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

IT spending to be on a slowdown across Asia

IT spending in Asia Pacific (excluding Japan) will drop to a growth rate of 7.1% in 2009, a decrease from 10.2% in 2008, said Singapore-based research group Springboard Research.

According to Springboard's executive brief Asia Pacific IT Market Predictions 2009 released today, all countries in the region will be affected, but the degree of fallout from the economic crisis will differ by country.

Countries at highest risk of a slowdown include the most developed economies of the region, such as Australia, New Zealand, Korea, Taiwan, Singapore and Thailand. Less developed, emerging and boom Asian economies, such as Malaysia, Philippines, Indonesia, and Vietnam run a lower risk of a spending slowdown.


Like other regions of the world, Asia will experience an IT spending slowdown during 2009 as all organizations re-look at spending in the wake of the global economic crisis, said Dane Anderson, CEO and EVP of Research at Springboard Research.

However, even with slower growth Asia will continue to emerge as a critical region for IT vendors and we will continue to see a substantial shift in investment moving to Asia and other global emerging markets. While the crisis will affect Asia in 2009, it will also further cement the region as crucial to any global company s growth strategy moving forward, Anderson added.

According to the study, countries in the High Risk Index are Australia, Hong Kong, Korea, New Zealand, Singapore, Taiwan, Thailand. However there is some good news for India as it has been placed in the 'lower risk' segment.

"As illustrated in our predictions, we expect that most organizations in the region will be modifying their IT strategy from a focus on supporting revenue generation to an approach aimed at improving efficiencies," said Ravi Shekhar Pandey, manager - Syndicated Research at Springboard Research. There will be a continued focus on reducing operational expenditure, both from business and IT perspectives. On the positive side, while technology spending will definitely be affected by this crisis, it will be more resilient than other areas that are often easier and quicker to cut.

Technology will be more resilient than other areas of spending among enterprises and will be difficult to cut, according to Springboard.