Datamonitor's new “Retailing in a Recession: The Opportunities for Outsourcing” report explores the increasing economic pressures affecting the retail industry, translating to companies in Western Europe and North America increasingly look to outsource technology and business processes in a bid to cut costs, and focus on core skills.
“To survive or succeed in the downturn, retailers will be looking for efficient ways to generate revenue by managing the demands of the customer, while at the same time making cost savings across the organization,” says Christine Bardwell, retail technology analyst with Datamonitor and the report’s author. “Many are looking to technology and services to help cut the cost of managing inventory, non-critical business processes and store operations. Although retailers are outsourcing in a recession, the types of contracts have changed; large scale infrastructure overhauls are less common. Instead, retailers are requesting a mixture of services on lower value contracts or transformational deals over longer periods of time.”
In the current uncertain environment, the priority for a retailer will be to protect margins. In a climate of falling sales, while facing cost and finance pressures, retailers are battling to keep afloat. As such, cost cutting has become their main priority and any option for reducing loss is being considered, according to the report.
“Cutting down on staff and inventory, the two biggest costs for a retailer, will be the principal areas of focus,” says Bardwell.