Retailers' IT budgets have been slashed by about 20 per cent over the past year, down from 1.3 per cent to 1.1 per cent as a percentage of sales, according to the latest Martec International IT in Retail report.

But the report, which surveys 100 companies, shows that there are some bright spots thanks to multi-channel retailing and the growth of mobile internet access and m-commerce. In 2005, 70 per cent of retailers did not use mobile technology in-store - now 57 per cent use or plan to use it. It is also increasing in the supply chain, with use rising from 53 to 62 per cent.

Five points down on last year, store systems remain the highest IT priority for investment for 19 per cent of companies and almost a quarter of retailers are planning to replace their systems. Elsewhere, the increasing focus on non-store sales is reflected in the report, which shows e-commerce and websites to be the second most important area for investment. This has not been adversely affected by the recession, now accounting for 4.8 per cent of sales, up from 4.4 per cent last year. The majority of retailers now also have a transactional website, and this has increased from 68 to 74 per cent.

"Despite the obvious cutbacks, there are some bright spots for retail investment in IT, particularly in e-commerce, multi-channel and PCI compliance," says Richard Lowe, CEO at BT Expedite, which sponsored the report. "We're also seeing retailers looking to sweat their existing assets as far as possible and this is sparking plenty of demand for small IT projects with quick payback. Where bottom line improvement can be demonstrated, retailers are more than willing to embrace new technology."

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