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SA's retail sector to spend R6.11bn on ICT by 2019

By , ITWeb
South Africa , 04 Jul 2017

SA's retail sector to spend R6.11bn on ICT by 2019

Despite economic pressure, South Africa's retail sector's level of investment in ICT is expected to reach R6.11 billion by 2019.

This is according to Frost & Sullivan's recent analysis ICT Enterprise Spend in Retail, South Africa, forecast to 2019. The research highlights 2016 retail ICT spend with the objective to identify key areas of IT spend within the retail sector in SA, as well as opportunities for IT service providers.

From an estimated R5.75 billion in 2016, at a compound annual growth rate (CAGR) of 1.7%, the company expects the overall ICT spend within the retail sector to reach R6.11 billion by 2019.

This analysis takes into account: IT hardware, Fixed and non-cellular connectivity, cellular connectivity, data centres, managed services, system integration, cloud-based services, Industry-specific ICT applications and services.

The company says growth opportunities are steered by increased retail investment in services including cloud, managed services and cellular connectivity. It also notes that cashless transactions, big data strategy and cybersecurity will be influential trends shaping retail investment.

The collective market value for cloud, managed services and cellular connectivity is expected to reach up to R1.8 billion in 2019.The company identified these categories as having the highest growth and they are expected to count for 29.5% of the total spend in 2019.

Frost & Sullivan says ICT spend is shifting from bigger capital expenditure to smaller operational models.

"The demand for lower-priced solutions within the retail sector presents IT and telecom service providers with an opportunity to differentiate their services portfolio by developing innovative usage- and value-based pricing models," said Naila Govan-Vassen, senior industry analyst, digital transformation at Frost & Sullivan.

"Flexible service-level agreement contracts, along with focus on the client's business and IT strategy, will be crucial for the service providers to increase competitiveness," she added.

The research and analysis firm says there needs to be an effective integration of legacy and new systems to deal with issues experienced by retailers such as logistics, distribution centres, suppliers, retail stores and customer delivery.

"Retailers often feel trapped by contracts that leave little scope to upscale or downscale according to changing needs," notes Govan-Vassen. "Essentially, this creates an opportunity for ICT service providers to become business partners as opposed to technology partners. They can increase industry expertise, build dedicated industry-focused teams to cross-sell, offer innovative branding and price strategies, and, most importantly, offer a full range of ICT solutions through flexible contracts."

"Small and medium enterprises will need more guidance on how to implement IT to save cost and increase efficiency," she concludes.

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