Retail boom a big chance for IT firms

As organised retail grows in India, IT vendors are waiting for the windfall coming their way, reports Prerna Mishra.

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As organised retail grows in India, tapping into the estimated $480 billion (Rs 21 lakh crore) personal consumption market, IT vendors are waiting on the sidelines for the windfall coming their way.

Their share of the pie for providing back end services is estimated to be between $140 million and $180 million.

The organised sector began with lifestyle retailing that has now moved on to value retailing as well. The third wave will revolve around strengthening the back-end that enables free flow of information, said Atul Ahuja, Principal Consultant, Technopak Advisors.

“The top five to six retail majors have pledged to pump in nearly $22 billion into the Indian retail sector in the next two to three years. So far companies have been investing in technology that enabled automation and reporting. In the next phase, they will invest in business intelligence and management tools,” added Ahuja.

With retail accounting for $300 billion of the total of $480 billion in private consumption, technology vendors are banking on the organised retail that is expected to go up from existing $12 billion to $90-100 billion by 2011.

The technology companies are gearing up to handle the rush. "Other things being equal amongst retailers, factors like management of the working capital will be the clear differentiates. So we see more companies investing in processes like billing in stores, warehouse management, pricing solutions,” said Priyadarshi Mohapatra, General Manager Retail Practice, Sun Microsystems India .

Sun earns about $1 billion in revenues (about 10 per cent of its global revenues) from retail practice. It is busy preparing to exploit the Indian retail market. The company has partnered with SAP to set up a centre of excellence in Mumbai showcasing its retail solutions. It will soon set up another one in Bangalore in partnership with Oracle.

In addition to huge opportunities in system integration, vendors like HCL Infosystems have rolled out niche offerings for the sector. “We had anticipated the demand for tailor made solutions for the retail sectors a couple of years ago. Today when the speed of execution is of essence to retailers, we are armed with the right retailing solutions,” says HCL Infy Executive Vice President Rajendra Kumar. The company that started by rolling out what they call 'rugged and reliable' point of sale terminals built specially to handle the Indian conditions, is now positioned as an integrated ICT vendor for retail majors.

First Published: Feb 22, 2007 03:12 IST