on IT development will remain the same in the next year. Retailers will focus on the critical implementations: National e-invoice System, e-receipts and loyalty systems. These are just some of the conclusions from the RetailTech 2023 report prepared by us and the Keralla Research Institute.
Retail is the litmus test of the economy. As a technology supplier for trade, we talk to clients daily about their challenges and expectations. We decided to scan the industry, looking for common conclusions about the current needs of retailers and their plans for the future in terms of IT investments. We summarized them in our RetailTech 2023 report.
According to the published report, the dominant trend in trade is automation, indicated by 58%. Companies with a simultaneous slowdown in production and a decline in demand, which is felt by 53%.
The economic effects of the events of recent years are noticeable for 38% of respondents in the form of searching for cheaper alternatives and substitutes for raw materials or semi-finished products. The exact number (38%) of the surveyed companies talk about a sharp decline in margins caused by, among others, higher wholesale prices. The results are consistent for enterprises employing 50 to 249 people and the largest ones, i.e. using over 250 people.
The differences are noticeable in subsequent positions. Over 40% of large retailers list sustainable development and ESG among the key trends. Technology can also significantly help in this area – especially in the context of the upcoming ESG reporting obligation. However, this issue is important to less than 28% of companies from the medium retail sector. Therefore, the degree of importance of sustainable development in a given company is related to the level of existing or non-obligatory obligations imposed by external regulations.
The mentioned trends also include a slowdown in the expansion of e-commerce and the return of consumers to stationary stores. Combined with a high automation rate, we predict that omnicommerce, i.e. multi-channel sales, will gain importance. This is an advanced strategy to provide customers with a smooth and personalized shopping experience – thanks to the skilful use of technology. At its core is the integration of all available sales channels and brand touchpoints, as well as systems, payment methods, processes and consumer data. While omnichannel is based on recognizing customer preferences and creating a harmonious brand presence in various sales channels, omnicommerce aims to create a coherent solution in end-to-end shopping experiences, regardless of where and how you interact with the brand.
Due to the VAT Act amendment, from July 1, 2024, KSeF, i.e. the National e-Invoice System, will become obligatory for entrepreneurs. Despite the prolonged legislation and subsequent changes regarding the implementation date, retailers have essentially prepared or are currently preparing for the new obligations. Already, 1/3 of retailers have invested in technologies enabling the implementation of KSeF. Investments in this area are declared by almost 60% of large (employing over 250 people) and 20% of medium-sized companies (hiring 50 to 249 people).
Another 14% have made investments related to the handling of e-receipts. The cloud has recently been developed by 10% of subjects.
Despite a temporary slowdown caused mainly by geopolitical and economic factors, nearly 36% of retailers intend to increase IT development expenditure, and another 34% will keep them at the current level.
Among companies that spend over 3% on investments in the IT segment average annual turnover, as much as 63% announced plans to increase expenditure. A slightly more conservative approach is taken by entities whose annual expenditure on IT investments is currently up to 2% of average yearly turnover—almost half of them (46%) plan to keep their expenses constant.
What does retail need to invest in now, and what can wait?
As much as 66% of surveyed retailers confirm that one of the most critical issues currently is preparation for sending and receiving electronic invoices in connection with implementing the National e-Invoice System. Engagement in this thread does not vary depending on the industry. As much as 90% of companies spend over 3% on IT development of average annual turnover, considering this investment a priority.
40% of respondents indicated e-receipts as the most important. Large companies often notice the need to provide digitalized fiscal documents (59.4%) more than smaller retailers (30.9%).
Slightly less, 35% of retailers intend to develop loyalty systems. 1/4 of respondents consider the topic necessary, but with the caveat that its implementation may wait.
The following places were taken by international expansion: cloud, metaverse and omnichannel. An essential factor determining solutions’ implementation is their adaptation to current trends and needs.
43% of retailers develop technologies using only their IT resources. The practice is evident in companies that employ 50 to 249 people – almost half rely on their IT departments.
The smallest group of respondents, only 17%, decided to outsource completely. This operating model works best in companies that primarily need continuous IT support and have clearly defined expectations regarding the solutions being built and their effects.
The compromise is to combine your resources with the forces of an external partner. 37% choose this solution subject. In this group, more than half are the largest retailers.
The critical factor that retailers consider when choosing IT technology suppliers is price. This is the most important factor for 55% of subjects.
37% of respondents pay attention to the supplier’s experience in the industry. The same proportion of respondents (37%) rely on references and opinions of other market participants. Before choosing a supplier, approximately 1/4 of retailers check the implementation time and whether it is delivered in stages. The solution’s compatibility with the existing system and integration ability are also important.
Challenges and plans
The most significant barrier to the development of retailers is finances – almost half of the medium-sized retailers and nearly 40% of large companies indicate a problem with finding a budget for investments in this segment. 30% of respondents indicate the lack of government, EU support or subsidies.
42% of respondents also feel they need more expert knowledge. This may be partly because IT specialists prefer to work in the technology segment rather than the commercial one. This is especially noticeable in the food and fuel industries.
The remaining challenges are technological issues related to compatibility, the possibility of integrating solutions, and the problem of awareness about excessive attachment to old, known solutions.
Among the investment plans, retailers again point mainly to implementing KSeF – this item was indicated by 35% of them. The highest rate is noticeable in the retail trade and food sector.
Despite investment plans, another 20% of retailers declare they do not offer software solutions. Respondents in this group focus on automation, modern devices and renewable energy sources.
12% of consumers intend to invest in artificial intelligence in trade surveyed companies. The following places are e-receipts (9%), cloud (8%) and new loyalty systems (8%).
The RetailTech 2023 report was based on a study of 100 medium and large companies with an annual turnover exceeding PLN 100 million. It was carried out by the Keralla Research B2B Research and Solutions Institute in August 2023. The respondents represented the following trade sectors: retail, food, pharmaceuticals and cosmetics, furniture and electronics/home appliances, clothing and footwear, and fuels.