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GOLD COAST, Australia, October 29, 2018

Gartner Says Retailers Are Investing Heavily in Digital Capabilities to Meet Customer Expectations

Analysts Present Retail Scenarios for 2025 and Beyond at Gartner Symposium/ITxpo 2018 on the Gold Coast, Australia, October 29-November 1

Global retail sector technology spending will grow 3.6 percent to reach almost $203.6 billion in 2019, with similar growth rates for the next two years, according to the latest forecast from Gartner, Inc. Customer expectations and competition are forcing retailers to evolve and invest heavily in digital business transformation.

Relative to other industries, retail has traditionally been a laggard in terms of appetite for change, digital maturity and hence technology spend, according to Gartner. However, this is no longer the case, and retail now surpasses most other industries with regard to IT spend.

Software is the fastest-growing category of technology spending (see Table 1), as retail CIOs prioritize analytics, digital marketing, mobile applications, e-commerce platforms and artificial intelligence (AI) as the technologies most crucial to their organization’s mission.[1]

“Retail CIOs used to be tasked with minimizing risk and cost,” said Molly Beams, senior director, analyst at Gartner. “Now they are held accountable for business results. They are prioritizing ROI and other measurable business impacts. Retail CIOs are investing in analytics for both near-term benefits like decision making and to prepare for innovations such as smart machines, AI and augmented reality — all of which will require robust datasets.”

Table 1. Retail IT Spending Forecast (Billions of U.S. Dollars)

 

2018

2019

2020

2021

2022

Internal Services

33.3

33.8

34.0

34.3

34.9

Software

30.2

32.8

35.7

38.6

40.5

IT Services

81.6

85.7

90.2

95.0

100.0

Telecom Services

27.4

27.0

26.7

26.4

26.0

Devices

12.4

12.6

12.6

12.5

12.4

Data Center Systems

11.5

11.7

11.7

11.7

11.5

Total Spending

196.6

203.6

210.9

218.5

225.4

Total Growth (%)

5.6%

3.6%

3.6%

3.6%

3.1%

Note: Totals may not add up due to rounding.

Source: Gartner (October 2018)

In Australia, retailers are forecast to spend A$4.9 billion on technology products and services in 2019, an increase of 3.2 percent from 2018. New Zealand retail sector IT spending is forecast to grow 3 percent to NZ$779 million in 2019.

Speaking at Gartner Symposium/ITxpo on the Gold Coast, Australia today, Thomas O’Connor, senior director, analyst at Gartner, said that contrary to what many people believe, physical retail is thriving. Global retail sales will increase 4.8 percent in 2018, more stores are opening than closing and consumer confidence remains high.

“In retail, there is only one battle that matters — the fight for the customer,” said Mr. O’Connor.

Gartner predicts that by 2023, Alibaba and Amazon will have captured 40 percent market share of global online retail, up from 33 percent in 2017.

“There are many ways for retailers to differentiate from e-commerce giants, and therefore profitably coexist,” said Mr. O’Connor. “We think that yes, there will be a robust retail industry. But the rules of the game are changing rapidly. Different kinds of retail businesses will continue to arrive and challenge the status quo.”

Mr. O’Connor said that to succeed, retailers need to:

  • Get even closer to their customers using new digital capabilities such as advanced analytics and AI to segment customers by behaviors and validate their evolving wants and needs.
  • Make clear strategic choices to adapt capabilities that are in lock step with how consumers are evolving. Transformative technology must only be scaled once it has been established there is a clear consumer want for it.
  • Predict and drive results by establishing clear leading indicators and measures of digital transformation success.

Gartner clients can read more in the reports “Forecast: Enterprise IT Spending for the Retail Market, Worldwide, 2016-2022, 2Q18 Update”; “Forecast Overview: Retail IT Spending, 2018” and “Adopt Digital Business KPIs to Lay the Foundation for Digital Transformation in Retail.”

About Gartner Symposium/ITxpo

Additional analysis on AI trends will be presented during Gartner Symposium/ITxpo 2018 the world’s most important gathering of CIOs and other senior IT executives. IT executives rely on these events to gain insight into how their organizations can use IT to overcome business challenges and improve operational efficiency. Follow news and updates from the events using #GartnerSYM.

Upcoming dates and locations for Gartner Symposium/ITxpo include:

November 4-8, 2018; Barcelona, Spain

November 12-14, 2018; Tokyo Japan

November 13-16, 2018; Goa, India

March 4-6, 2019, Dubai

June 3-6, 2019; Toronto, Canada

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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