Retail sector to grow at 28% during 2008-12 in India

During 2008-2012, the IT market in the Indian retail sector is likely to grow at an estimated compound annual growth rate (CAGR) of 23 percent; reaching $1.4 billion by 2012, says a report. According to the report titled as 'IT in the Indian Retail Industry: Emerging Trends and Market Opportunities' brought out by Springboard Research; software is estimated to grow at a CAGR of 28 percent for the period under review, while hardware will grow at 19 percent.

Springboard Research is an IT market research and advisory firm. The firm has brought out this report after interviewing leading IT vendors operating in the retail sector and 152 Chief Information Officers from both large and mid-sized retail companies across India. According to Nilotpal Chakravarti, Senior Research Analyst, Springboard Research, although the recession has affected retailers' profitability, it opens a window of opportunity for IT vendors as retailers turn to technology to address the challenging economic scenario. "Many retailers are eschewing curtailing their long-term IT projects, while they remain cautious with short-term IT spending and new investments," he added.

Nearly half of the CIOs in the retail sector interviewed, indicated large format stores/hypermarkets as the top business opportunity in the sector, while competition is named as the biggest business challenge by a majority of the CIOs. Inventory management has emerged as the top strategic IT focus areas for the CIOs, followed by supply chain management (SCM). Enterprise resource planning (ERP) topped the list of business applications in terms of actual deployments in the last 24 months.

According to Springboard's data, POS (Point of sales) is the top preferred store solution that Indian retailers have deployed in their stores. CIOs revealed that a large number of retailers mentioned price as a key determinant in external IT vendor selection, while strong service and support came in the second place on the list of priorities. Other influencers like vendor reputation and existing relationship rank much lower in the priority hierarchy. Springboard also found that local IT vendors have a sizeable foothold in the retail space because they provide low-cost, industry-specific solutions.

According to Springboard's data, SAP, Microsoft and Oracle hold the largest market share in the Indian retail sector, while HCL is the leading local vendor in the retail space. IBM is also named as among the leading vendors in this space.

"Best-of-class retail solutions like RFID, intelligent shelves, and kiosks still remain out of reach for the Indian market because of their high cost. IT vendors should look to address this gap by rationalizing costs, along with clearly defining ROI benefits for clients," said Chakravarti.

Agencies