Australian retailers are expected to be second only to China in IT spending in the Asia-Pacific region this year, with expenditures reaching $1.6 billion (US$1.24 billion) in the pursuit of digital transformation and enhanced customer engagement, according to IDC’s recently released Asia Pacific Retail IT Spending Guide.
“What we are really seeing is an arms race across the retail sector,” said Jaideep Thyagarajan, industry analyst, IDC, explaining that the battle for digital transformation has heated up following recent leadership changes at major retailers, and that “retailers are committed to improve their digital health to cater to the needs of the connected customer and to increase workforce productivity before it is too late”.
As a result, Australian retailers are investing in customer-facing technologies, developing smartphone apps, leveraging cloud infrastructure and transforming retail locations into fulfilment centres for online purchases, following the recent IDC Retail Insights survey, which identified operational excellence, exploiting new markets and customer engagement as the top three business priorities in the region.
“Despite ICT budget constraints, Australian retailers understand and appreciate the long-term benefits offered by cloud, mobility and particularly, big data,” said Thyagarajan, adding that pressure from international competitors has increased substantially over the past 6-12 months and that the competitive battleground is forcing retailers to focus on both improving customer loyalty and preventing loss of market share.
Competitive pressures are not the only challenges as retailers are becoming increasingly concerned with the escalating levels of IT complexity and operational expense required to reap the benefits of social, mobile, cloud and big data technologies. At the same time, retailers are being squeezed by the need to enhance data security and privacy systems and processes in the wake of recent data breaches.
“While there is an urge to harness ICT opportunities, there is also an immediate need to simplify and improve the legacy IT platforms,” said Mike Ghasemi, research director, IDC Retail Insights Asia-Pacific.
