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Retail IOT spend grows at 19% in MEA

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 21 Aug 2015
The IDC says South Africa's spend on retail IOT will grow to $60 million by 2018.
The IDC says South Africa's spend on retail IOT will grow to $60 million by 2018.

The International Data Corporation (IDC) predicts huge growth in retail spend on the Internet of things (IOT) in the Middle East and Africa (MEA).

A recent IDC study looked specifically at four key markets: South Africa, Saudi Arabia, Turkey and the UAE. It predicts spending on IOT solutions among retailers will grow by an average of around 19% annually for the foreseeable future. This represents nearly $1.6 billion in spend from 2014 to 2018.

The IDC says the growth is in line with global trends, where IOT retail spend is also soaring by an average of 19% per year.

"All those digital signs popping up in shopping centres and airports in the MEA region are the most visible element of a market that is taking off," according to an IDC statement.

The study shows South Africa spent $27.9 million on retail IOT last year, and this number is expected to grow to $36.3 million this year and be as much as $60 million by 2018.

"Despite the visibility of the signs, the great majority of IOT projects will relate to in-store promotions and personalised promotions, as well as ad hoc improvements to supply chains, in-store inventory systems, and transportation or delivery systems."

They IDC says this stems from a need for basic infrastructure and process optimisation. Retailers are also seeking online and mobile sales channels and customer relationship initiatives, "all steps on the path towards the creation of true omni-channel shopping".

For all four markets, international brands will be the driving force, but the IDC says: "While high-end brands are already spreading throughout shopping centres and airports in the region, the markets remain underserved."

The great majority of retail sales in MEA still happen in small, independent shops and in Sub-Saharan Africa; this proportion can be up to 90%, says the IDC.

"But where regional and global chains are present, competition is fierce, particularly in larger cities. Anything that enhances the customer experience - such as IOT - will be essential for long-term loyalty."

Despite IOT's uptake in retail both regionally and globally, the IDC says the term is not widely used in the MEA retail sector.

"While forward-thinking retailers in MEA readily embrace cutting-edge technology, they do so with an eye towards streamlining operations, reducing costs, and enhancing the customer experience."

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