Midmarket Retail Tech Investments Soar Worldwide

Increased acceptance of online transactions and innovative customer acquisition strategies drive growth in developing nations. (CIOInsight.com)

Global retail IT spending among midmarket companies is expected to sharply increase in the next few years, from about $22 billion last year to almost $31 billion by 2009, an almost 41 percent increase, according to a new report from technology analysis firm AMI Partners.

AMI Partners Inc. defined the midmarket retailer as one with between 100 to 999 employees.

There are several reasons for the projected increase, but a key reason is accelerated IT investments in overseas markets—especially China, India and Korea.

Another key factor is intensified acceptance of credit cards and online applications, which makes it easier for smaller companies to compete, said Anin Bose, an AMI senior analyst. That top-line growth amounts to a CAGR (compounded average growth rate) of 6.9 percent, AMI Partners said.

Although the report does focus extensively on Asian and European retailers, it concludes that retail technology spending will increase across almost all regions.

For the same 2004 to 2009 projection, the report has "mature markets"—including the U.S, the U.K., Canada, France, Italy, Scandinavia and Germany—rising from $20.3 billion to $27.85 billion (a 37 percent increase and a CAGR of 6.5 percent).

The "emerging markets"—including India, Brazil, Mexico and Russia—are projected to move from $1.33 billion to $2.27 billion (an almost 71 percent increase and a CAGR of 11.4 percent).

The "newly industrialized markets"—including China, Korea, Singapore and Taiwan—are expected to increase from about $500 million to $840 million (a 68 percent increase and a CAGR of 10.9 percent).

"We definitely didnt expect this kind of growth rate," Bose said.

Some of the increases can be statistically misleading, as many of the emerging markets are increasing from such low numbers that one healthy upgrade can cause a huge percentage increase. But Bose said that the increases are often truly substantial.

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