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Overview

User Survey Analysis: Retail

Supply Chain Trends, Europe, 2010 Jeff Roster, As of September 2010

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2010 Gartner, Inc. and/or its affiliates. All rights reserved.

• The intent of the survey: - To advise technology and service providers regarding the European retail sector's current and future adoption plans and investment priorities for IT. - To identify what retailers perceive to be the key trends, drivers of and barriers to technology spending.

• The study was conducted in the fourth quarter of 2009. This document completes a series of three documents looking at European IT spending behaviors. • Respondents to the study were located in France, Germany and the United Kingdom.

Key Findings

Recommendations

• Supply chain spending will build steam through the second half of 2010 and will increase in 2011.

Develop an RFID point of view. Retailers are increasingly likely to consider the impact of RFID capability for their supply chain and in store experiences. It is critical that you help clients understand what RFID can and can't do.

Prepare for moderate spending recovery in supply chain initiatives through 2011. Prioritize your client base, focusing on quick and late adopters, and nonadopters who are planning more projects than aggressive adopters.

• Order management systems will enjoy the strongest demand through 2011. • RFID has gained traction in general and specialty retail. Grocery is now embracing RFID. • Quick and late adopters of IT will start the majority of new initiatives in order management systems, sourcing systems, transportation management, warehouse management systems and RFID.

- Lead with order management systems through 2010 and sourcing systems in 2011. - Focus on general retail. In all the categories surveyed, this segment offers the largest growth opportunity.

Develop software as a service (SaaS) offerings with built-in best practices to attract more Tier 2 and Tier 3 retailers. Tier 2 retailers are interested in many supply chain applications, but this group will be unreachable selling currently priced enterprise software.


Survey Objective and Methodology

Respondent Demographics

• The intent of the 2009 Western European retail survey is to understand the European retail sector's current and future adoption plans for IT.

Size of Retailers

Grocery/Supermarket 20%

• Methodology statement: - The data was collected from November and December 2009. The respondent pool consisted of 61 senior-level executives in retailing.

Subsegment

$1 Billion or More 41%

- This data, while older, still illustrates trends Gartner is observing in inquiry patterns, trade press coverage and ongoing Gartner research.

General Retail 28%

$250 Million to Less Than $500 Million 46%

Specialty Retail 24% Hotels/Restaurants 28%

$500 Million to Less Than $1 Billion 13%

N = 61

Respondent Demographics (Continued)

European Retailers Resume Moderate Spending on Supply Chain Initiatives Question: What best describes your company's status with supply chain systems?

Country

Order Management Systems

United Kingdom 28% Germany 39%

70

Sourcing Systems

54

Transportation Management Systems

43

Warehouse Management Systems

41

RFID

Up-to-Date Technology

N = 61

10

0

France 33%

N = 61

5

3 3

3

7

10

2

8

23 3

2 7

5

7

20

Started but Not Finished

40 60 Percentage of Respondents Will Start This Year

80

100

Will Start Within Two Years


General Retail Provides Best Opportunity in Order Management

Nonadopters Plan to Outpace Other Profiles in Spending on Order Management Systems

Question: Please check the one column that best describes your company's status with order management systems.

Question: Please check the one column that best describes your company's status with order management systems.

Tier (Percent)

Segment (Percent) Grocery/ Supermarket

Tier 1

83

Specialty

67

General 63

Leading-Edge Adopter

75

7

47

18

Quick Adopter

18

73

Late Adopter

9

70

5

9

10

25

Hotel/Restaurant

0

8 8

444

76

Tier 2

Adoption Profile

20 40 60 80 Percentage of Respondents

Up-to-Date Technology

0

100

Started but Not Finished

66

29

Nonadopter

20 40 60 80 100 120 Percentage of Respondents

Will Start This Year

60

0 Up-to-Date Technology

Will Start Within Two Years

20

20

40 60 Percentage of Respondents

Started but Not Finished

20

80

Will Start This Year

100

Will Start Within Two Years

N = 61

N = 61

General Retail Planning Major Investments in Sourcing Systems Through 2011

Nonadopter Retailers Planning Major Investments in Sourcing Systems

Question: Please check the one column that best describes your company's status with sourcing systems.

Question: Please check the one column that best describes your company's status with sourcing systems.

