IT Spend: Outlook and Opportunities During COVID-19

Good opportunities still exist in retail and restaurant verticals – if you know where to look.


The COVID-19 pandemic has dealt an undeniably heavy blow to the economy, but some sectors are managing to keep their heads above water better than others. Though lockdowns swept across retail in mid-March, government mandates spared “essential” retail businesses like grocery stores, pharmacies and sprawling membership clubs, where shoppers flocked to stockpile pantry staples. With more than five months of the coronavirus crisis in the rearview mirror, fears over widespread cutbacks in IT spending are starting to subside now that the industry has a clearer picture of where and how retail can confidently greenlight tech investments.

Despite the report that apparel and department stores and their hard-goods peers are planning to prune back IT spend by more than 9 percent while hospitality enterprises like restaurants and hotels are contracting IT spend by more than 14 percent on average, it’s not all doom and gloom for the vendors that support these ecosystems. The essential retailers that saw a surge in pandemic demand are bucking the downward trend in IT spending, planning to bump investments by 5.5 percent instead, according to retail and hospitality tech research and advisory firm IHL Group.

Some IT Spend is Driven by New Needs and, Maybe, Bargain Hunting

Some savvy merchants will take advantage of the attractive terms and reasonable interest rates that some vendors are offering to recoup business during the downturn. But beyond that, much of this uptick in planned tech dollars can likely be attributed to the need to virus-proof store surfaces. Safety-enhancing measures are now commonplace at virtually any retailer that’s open for business. Contactless payments have gotten a significant boost in recent months as consumers remain wary of touching point of sale (POS) pin pads or handing over payment cards to store personnel. CVS, for example, is seizing on the contactless trend, announcing plans to deploy PayPal QR codes at checkout that enable shoppers to pay using a convenient touch-free smartphone scan.

Self-checkout is also on the rise. Beyond the fact that 61 percent of shoppers responding to a 2019 SOTI survey said they’d rather use self-service technology than interact with a salesperson, concerns about the coronavirus underscore the importance of giving customers autonomous ways to transact quickly and conveniently. Delivery and fulfillment have seen massive shifts, as quarantining consumers strained last-mile networks with overwhelming demand and forced stores to deploy omnichannel features like buy online, pickup in-store or curbside pickup—seemingly overnight. Even Amazon’s vaunted supply-chain prowess buckled beneath the staggering burden of keeping up with panic-buying shoppers, illustrating opportunities for retailers to optimize their own supply networks and stave off similar collapses and missed sales.

The market for electronic shelf labels (ESL) is set to top $3 billion by 2027, says, as this tech offers another solution that’s proving especially useful amid the pandemic. Instead of having store employees manually switch out hundreds or even thousands of static pricing labels dotting aisle after aisle, retailers that upgrade to ESLs can instead redeploy their personnel to more critical operations and update shelf-level info remotely and safely.

Robotics solutions are getting a second look from retailers striving to balance costs with cleanliness. Robotic cleaners, for example, can keep stores spotless and prevent human employees from having to be out among shoppers in store aisles sweeping and sanitizing, while warehouses can leverage bots to maintain picking productivity while reducing personnel density.

And mobile is the name of the game these days. Any investment that nurtures engagement with consumers through their ever-present smartphone is virtually a sure bet, especially as digital commerce continues to surge, growing an estimated 18 percent this year, eMarketer says.

Follow the Money

Despite the challenges of navigating the COVID-19 outbreak, savvy developers can position for success by chasing industry trends and understanding IT spend. Seizing opportunities to serve retailers investing in safety-oriented store and supply-chain technologies can spell the difference between simply surviving the pandemic and thriving in the new normal.

Mike Monocello

The former owner of a software development company and having more than a decade of experience writing for B2B IT solution providers, Mike is co-founder of DevPro Journal.

Mike Monocello

The former owner of a software development company and having more than a decade of experience writing for B2B IT solution providers, Mike is co-founder of DevPro Journal.