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This research is aimed at identifying the key areas of IT spend within the retail sector in South Africa to highlight the key areas of opportunities for IT service providers. It seeks to: • provide an overview of South Africa’s macroeconomic environment and its impact on the retail sector • offer insights into the retail sector‘s value chain and the adoption of ICT services across value-chain participants• identify the global and domestic challenges facing the retail sector• highlight the retail ICT spend in 2016 and offer future forecast insight• identify growth opportunities within the retail sector for IT and telecom service providersThe market for the service providers is very competitive, especially as they offer similar IT solutions and services to enterprises. Differentiation through innovative pricing models and industry knowledge will be a key factor. To remain competitive and differentiate themselves, service providers need to increase their industry expertise; build dedicated and industry-focussed teams that can cross-sell; offer innovative branding and price strategies such as pay-per-use models; change their approach from selling services to providing full ICT solutions (to have a stronger business focus); and enter into contracts with flexible SLAs. The four predictions for the retail sector in South Africa are as follows:1. ICT spend within the retail sector, estimated at ZAR 5.75 billion in 2016, is expected to record a compound annual growth rate (CAGR) of 1.7% to reach ZAR 6.11 billion by 2019. 2. Key services that will shape the IT strategy across retailers are cloud-based services as a measure to increase work effectiveness; workforce mobile solutions to increase efficiency across key working groups along the value chain and ensure real-time communication; and retail analytics focussed on developing strategies and plans that aid in mitigating stock outage and stock layout challenges whilst enabling track routing systems and store optimisations.3. Lack of flexibility on SLAs is one of the challenges that retailers have highlighted. There is a great disparity between sales and delivery. There is limited scope on the contract to accommodate technological changes. Retailers feel trapped by the contract as there is no scope to upscale/downscale according to the changing needs of the enterprise and the market.4. Service providers need to increase industry expertise; build dedicated industry-focussed teams that can cross-sell; offer innovative branding and price strategies; bring about a change in their approach from selling services to providing full ICT solutions; and offer flexible contracts.
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