Retail CFOs Expect 2016 to Bring a Rise in E-Commerce

As the digital retail landscape continues to grow and evolve, retailers are evaluating the best way to balance investments among their online and brick-and-mortar operations. But one thing remains clear: We have not yet reached e-commerce’s zenith. According to our tenth annual Retail Compass Survey of CFOsall of the 100 retail CFOs we polled anticipate their online sales will increase or stay about the same in 2016, while none believe that their online sales will suffer. On average, CFOs expect their online sales to grow nearly 10 percent in the year ahead. Their sentiments are unsurprising; in 2015, e-commerce sales accounted for over half of all retail sales, totaling $341.7 billion for the year—a 14.6 percent increase from 2014, according to non-adjusted estimates from the U.S. Department of Commerce.

Despite the anticipated growth in e-commerce, the CFOs we surveyed are not investing most heavily in their online and mobile channels, with just 9 percent citing it as a primary area of investment this year. Rather, 31 percent of CFOs are focusing their capital on redesigning and remodeling their brick-and mortar locations, making it this year’s most popular area of investment and suggesting that retailers are looking to replicate the successes of their online strategies in stores.

With an uptick in online sales comes the question of how to protect the constant flow of sensitive consumer data from cyber-attacks. The retail industry is naturally susceptible to cyber breaches as a result of the volume of data it processes, as well as the number of potential entry points that exist throughout a retail organization, and a cyber-attack could be devastating for businesses and customers alike. With cyber incidents on the rise across industries, more than half (52 percent) of the CFOs surveyed say they increased spending on cybersecurity in the past 12 months. This may be explained, in part, by the fact that 69 percent of CFOs say cybersecurity regulation will increase in the year ahead.

Retailers are pursuing a broad array of strategies for addressing cyber threats. Among those CFOs who say they increased spending on cybersecurity last year, the most-frequently cited tactic was leveraging new software security tools, noted by 85 percent, followed by creating a response plan for security breaches (71 percent), hiring an external security consultant (43 percent), and bringing on a Chief Security Officer (19 percent).  In general, consumer businesses are getting increasingly creative in how they assess and adapt their cybersecurity strategies. For example, according to a recent Wall Street Journal article, General Motors invited white-hat hackers to find cybersecurity gaps in GM vehicles, websites and software.

Another way retailers are arming themselves and their consumers against cyber-attacks is by ensuring that they are Europay, Mastercard and Visa (EMV) compliant. Slightly more than two-thirds (76 percent) of the retail CFOs we surveyed say that their companies have completed their EMV transition.

For more insight into our findings from this year’s tenth annual Retail Compass Survey of CFOs, click here. Stay tuned to the blog for the full survey report, featuring addition insights from the Consumer Business practice leads.