The sector is looking only one way, up, and IT spends too are headed in the same direction.

The Indian retail market is expected to grow from $350 billion to $427 billion by 2010, and the country may have 600 new shopping centers by that year.
Two-thirds of our respondents in the retail segment had revenues in the Rs 301 crore to 500 crore range in 2007; one-third had revenues between Rs 501 crore and Rs 1,000 crore. Reflecting on the fact that the greater the revenues the larger the IT budgets, two-thirds of responding companies said they spent Rs 10 crore or less in 2007, and one-third spent between Rs 10 crore and Rs 20 crore.
Irrespective of the revenues or current IT budgets, all retail IT heads said they planned to spend more than they did last year. Indeed, the majority of them—over 65 percent—said they were hiking budgets by more than 40 percent from 2007; the rest would spend 20-40 percent more.
According to Springboard Research, IT revenue from the retail segment measured $253 million in 2006 and is expected to grow to $1.07 billion by 2010 at a compounded annual growth rate of 44 percent.

Getting intelligence right
With strong IT purchase plans, our survey showed that business intelligence/data mining/data warehousing tools and solutions would be high on their spending agenda. Retail chains like Globus Stores have already gone ahead and deployed BI to enable interaction between the company’s front-end and all the backend systems, and provides a single window to carry out effective reporting and decision-making.
“BI is a critical functionality in the retail segment as everyone captures data. Retailers could use it to predict future trends and know more about their customers,” says Arun Gupta, customer care associate and CTO, Shopper’s Stop.
BI is critical to retailers’ success because increased competition, an evolving global economy, short product lifecycles, and rapidly shifting consumer demand are pushing retailers to continually innovate through PoS (point of sale) solutions that capture data at the time and place of service, operational efficiencies, broader consumer outreach, and new services designed to enhance the customer experience.
The other area that CIOs of this sector will focus on in terms of spending is mobility solutions like Wi-Fi and mobile devices. Mobility technology would help the retail industry provide more personalized services. A wireless handheld store assistant, for instance, could be offered as a virtual shop assistant that the customer carries around the store. Retailers can develop custom software to run on such devices running a standard handheld operating system such as Windows CE 5.0 and integrate them with in-store PoS and inventory systems.
In the more developed markets like the US, mobile applications for search and comparison are emerging to aid shoppers and give them more control at the point of decision.
Indian retailers would want to tap into the growing customer base of mobile communications in the country. As Indian customers grow comfortable with the use of mobile devices for activities beyond voice, the mobile channel would have a significant impact on their shopping habits.
Already, Bharti Enterprises is working on technology to leverage its mobile phone service company Airtel to drive customers to shop at the group’s soon-to-be-opened Bharti-Walmart retail stores.
Bharti’s Group CIO Jai Menon has been quoted as saying that the company would come up with a portal that could be accessed on mobile phones to transact with the retail stores. Point-and-click-to-buy, and payment through mobile phones, are some of the features that retail stores could put in the hands of customers using mobile technology. BI and mobility technologies accounted for 25 percent of the responses from the retail companies. FID, information and data security, and use of virtualization tools, are the other areas that the CIOs intend to spend on in the next year.
Spending on supply chain management and inventory management solutions did not feature in the CIO spending list as most of the retail chains have already deployed these solutions. Some CIOs, however, do plan to make investments in ERP systems.
Like IT heads in every other sector, a majority of retail IT heads also stated that their greatest challenge was aligning IT with business. 50 percent of respondents said their other challenges were selecting and implementing new technologies and better project management, especially since retail is still in its infancy, yet stores are being rolled out rapidly.

On the roadmap
Unlike in the other sectors, in retail, IT heads did not rank disaster recovery/business continuity/enterprise risk management very high on their list of priorities. In terms of their outsourcing plans, WAN support operations, IT security, helpdesk, customer technology support and BPO featured high on the CIO agenda.
Customer technology support, helpdesk and IT security accounted for approximately 33 percent of the responses from this vertical. A majority of the respondents said that they would not outsource their data management and IT strategy functions in 2008.
Unified Communications and Service-Oriented Architecture were seen to be the technologies that would have significant impact on the IT environments. Some 22 percent of respondents ranked each technology as uppermost in their minds for potential impact. An equal number of retail IT heads voted for open source technologies. This is unlike what the survey found in any other sector.

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