Retailing in a Recession - The Opportunities for Outsourcing

Retailers want to cut costs and achieve business flexibility from outsourcing.

The recession has hit consumers and retailers alike. A large number of retailers in North America and Western Europe are suffering as a result of low consumer confidence. Heavy discounting is a way of maintaining footfall, but falling retail prices have a negative effect on the economy, causing further financial uncertainty. The increasing economic pressures affecting the retail industry means that companies will increasingly look to outsource technology and business processes to cut costs and focus on core skills. This report provides a detailed analysis of service providers capabilities of selling to the retail sector in the current recession.

This report:
• Contains analysis of the difficulties and opportunities retailers face in the current economic downturn.
• Looks at the opportunities available to IT and BPO service providers in North America and Western Europe.
• Provides analysis on leading players in the market and discusses future predictions.
• Offers recommendations to vendors about how best to target the retail sector based on recessionary requirements.

Key findings from this report:
Cutting down on staff and inventory, the two biggest costs for a retailer, will be the principal areas of focus. Retailers are also cutting costs in other areas: one of the biggest current hurdles to outsourcing is the industry-wide reduction of capex in retail.

Choosing the right service provider is very important. Retailers will expect outsourcers to not only know the demands of the retail industry, but also the challenges of their particular retail sector. As such, a service provider must take strides to understand the pulse of the business in order to work in partnership with the retailer.

Holding almost a quarter of the market between them, Datamonitor believes the top 2 services providers to the retail, wholesale and distribution sectors are IBM Global Services, and HP Services. Datamonitor estimates that in 2008, IBM held around 14% of the services to retail market, and we expect similar results for 2009.