ICT and e-Business Impact in the Retail Industry - empirica

e-Business in the Retail Sector3.8 Summary of the state of play of ICT and e-business inretailThis chapter has shown that ICT and e-business can be beneficial for the whole supplychain of the retail industry. It can support procurement, internal operations as well assales and distribution. However, there are challenges related to e-business use, forexample related to ICT use in SMEs and with regard to a generally higher level of ICTand e-business in the US. Key findings of chapter 3 include the following:Increase of ICT and e-business use since 2003: The results of the 2007 surveycan be compared with a similar survey conducted by e-Business Watch in 2003.The 2003 study found that the use of e-business in the retail sector was far frombeing a pervasive reality and below the average adoption rates in other sectors.The 2007 survey found that ICT and e-business use have become more prevalentin firms of all size classes. The 2003 study argued that the main opportunitiesstemming from e-business, similarly as in other sectors, were efficiency andproductivity gains and, thus, cost savings. This was found to be still the same in2007.ICT infrastructure, skills and investments improved: The quality of SMEs'internet access has significantly improved between 2003 and 2007. However, thereis scope for further improvement. Currently, retailers comprising about 45% of thesector's employment are connected by broadband (>2 Mbit/s). Diffusion of internalW-LANs has been fast. More than 50% of large retailers operate a W-LAN, and 35-40% of small and medium retailers. As regards ICT skills, only about 10% of allretail companies employ ICT specialists; even among large retailers, only about50% do. Many companies completely outsource ICT services to external serviceproviders. The attitude towards ICT investments and budgets is more positive thana couple of years ago. A third of the retailers plans to increase their ICT budgets,only few expect budget cuts for the forthcoming financial period.Electronic procurement: Online procurement practice can offer considerable costreduction benefits to the retail industry, mainly through process streamlining andimproved purchasing conditions. The level of retail firms ordering online increasedfrom firms representing 43% of the industry’s employment in 2003 to 55% in 2007,and the share of e-procurers increased in all size classes. In those companies thatprocure goods through the internet or computer-mediated networks, the share ofgoods actually ordered online increased, too. The use of Supply ChainManagement (SCM) systems also increased considerably, from 6% in 2003 to 19%in 2007 (weighted by employment), but this is exclusively due to a higher level ofSCM use in medium-sized and large firms.Internal e-business systems: Internal e-business operations can significantlyenhance workflows and business processes and thus increase productivity.However, companies representing almost half of the industry’s employment saidthat they only conduct some processes by e-business. 22% even said “none”; a“good deal” was stated by 20%, and in 11% most processes are conductedelectronically. As regards particular systems, firms representing 60% of theindustry’s employment reported to have a software application to manage theplacing or receipt of orders, 59% a bar-coding system, 51% a warehouse or depotmanagement system, and 16% an ERP system. RFID is not yet very common in78