We read an interesting report by Prologic in association with Martec recently, analysing spend on IT and e-commerce in the fashion sector, dated October 2009. Prologic supplies ERP systems to fahion retailers.The report is based on 40 companies with a combined share of 18% of the fashion industry. On average, IT spend is 2.3% of sales. E-commerce sales are averaging 6.3%, but the range is wide. 28% of those interviewed felt this was sensitive information - one wonders why when successful & enlightened retailers like John Lewis publish this data regularly.
The broader trading context shows that 38% are looking at increased sales, 38% at flat sales with 18% decreasing. Last year's priority was cost-cutting, but this year's first priority for 63% of them is e-commerce. Most companies say e-commerce is one of the few areas where they are seeing growth. Typical investments are on broadening the range, targeting more countries and improving website usability.
68% of fashion companies' websites are profitable and half say that profitability was achieved in the first year. Two thirds of the profitable businesses said that their e-commerce websites were more profitable than stores. 77% believe that their website will trade more profitably than stores in 2010. Oddly, one third were not trading profitably. The writers conclude that those who were not using this sales channel were missing out on profitable growth opportunities.
E-commerce budgets were variable, but the average spend was between 5% and 7.5% of sales with most predicting this % would increase in 2010 as further investments are made in e-commerce.