Increased gas prices have had a dramatic impact on retail landscape over the last 12 months making the rich, richer. Oil companies and Wal-Mart are the big winners of the price increase and garnered more than the total amount of the US government stimulus package to date (of $92 Billion). OK, now you are saying, "Tell me something I don't already know."

What is not as well known is that every sustained penny change in a gallon of gas removes $1.7 billion a year from consumer's wallets from other activities. Increased food and fuel prices in the last twelve months have removed $132.4 Billion from the consumer's discretionary spending in other areas since last August. That's the equivalent of removing Sears, Lowes, Macy's and Dillard's from the retail economy!

So with most of that money shifting from restaurants, department stores, autos, and specialty stores to grocers/mass merchants/warehouse clubs, and gas stations this is having a dramatic impact on who is going to be spending on IT in 2009, how much will be spent and on what technologies.

By all accounts, IT spend has remained strong for 2008, up 2-3% depending on the research study and research house. Capital expenditures have stayed particularly strong which has helped many categories of IT.

Retailers learned from the last downturn that those that invested in IT came out of the recession stronger than those than those who crawled into a spending shell. That has kept many projects on course for the year.

So how will all of this affect IT spend in 2009? With the great shift of retail wealth, the money is moving to retailers that typically spend less on IT as a percentage of revenues than the segments from which they are taking those revenues. For instance, a dollar in revenue to a Specialty Soft Goods retailer like Abercrombie does not equate to the same amount of IT spend as a dollar to a grocer like Kroger. According to IHL research model WorldView, a typical grocer spends about 1% of revenue on IT systems. A Specialty Soft Goods retailer will typically spend 2% of revenue or twice as much per dollar on IT. So for every dollar that shifts for 2008, anywhere from 10-50% of the IT spend could be lost for 2009. In other words, the more the US consumer has to focus on "needs", rather than "wants and desires", this will have a negative effect on total IT spend.

Those IT vendors that focus on general merchandise retailers or those categories that represent "wants and desires" rather than "needs" will suffer more the higher the fuel prices remain. If you are a vendor that focuses on specialty retailers or worse yet, casual restaurants, your very livelihood is threatened for 2009 due to these higher fuel prices as these categories of the retail landscape will be lean for the next year. However, if you are vendor with solutions positioned in the "needs" categories of groceries, fuel, or mass retail you are well positioned to benefit from increases in spend in those areas.

Clearly the drop in fuel prices in the last 40 days is very welcome and relieves some of the pressure that was felt through the spring and early summer. But the US Stimulus package that was there to soften the blow this summer is pretty much gone. Without a continued drop of 30-40 cents by November 1st we will be facing a very tough Christmas for those retailers in the "wants and desires" category. So if you are a vendor focusing on this category of retailing, you will want to diversify quickly. Then once November 1st comes, we only have to worry about who gets elected....Ahh, but that's analysis for another day.