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SA retailers open tills on ICT spend

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Total ICT spend in the South African retail sector was $484,1-million last year and is estimated to reach $572,6-million in 2019 at a compound annual growth rate (CAGR) of 3,4%.
This is according to new analysis of the sector from Frost & Sullivan which says that, previously, retailers in South Africa leveraged information and communication technologies (ICT) to increase operational efficiencies in areas such as supply chain management, point-of-sale systems, and enterprise resource planning.
Going forward, expenditure by retailers will shift to application-based usage, including data analytics, social commerce, and omni-channel engagement, thus firmly embedding ICT into multiple facets of the retail value chain.
“The prevalence of cloud-based applications and managed services, as well as stronger focus on ICT from support units like marketing, are pushing up ICT spend in the South African retail sector,” says Frost & Sullivan ICT Programme Manager, Gareth Mellon. “Factors like increased connectivity, the adoption of mCommerce, and improved access to customer information contribute to the drive for more ICT applications.”
An ongoing challenge for retailers is the integration of legacy systems with new applications. Furthermore, the continued need for systems maintenance is cutting into ICT budgets and delaying the adoption of new technologies. Broader macroeconomic conditions, such as the slowdown in the South African economy and lack of reliable power, also dampen retailer investment in ICT.
Concerns surrounding the security of customer information also restrain implementation. As customers demand personalised services, information becomes more critical. However, it is no longer just about collecting information; ICT providers and retailers must also address the important question of effectively managing and protecting this data.
“A comprehensive understanding of the retail value chain will assist ICT providers in identifying the role they can play,” says Mellon. “For example, the extension of the value chain to include personal delivery to customers is a challenging prospect for retailers, but this is an area that ICT partners can easily assist in.”
While the pervasive influence of connectivity and convergence can overwhelm retailers, articulating the value of new technologies – such as big data and virtualisation – will help South African ICT providers open the door to effective implementation. Eventually, ICT will move beyond the mere running of retail operations to supporting the entire retail business model.