The Indian retail industry, the fifth largest in the world, accounts for over 10% of the country’s GDP and around 8% of the employment. A report by BCG says that the overall Indian retail sector is projected to double in 2020 to $1 tn from $600 bn in 2015. As the overall retail market is growing, there has been tremendous growth in the IT spending too. Though the worldwide retail sector IT spending market is projected to grow at a CAGR of 4.1% over the period of 2013-18, the Indian retail IT spending is projected to grow at a CAGR of 12.8% over the period of 2010-2015.
Looking at the trends, 2015 is likely to be a year of unprecedented IT growth for the retail and CPG industry in India. The rising need for consumer goods in different sectors and the government’s decision to allow FDI has given a major push to the investments in the industry.
Additionally, digital customers of today want to take more and more control of their shopping experiences. Considering this, the retailers are working with a dual mandate to drive not just efficiencies but also greater innovation for the needs of tomorrow. They are moving from incremental levels of performance efficiency to building new digital business capabilities.
Trends shaping the business
Experts believe that the retail and CPG industry is in the midst of a ‘once-in-a-decade’ shift in the technology landscape, driven by digital technologies that are putting industries and businesses at a crossroads. The business is evolving from the ‘brick and mortar’ model to adopt technology for connecting with customers and achieving a complete seamless customer experience.
Agrees Samik Roy, Country Head, Microsoft Dynamics Business, “The focus of retailers has expanded well beyond the walls of the physical store, and now includes everything from the retailer’s website and call center to marketplaces and social networks.”
In this digital era, omni-channel experience is a key expectation of consumers. Hence, building an omni-channel strategy is not an option for retailers but a necessity. In addition, in the fiercely competitive space, retailers need to provide personalized experience to customers to stay ahead of their competitors. These are the key factors driving technology investment in the sector.
Prakash Balasubramanian, VP, Retail Consulting, Cognizant, adds, “With innovation cycles getting compressed dramatically, retailers are looking to reinvent and reimagine their businesses and build the skills and capabilities required to make digital come alive.” He further adds that today retailers are much more focused on mobility, engagement with social media, along with ongoing investments in eCommerce initiatives that will drive IT investments further.
Key technologies gaining traction in the retail sector include:
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August 31, 2015