Retail companies have been cutting back on investment in technology, new data shows.
The volume of technology-related mergers and acquisitions (M&A) within the retail industry shrunk by 43% between H1 2021 and H1 2023, according to figures from GlobalData, the parent company of Retail Insight Network.
This comes as a survey by the Confederation of Britain Industry (CBI) found that UK retailers expect to reduce investment over the next 12 months, and anticipate a moderate deterioration in their business situation over the next three months.
Martin Sartorius, Principal Economist at the CBI, said: “Retail sales in August fell at their quickest pace in over two years, culminating a summer that many retailers would rather forget. Against a backdrop of rising interest rates and weak demand, retailers foresee cuts to investment over the next year, while employment is expected to fall again next month.”
In H1 2023, GlobalData recorded just 463 technology-related deals, compared to a high of 813 deals in H1 2021 when successive lockdowns conspired to speed up digital transformation and fuel technological investment.
Now, customer experience-driven innovation appears to have been put on hold in favour of critical investments and cost-cutting. In the US, Gap, J.Crew, Walmart, Nordstrom and more have made significant job cuts since the start of the year, while Selfridges, Tesco, Asda, Wilko and New Look have axed thousands of jobs in the UK since January.
Recent tech M&A and investments in the retail space
In early August, British department store giant John Lewis renewed its partnership with Google Cloud, with John Lewis Partnership CEO Kankiwala saying: “Investing in cutting edge technology is not just a choice, it’s a necessity for a modern retailer like us.”
In May, Ingka Group (the largest owner and operator of IKEA stores in 31 countries) acquired Made4net, a US-based supply chain software provider, to improve its order fulfilment.
And February saw eBay acquire 3PM Shield, a provider of advanced artificial intelligence-based marketplace compliance solutions, which will help to enhance the company’s ability to prevent the sale of counterfeit items and illegal goods.
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