Retail to spend more on IT: Springboard

NEW DELHI: IT revenue from the retail segment is expected to grow to $1.07 billion by 2010, with a compound annual growth rate (CAGR) of 44 per cent, according to the

Report- ‘India’s Retail Industry: IT Market Trends and Opportunities, 2006-2010,’ by Springboard Research.

In 2006 the IT revenue from retail sector measured $253 million. The Indian retail industry, estimated at $325 billion in 2006, is one of the fastest growing sectors of the Indian economy, Springboard said in a statement.

“As the current economic boom in India spreads to Tier II and Tier III cities and towns, reaching out to prospective consumers in these cities is high on the agenda of most retail companies,” said Nilotpal Chakravarti, market analyst for Springboard Research. “Retailers consider market presence in these cities and towns key to their growth and profitability. As such, many retail companies are investing in technology that will help support their expansion into these new markets.”

According to the report after real estate and human resources, IT is the highest investment area for most large- and medium-sized retailers. Report data also showed that retailers consider supply chain management (SCM) and inventory management their top strategic focus areas.

This is driving the demand for enterprise resource planning (ERP) systems, with 35 per cent of the report’s retail respondents saying that they have deployed ERP as their largest IT solution in the past 24 months and a further 38 per cent of retailers sharing that they will invest in ERP in the next 12 months, a Springboard statement said.

“Many Indian retail firms have traditionally focused on service and support as a key factor in choosing a vendor. We expect this to continue and to also see more significance placed on an IT firm’s industry knowledge, expertise, and ability to provide retail-focused solutions,” Chakravarti explained.

The report also identified SAP as the leading primary influencer in terms of solutions investments (27 per cent of respondents), followed by Microsoft (14 per cent). Local vendors (19 per cent) also had a significant response.

The local vendors’ focus on providing customized and industry-specific retail solutions has helped them create a niche for themselves in the market, Springboard statement added.

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