Will Retail IT Be Spared The Recession?

Although there is little doubt that the United States is in for a very rough economic period over the next half-year or more, there is ample reason to believe that retail IT may escape mostly unharmed.

Let's not get too optimistic here. "Mostly unharmed" doesn't mean escaping untouched. But it does mean that when large companies—especially retailers—have to suddenly make do with a lot fewer people, they need that good ole IT magic more than ever. They need the efficiencies that IT promises and the employee-replacing devices that IT enables.

An interesting blog from a Forrester Research analyst makes the point that this recession will be gentle, mostly because so much of the fat was already obliterated back in 2002 after the dot-com movement imploded.

That's a fair point, but retail IT has so many other things going for it. The demand for greater profitability means improved efficiency, which is an IT function.

Retail efficiency also means more E-Commerce (and mobile and social network interactions), and that all requires programmers and other IT-like folk. From one optimistic perspective, a recession might even deliver a boost for IT hiring and resources, because both are needed to allow the rest of the company to downsize without overly impacting revenue.

Customer service layoffs will likely force dollars to be spent for more intelligent software to emulate and automate what those CS people used to do, assuming that the coding will be even more expensive than overseas outsourcing.

Even retail store owner franchisees will play a role. As the economy has hit them hard, they have increasingly turned to tech investments to squeeze extra pennies of margin out of the bagels and donuts. Ironically, those were investments they didn't feel the need to make when revenue was much more free-flowing.

Security will play a key role in taking away the retail IT pain, too. As PCI rules force more compliance, dollars for security will be given ultra-high priority. That's not merely software; it's upgrades for POS, kiosks, wireless and, ultimately, RFID for warehouse, shelves and the full supply chain.

Not to suggest that the economic problems on the horizon will be mild or that they shouldn't be taken seriously, but as George Bailey told us decades ago, one big part of surviving bad economics is psychological. By not panicking and focusing on the value you always have brought, there's a fine chance you'll survive a lot better than you feared.