Mounting innovation debt caused by legacy systems risks preventing retailers from investing in the modernisation needed to create competitive advantage, driving a growing trade-off between margin protection and innovation, according to a new study by global commerce technology leader, PMC.
Yet, with modern, composable ecosystems, underpinned by the right strategy and the right partners, retailers can overcome these constraints and innovate themselves out of this cycle of underinvestment and diminishing returns.
Unpicking the cost of complexity
New research in the ‘Winning The Race To Unified Commerce’ report, conducted in partnership with Retail Economics, reveals that UK retailers would need to invest an additional £25billion to modernise their core systems – equivalent to 5.3% of their annual revenue – highlighting the scale of the tech debt now holding back transformation.
“The scale of this modernisation bill underscores just what retailers are up against – not only are they having to trade against fragile customer demand and volatile conditions externally, but they’re also facing the cost of unpicking complexity within their own organisations,” commented Rich Lowe, CEO of PMC.
“However, behind the headline cost lies significant opportunity – and, with the right systems, people and partners in place, retailers can unpick those complexities, stitch by stitch, and turn a cost burden into a strategic driver of growth.”
Breaking the vicious cycle of innovation debt
Retailers are finding new ways to innovate their way out of legacy tech debt, according to the report.
Original research of over 100 senior commerce leaders showed that data integration which supports AI readiness was retailers’ top priority for investment for the year ahead (41%). This was closely followed by systems integration and cybersecurity for over a third (36% each).
Encouragingly, these foundational investments are supporting retailers’ efforts to turn tech debt cost burdens into growth capabilities and ROI delivery; over half (56%) say that digital transformation has led to revenue growth for their organisation.
“Retailers know they need to balance protecting margins today with investing for tomorrow,” said Lowe. “But putting off modernisation only makes the problem bigger – legacy complexity compounds, change becomes harder and innovation gets slower. Breaking that vicious cycle relies on a foundational reset. Supported by the right partners and tech ecosystems, retailers can ready themselves for growth, moving faster, innovating more effectively and staying competitive in the long term.”
To find out more about how retailers can accelerate their unified commerce strategies, download the PMC and Retail Economics report: Winning The Race To Unified Commerce Research Report | PMC.
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