scandiweb: how to make digital a goldmine instead of an Achilles' heel for European retailers

By Antons Sapriko, Founder of scandiweb

The last few years have been life changing, to say the least, for a lot of European retailers. Many reported a mixed fiscal 2025 year due to the latest microeconomic pressures and shifting consumer habits. The economic and logistic pressures from global supply chain disruptions forced many large enterprises to raise prices, while legacy IT systems couldn't handle the operational emergencies, leading to big financial losses.

The scale of IT investment in European retail is growing regardless. In 2023, 73% of retailers in Germany, France, and the UK integrated omnichannel platforms to connect physical and digital retail experiences, contactless payment technology was adopted by over 85% of retail outlets in Western Europe, and European supermarkets deployed IoT sensors to improve inventory accuracy by 24%, while GDPR compliance drove major investments in data governance tools and customer data platforms.

Zooming out further, the European IT spending market was worth $1,153.64 billion in 2024 and is projected to reach $1,531.97 billion by 2033, rising at a CAGR of 3.20%. Within retail specifically, over 71% of European retail brands engaged third-party service providers in 2023 to manage their cloud migration and software maintenance tasks, with managed IT services leading to a 26% reduction in operational downtime for mid-sized clothing retailers.

Yet the digital foundation supporting all of this investment remains fragile. According to official EU statistics, nearly 96% of large EU retailers and only 70% of the 5.4 million retail businesses have reached at least the basic level of adoption of digital tools, and only 25% of EU businesses have integrated the use of AI into some of their IT processes. Hiring skilled IT in-house specialists remains one of the biggest hurdles, with up to 57% of businesses citing open vacancies as hard to fill.

According to the EU Agency for Cybersecurity (ENISA), 58% of large organisations in the EU expanded cybersecurity related IT spending in 2023 following increased digital threats and data protection regulation compliance requirements - yet for the overwhelming majority of Europe's smaller retailers, cybersecurity remains an afterthought rather than a budget line.

When complexity becomes the enemy

The source of this weakness lies in the scale of the business itself. The more a company goes digital, the larger and more complex its IT operations become. At the very minimum, it adopts and manages communication and collaboration tools for its staff.

Depending on the line and type of business, the company then builds a website and integrates various modules enabling product or service delivery - payment systems, cloud infrastructure, databases, chatbots, or integrations with third-party marketplaces. Physical assets such as offices, goods, or storage space require digital monitoring tools on top of that. Together, all of those make up a multilayer, omnichannel IT environment, each element of which generates data and errors that need to be analysed and fixed.

Since 93% of European retail businesses have no more than 10 employees and a turnover of no more than €2 million, managing and maintaining this kind of infrastructure becomes a serious challenge. Only 14% of smaller European retailers had in-house IT specialists as recently as 2020, and this gap will only intensify as digital offerings scale, because the volume of IT elements to monitor and fix grows exponentially with every new tool, channel, or integration added.

The consequences of inadequate IT infrastructure are no longer theoretical. Companies lacking real-time operational visibility struggle to react to disruptions quickly enough, and the financial damage compounds fast. One of scandiweb’s clients is in large furniture retail and we were dealing with over 200 open purchase orders with no reliable status. Within three days, planners had a live view of every shipment and could act on exceptions the same day they appeared - that kind of turnaround isn't possible through a standard legacy change request.

Another grocery and pharma distributor had expiry sensitive lines being tracked in four different spreadsheets. Consolidating those into a ranked exception queue reduced duplicate data entry by an estimated 60-70% in the first week.

Three paths forward and their trade-offs

So what can European retailers do to keep track of their IT environments and stay competitive? The first and most evident option is to radically simplify their IT environment and infrastructure. Retailers could focus on one communication tool instead of several, use website builders wherever possible instead of building custom solutions, and favour easy-to-integrate APIs over complex modules. However, this approach could worsen the product experience for customers, and retailers delivering digital products or services face hard limits on how far simplification can go without eroding what they offer.

A second approach is to use IT ops monitoring tools that relieve retailers of tracking each individual element of their IT environments. There are a number of "umbrella" IT ops monitoring systems that source data and errors from all layers and channels and gather all events on a single dashboard. This can substantially cut the time spent on this task and reduce the level of skill required - particularly important for retailers that cannot afford additional or highly qualified tech staff but face the same operational complexity as larger players.

In 2024, nearly 59% of retail operations globally used ERP and CRM applications to synchronise logistics and customer data, contributing to a 22% increase in retention rates for early adopters - a result that smaller European retailers should take seriously, even if implementing a fraction of that infrastructure.

The third option is outsourcing to optimise IT environment maintenance and monitoring. Outsourcing can be significantly cheaper than building in-house capability while still solving the task. However, finding a reliable outsourcing contractor carries security and data protection risks that are especially acute in Europe, governed by one of the world's most complex data protection regimes. The complicated labour and employment regulations across various EU countries can also make finding the right specialist an arduous process.

The stakes are high but so is the opportunity

The global IT spending in retail market is estimated at $124 billion in 2026 and expected to rise to $172 billion by 2035, experiencing a CAGR of 3.7%. European retailers are both a contributor to and a beneficiary of that growth but only if they can close the structural IT gap that leaves most of them exposed. Germany alone accounts for 22.5% of European IT spending, and the gap between large enterprise IT capability and the rest of European retail is arguably wider than anywhere else in the developed world.

The retailers who come out ahead will be those who find ways to make their digital infrastructure work smarter rather than simply larger - whether through simplification, smart monitoring tooling, or carefully managed outsourcing partnerships. The tools to do so exist today. The question is whether European retailers move fast enough to use them.