Tier

Segment Grocery/ Supermarket

Tier 1

38

13

13

83

67

General 61

4

47

20 40 60 Percentage of Respondents

Up-to-Date Technology

N = 61

Leading-Edge Adopter

50

Quick Adopter

50

7

18

18

Late Adopter

14

14

3 3 3

60

11 Hotel/Restaurant

0

8 8

13 Specialty

Tier 2

Adoption Profile

80

Started but Not Finished

29

0 Will Start This Year

66

Nonadopter

20 40 60 80 100 120 Percentage of Respondents

0 Up-to-Date Technology

Will Start Within Two Years

N = 61

20

40

10

20

30 40 50 Percentage of Respondents

Started but Not Finished

Will Start This Year

20

60

70

80

90

Will Start Within Two Years


General Retail Looks to Be the Best Bet for New Opportunities in TMSs

Quick Adopters Provide the Best Growth Opportunity

Question: Please check the one column that best describes your company's status with transportation management systems.

Question: Please check the one column that best describes your company's status with transportation management systems.

Tier

Segment Grocery/ Supermarket

Tier 1

48

67

Quick Adopter

50

41

6 12

12

Late Adopter

5

3

37

5

5

3

4 4 4

Hotel/Restaurant

20 40 Percentage of Respondents

Up-to-Date Technology

50

53

General 45

0

Leading-Edge Adopter

4 4

Specialty

Tier 2

Adoption Profile

0

60

Started but Not Finished

18

Nonadopter

20 40 60 Percentage of Respondents

Will Start This Year

80

40

0

Will Start Within Two Years

Up-to-Date Technology

10

20 30 40 Percentage of Respondents

Started but Not Finished

50

Will Start This Year

60

70

Will Start Within Two Years

N = 61

N = 61

Tier 1 Retailers Planning WMS Investments Through 2011

Quick Adopters Look to Be the Best Bet for Growth

Question: Please check the one column that best describes your company's status with warehouse management systems.

Question: Please check the one column that best describes your company's status with warehouse management systems.

Tier

Segment Grocery/ Supermarket

Tier 1

44

8

53

20 40 60 Percentage of Respondents

Up-to-Date Technology

N = 61

50

41

Quick Adopter

18

12

36

Late Adopter

5

40

14

3

9

3

13

Hotel/Restaurant

0

Leading-Edge Adopter

8

General 38

8

67

Specialty

Tier 2

Adoption Profile

80

Started but Not Finished

12 6 6

0 Will Start This Year

20 40 60 Percentage of Respondents

Nonadopter

80

60

0

Will Start Within Two Years

Up-to-Date Technology

N = 61

10

20 30 40 Percentage of Respondents

Started but Not Finished

Will Start This Year

50

60

70

Will Start Within Two Years


Grocery/Supermarket Aggressively Developing RFID Capabilities

Nonadopter Retailers Could Become Largest Users of RFID

Question: Please check the one column that best describes your company's status with RFID.

Question: Please check the one column that best describes your company's status with RFID.

Tier

Segment

Specialty Tier 1

12

Tier 2

4

14

8

20

12

General

18

6

Grocery/ Supermarket

17

8

6

Quick Adopter

14

Late Adopter

5

3

7

5

14

3

9

10 20 30 Percentage of Respondents

Up-to-Date Technology

Leading-Edge Adopter

7

7

4

Hotel/Restaurant

0

Adoption Profile

40

6

0

Started but Not Finished

Will Start This Year

Nonadopter

10 20 30 Percentage of Respondents

40

0

Will Start Within Two Years

5

Up-to-Date Technology

20

20

10

15 20 25 30 Percentage of Respondents

Started but Not Finished

Will Start This Year

35

40

45

Will Start Within Two Years

N = 61

N = 61

Methodology

Definitions

• The data was collected during November and December 2009 from a respondent pool of 61 senior-level executives in retailing. Screening questions were used to determine detailed IT strategy and spending plans. Survey respondents had significant IT decision-making authority.

Gartner defines retail tiers by revenue. Tier 1 retailers have yearly revenue of more than $1 billion. Tier 2 retailers have yearly revenue of from $250 million to $1 billion. Tier 3 retailers have yearly revenue of from $50 million to $250 million. Retail subsegments are made up of general retailers (nonspecialized stores), specialty stores (building materials, hardware, automotive, fuel, apparel, furniture, miscellaneous and nonstore), grocery stores (food, beverage and tobacco stores) and, finally, convenience stores.

The retailer adoption profile includes four classifications:

• While this data is older, it illustrates trends Gartner is observing in inquiry patterns, trade press coverage and ongoing Gartner research.

- Leading-edge adopter — These retailers are at the cutting edge of technology. - Quick adopter — These quickly follow the leaders in technology adoption. - Late adopter — These retailers typically wait until a technology has been proved, then consider adoption. - Nonadopter — These retailers adopt new technology only when it becomes necessary.

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