IHL looks at coronavirus impact on retailers’ IT spending

While coronavirus-related declines in consumer traffic will impact retailers’ IT spending, IHL Group also sees some positive trends.

The industry analysis/consulting firm now forecasts 2020 worldwide IT spend by the retail and hospitality industry will total $270 billion. This is up 5.6% from 2019, but adjusted downward for the expected impact of the coronavirus 9COVID-19) on the global economy.

IHL predicts that consumer traffic will be down for a period, but there will also be developments that will help to buffer the negative downside in retail IT spend. These include less travel, more focus on specific projects and opportunities to replace equipment with less impact on operations. 

In addition, IHL says the most significant retail investments in IT are in moving solutions to the cloud, particularly those that optimize the relationship for digital orders with store fulfillment. The firm predicts that the trends to optimize click-and-collect and delivery will double their previous investment as a result of consumers seeking to avoid crowds into June 2020. 

Other technologies IHL expects retailers to significantly increase their investments in include remote tools, solutions that decentralize the supply chain, artificial intelligence/machine learning, forecasting solutions, and analytics. Retailers have also already made decisions about investing in POS technology based on the expiration of the Payment Card Industry (PCI) data security standard 2.0. 

“Overall, we view COVID – 19 as a 1 fiscal quarter significant blip on retail consumer spending, with less impact rolling through on 2020 IT spend,” Greg Buzek, founder and president of IHL Group, said in a corporate blog post. “If there is to be a significant drop in retail spend as a result of COVID-19 and resulting economic impact beyond 1 fiscal quarter, the IT impacts will be more significant in 2021 spend than for 2020. Of course, should the virus impact grow longer than one quarter worldwide, all growth will be reduced further.”