Retail spending on digital services to reach $70 bn in 2016

Retail investment in digitalGlobal retail spending on digital services is expected to reach $150 billion by 2020 from $70 billion in 2016 — growing at over 20 percent per annum, according to Zinnov.

Technology outsourcing companies such as Accenture, IBM, Capgemini, Wipro and TCS are the top digital services providers in the retail segment in the global rankings of service providers by Zinnov.

Global retail digital outsourcing opportunity for service providers is estimated to grow to $12.4 billion by 2020 from $4.8 billion in 2016 at 27 percent CAGR.

Out of the total digital investment of $70 billion in 2016, spend on externally sourced digital services is about $4.8 billion and is expected to cross $12 billion by 2020.

Online commerce, and marketing and sales together comprise about 50 percent share in digital retail outsourcing spend. North America leads the demand with 69 percent market share, followed by Europe at 21 percent.

Application engineering and platform integration topped the list, with over 63 percent of services being consumed by them.

Top 10 service providers account for 2/3rd of the outsourcing market share. The market is also characterized by smaller deals with over 60 percent of service provider digital customers being <$1M in account size.

Retail is spending across two broad categories – Customer experience such as, immersive shopping, robotics shop floor assistants, new age check outs, omnichannel engagement and operational efficiency such as real time logistics tracking, connected warehouse, and data driven decision making.

With an opportunity of nearly $5 billion in technology outsourced services, service providers are investing in augmenting their digital capabilities through COE/digital lab setup (59 percent is in India), and in building IPs, especially in marketing and sales, store ops and supply chain management,” said Praveen Bhadada, practice head (Enterprise Digital Transformation) & Partner, Zinnov.

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