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Australian retail sector IT spend set to top $1.24B in 2017

Australian retail sector IT spend set to top $1.24B in 2017

New figures position Australia as the second highest tech spender for the industry vertical in the region after China

The Australian retail sector is set to throw more money at IT providers in the coming year, with local technology spending in the retail sector expected to reach US$1.24 billion in 2017.

This figure would position Australia as the second highest tech spender for the industry vertical in the region after China, according to research firm, IDC.

In its recently published Asia Pacific Retail IT Spending guide, IDC suggests that "profound changes" in consumer shopping behaviours, along with rapid advancements in technology, have resulted in retailers getting serious about building omni-channel capabilities.

Another factor that has contributed to this is the changing role of the store – with more purchases happening online and stores becoming fulfilment centres, IDC identified that retailers are also focused on utilising floor space efficiently to ensure the offer of a “highly personalised service”.

IDC Industry Analyst, Jaideep Thyagarajan, mentioned that as part of their customer engagement focus, Asia Pacific retailers are investing in customer-facing technologies, developing smartphone apps, leveraging on cloud infrastructure, and reinventing stores to become fulfillment centres.

According to Thyagarajan, retailers are challenged to transform their business and, along with operational excellence, are exploiting new markets and customer engagement - this has fueled the retail IT spending growth in the Asia Pacific (APAC) region.

"Despite ICT budget constraints, Australian retailers understand and appreciate the long-term benefits offered by cloud, mobility and particularly, big data," he said. "This shows that they are committed to operating at their highest potential.

“Competition from international players has significantly increased in the last six to 12 months and retailers are intensely exploring opportunities to reposition themselves to improve customer loyalty and prevent loss of market share” he said.

IDC Retail Insights Asia Pacific Research Director, Mike Ghasemi, said Third Platform technologies, such as cloud, mobility and big data, enable business agility and open up new sales channels to attract, inspire and retain customers.

However, he added that retailers are concerned about increasing complexity in their IT environment, leading to escalating operational costs.

“While there is an urge to harness ICT opportunities, there is also an immediate need to simplify and improve the legacy IT platforms," he said.

“In addition, recent data breaches are placing pressure on retail organisations to enhance their data security measures across all stakeholder datasets."

Thyagarajan also identified recent leadership changes in some of the big retailers and their move towards digitally transforming their organisations as a testament that retailers are committed to improve their digital health, cater to the needs of the connected customer, and increase workforce productivity.

“What we are really seeing is an arms race across the retail sector,” he added.


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