Telstra has revealed the addition of almost one million new mobile services in the six months to December 2011, but Sensis revenues plummeted 24 percent in 12 months.
Retail industry expected to spend US$3.1 billion on IT by 2010; Springboard estimates that after store expansion and brand development, IT is the largest investment area for large- and mid-sized Chinese retailers
Springboard Research, a leading innovator in the IT Market Research industry, today announced the results of its research report detailing IT spending and market trends in the Chinese retail industry.
Springboard data shows that IT revenue from the retail segment measured US$1.13 billion in 2006 and is expected to grow to US$3.1 billion by 2010, with a compound annual growth rate (CAGR) of 29%.
The Chinese retail industry, estimated at US$850 billion in 2006, has recently emerged as a fast growth industry, thanks primarily to increased spending by Chinese consumers. The dynamic sector is also attracting massive investments from a variety of companies, including international giants such as Wal-mart, Carrefour and Tesco, who have made China a key part of their global retail market strategy.
“The big bang market entry of large multinational corporation (MNC) retailers has fuelled intense competition. Local retailers realize that they have to upgrade quickly to robust IT systems to stay competitive and better serve their customers,” said Nilotpal Chakravarti, Research Analyst for Springboard Research. “Maintaining an advantage in the face of increasing competition requires retailers to improve facility flow-through, decrease the amount of inventory in their supply chain and meet escalating customer demands – all while operating in an environment with high logistics costs and tight profit margins. Retailers now see that upgraded, integrated IT systems can streamline management of these increasingly complex operations,” Chakravarti added.
In its report, “China’s Retail Industry: IT Market Trends and Opportunities, 2006-2010,” Springboard estimates that after store expansion and brand development, IT is the largest investment area for large and mid-sized retailers in China.
Springboard’s data shows that Chinese retail companies are eyeing a major overhaul of their IT infrastructure to boost sales and beat foreign competition. Guided by the competitive need to give their customers a better shopping experience and after-sales service, retailers’ IT spending is also influenced by challenges such as increasing brand awareness, raising profitability, ensuring high levels of customer satisfaction and improving quality of service.
In stark contrast to what is typically seen in other emerging markets, price was not the primary factor for choosing external vendors.
Instead, 37% of surveyed retailers cited “Strength in the Industry” as the top vendor selection consideration, followed by “Strong Service & Support” with a 30% response rate.
“Price” trailed in the third position with 11% of retail industry respondents naming it as the leading factor in choosing IT solutions.
“Chinese vendors with in-depth knowledge of the local retail environment are preferred by small Chinese retailers,” Chakravarti revealed.
“Since MNC vendors focus mainly on providing high-end retail solutions, which come at a premium, local small retailers find it more affordable to go with regional IT vendors on an as-needed basis for billing applications, data management software and hardware implementation.
However, this market dynamic is set to change once retailers realize the need for high-end integrated solutions as they ramp up operations in China to tackle the competition”.
Overall, Springboard found that local vendors are still significant influencers for IT end-users in the retail market. Although Microsoft led the list of leading influencers, followed closely by IBM, the next four spots were taken by local vendors (E-Future, Chyangyi, Ufsoft, and Royalstone).
