IT in Indian Retail Industry

IT revenue from the Indian retail segment measured US$ 253 million in 2006 and is expected to grow to US$1.07 billion by 2010, with a compound annual growth rate (CAGR) of 44%. This was announced by Springboard Research, in the results of its research report detailing IT spending and market trends in the Indian retail industry.

The Indian retail industry, estimated at US $325 billion in 2006, 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. Thanks to a healthy economy and rising household incomes, organized retail is emerging as a rapid growth industry in India.

Nilotpal Chakravarti, Market Analyst for Springboard Research, said, "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. 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."

In its report, "India's Retail Industry: IT Market Trends and Opportunities, 2006-2010," Springboard Research concludes that after real estate and human resources, IT is the highest investment area for most large- and medium-sized retailers.

Report data also showed that retailers consider supply chain management (SCM) and inventory management their top strategic focus areas.

Springboard also found that retail firms consider strong service and support and price as key factors in IT vendor selection, followed by strength in a particular solution area, knowledge of the retail business and knowledge of the retail industry.

SAP was identified as the leading primary influencer in terms of solutions investments, followed by Microsoft. Local vendors also had a significant response. The local vendors' focus on providing customized and industry-specific retail solutions has helped them create a niche for themselves in the market.