New Delhi: The burgeoning Indian retail industry is expected to spend $1.07 billion (Rs4,589 crore) on information technology (IT) by 2010 as against $253 million last year with a compound annual growth rate (CAGR) of 44%.
Springboard Research, an IT Market Research body in a report released today, detailed IT spending and market trends in the Indian retail industry, saying rapid growth in India’s retail industry drives increased investments in IT.
The report, India’s Retail Industry: IT Market Trends and Opportunities — 2006-2010, concludes that after real estate and human resources, IT is the highest investment area for most large- and medium-sized retailers.
Retailers consider supply chain management (SCM) and inventory management as their top strategic focus areas.
This is driving the demand for enterprise resource planning (ERP) systems, with 35% of the report’s retail respondents saying that they have deployed ERP as their largest IT solution in the last two years and 38% confirming that they will invest in ERP in the next 12 months.
The Indian retail industry is one of the fastest-growing sectors of the Indian economy. Traditionally dominated by small, family-owned retail shops, the industry is making a move to a more modern and organized retail industry structure. Organized retail is emerging a rapid growth industry in India.
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, Springboard.
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.
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 said.