One in five Australian retailers plan IT infrastructure overhaul

A quarter of respondents invest in ERP solutions

IT spending in Australia's retail industry will top AUD$1.54 billion by the end of 2007 with the market continuing to grow at a cumulative growth rate of nine per cent per annum through to 2010.

Springboard Research A/NZ country manager, Phil Hassey, said the market will reach AUD$1.96 billion by 2010.

Hassey said that after focusing on driving customer satisfaction, increasing retention, and expanding business, IT is the highest investment area for most large and medium-sized retailers.

"Our data also shows that one in five Australian retail companies are on the verge of an IT infrastructure overhaul, and are in the process of replacing legacy systems with more modern and cutting-edge technology," he said.

"This will create many short-term opportunities for IT vendors that are able to effectively communicate the benefits of their solutions."

Hassey said a saturated local market has forced Australian retail companies to look at investing in new markets, including geographic expansion and new formats, to boost their business.

He said these retailers consider expansion as key to continued growth and profitability.

This focus on new market opportunities, and the pivotal role technology plays in these strategies, will prove to be one of the key drivers for IT revenue growth in the Australian retail industry.

The survey covered 48 CIOs and IT decision makers and according to Springboard Research senior analyst for vertical industries, Nilotpal Chakravarti, a quarter of respondents have invested heavily in ERP solutions.

Chakravarti said this underscores the industry's need for streamlining back-end operations affected by the dynamic changes retailers face due to expanding markets, developing technologies and evolving business strategies.

"We have also seen retail companies across all sectors invest in supply chain management (SCM) to streamline business operations," he said.

"Retail investment in this area of IT is viewed as fundamental to industry growth and profitability.

"A further 26 per cent of retail respondents have said that SCM has been their main IT focus area of the past 24 months."

While online retailing in Australia is at a nascent stage, it is on the agenda of a significant number of retailers, especially the larger ones.

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