Alphameric has resigned from the race for supremacy among consolidating retail-sector IT suppliers, just as retailers were starting to look unsteady in the face of faltering consumer spending and a waning housing market.
It will pass the baton to Torex Retail, selling its retail arm in a deal worth up to £30m if Alphameric shareholders give their approval on 29 November.
The proposed deal will leave the £61.5m software and services supplier with a business nearly halved in size, but with cash to spend on further acquisitions.
Although Torex Retail is about the same size as Alphameric, it works solely in retail and has an established European business.
Andrew Bletherwick, managing director of Alphameric Retail, said: "The opportunity for Alphameric is greater in the hospitality and leisure sectors. The major retail business requires a large-scale operation."
Jennifer Thomson, retail-sector IT analyst at IDC, said European retail is being driven by "consolidation brought on in part by the expansion of the European Union". The analyst predicted a seven per cent growth in IT services to the sector as a result.
Rhys Williams, retail analyst at broker Seymour Pierce, said all is not lost for IT suppliers.
"On the one hand, consumer spending is set to disappoint at Christmas as the housing market, which propped it up, looks set for a fall. But as retail gets tougher, firms may spend more on IT to improve their margins," he said.
Bletherwick added that the sector is becoming "bipolar". He said spending on non-essential items is set to fall under pressure from rising interest rates, stealth taxes and consumer debt. But essential commodity items will remain strong, he claimed.
"There will be a slowdown in retail spending as whole. And there will be winners and losers in that," Bletherwick added.
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