Retailers Target 2015 Investments at Big Opportunities and Big Risks

Over the last few weeks, we’ve been sharing results from our 2015 BDO Retail Compass Survey of CFOs. Key themes have emerged around optimism, growth, M&A and the focus of our latest set of findings: investment. 

Following modest but optimistic projections for overall sales, retail CFOs forecast a notable 9.9 percent boost to e-commerce sales in 2015. This bullish projection comes on top the Commerce Department’s estimate of a record-breaking $304.9 billion in U.S. online sales in 2014. With online sales growing at a record clip, many retailers are making moves to catch up and/or capitalize on the shift in spending. In fact, a plurality of CFOs (37 percent) say expanding e-commerce and mobile offerings is their primary growth tactic for 2015.

To fuel that growth, retailers are putting their money where their mouths are. When asked where they plan to spend the most capital this year, 22 percent of CFOs point to e-commerce and mobile channels. PayPal and Ipsos report that mobile commerce is growing at nearly three times the rate of overall e-commerce, and our survey shows that retailers are steadily realizing the need to enhance each touchpoint on their customers’ path to purchase. To keep up with the surge in mobile shopping, 68 percent of CFOs plan to increase their investment in mobile technologies in 2015, a leap from the 40 percent who planned to do so last year.

While consumers are demanding an omnichannel experience marked by speed, selection and convenience across all interactions with the brand, retailers are finding their resulting investments to be a difficult balancing act. As they work to optimize their digital platforms and internal infrastructure to capture and fulfill more orders, they are also increasingly focused on strengthening and securing those platforms—particularly in the light of high profile security breaches at major retailers including Michaels, Supervalu and Home Depot. This concern was recently echoed in our 2014 Retail RiskFactor Report, which found that 91 percent of the nation’s largest retailers cited security breaches as a risk to their business last year.

Similarly, their concerns aren’t just lip service. Retailers are taking action to proactively prepare for and mitigate against security risks. Twenty-eight percent of CFOs say they will invest the most capital into their IT systems and technology this year. In addition, more than half of CFOs (56 percent) have increased their spending on cybersecurity in the last 12 months. Among these retailers, 89 percent have begun using new software security tools and 81 percent have created a security breach response plan. At the same time, 40 percent have hired an external security consultant and 11 percent have brought in a Chief Security Officer.

For the latest set of findings, view our summary here. And stay tuned for the full Compass Survey of CFOs report and infographic of top findings in the coming weeks.