Further consolidation to hit UK retail software market

Market is over-crowded, according to analyst consultancy, and merger activity will be rife this year

The UK retail software landscape is the most over-crowded in Europe and is in line to witness further consolidation in 2007.

That is the verdict of software consulting firm Strategic Software Partners (SSP), which has claimed there are a whopping 248 outfits currently battling it out in this part of the UK market, compared with just 53 in Germany and 76 in Scandinavia.

“The number of retail software vendors in the UK as a proportion of the population is far greater than anywhere else in Europe,” said SSP analyst Graham Stanton.

“Although we expect to see more demand in areas such as business intelligence and analytics, there are too many fish in the sea.”

2006 saw 15 trade sales in the retail software sector in the UK, according to SSP, with troubled giant Torex among the most aggressive consolidators.

But UK retail VAR Triangle argued that the recent rash of merger and acqusition activity has run its course.

“There are only one or two retail software firms left of a reasonable size that are still independent,” argued Triangle’s managing director Kevin Drew. “The reality is consolidation has already happened.”

“If it goes any further, retailers won’t have enough choice,” added Karen Dyke, Triangle’s retail business director.

But Sarah Taylor, retail industry director at Oracle - which itself snapped up retail software powerhouse Retek two years ago (CRN, 22 March 2005)- said: “I don’t think consolidation is over by any stretch. Retail requirements are always changing and Oracle will continue to look [for targets].”