Tech vendors await ripple effect of retail boom

By SiliconIndia   |   Thursday, 27 December 2007, 08:00 Hrs
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Hyderabad: Taking hope from a study which estimated that IT revenues will rise four-fold in four years starting from 2006, technology and software vendors are anticipating big business opportunities from the fast-growing retail sector, reported The Economic Times.

Corporatisation of retail and expansion of the consumer market in smaller towns and cities will cause IT revenues to surge from $253 million to $1.07 billion, Springboard Research says.

Supply chain management and inventory management are the top strategic focus areas, driving the demand for enterprise resource planning (ERP) systems which automate and integrate business processes, according to the study.

Organised retail, valued at $12 billion, has only a 4 percent share of the sector now, but is seen growing to $100 billion in the next five years and making up 16 percent of the total by consultancy firm KSA Technopak.

According to Gartner India principal research analyst Bhavish Sood availability of real estate at the right price and the use of IT would be the factors that can drive growth in the retail business. "Among different IT solutions, CRM (customer relationship management) could become the major focus area for retailers as it can help them understand the customer better. Going ahead, there will be demand for CRM with built in component of business intelligence," he said.

Gartner's research director for the country, Yanna Dharmasthira, says that India, like other emerging markets, is price-sensitive. "The presence of large vendors will help the retail market grow further as they have been aggressively penetrating not only in large enterprises, but also mid-market segment, including smaller sized retailer operations," he said.

"While we see some large, established retailers and new entrants adopting package solutions, there are still a significant number of companies which are yet to adopt best practices like retail merchandising solutions," said Colin Lian, SAP director (industry solution group).

He expects 30 to 40 percent growth every year in the enterprise retail market, with organized retailers investing 1 to 1.5 percent of their turnover on technology.

American competitor Oracle is also betting big on retail and plans to launch an edition of its existing software product which is tailored for small retailers in India. It is looking at adopting an India-specific pricing strategy for the new product and is in talks with a few prospective clients. Oracle's retail customers include LifeKen, Home Care Retail and the Landmark Group.

Other vendors like the Nasdaq-listed SumTotal Systems are in talks to provide learning and talent management solutions. "The market is small but it has the potential to grow," SumTotal managing director (India) Sudheer Koneru remarked.

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