Insights: IT spending by META retail and wholesale contracts

As the COVID-19 pandemic swept the world in early 2020, sector after sector suffered massive hits. Vital to the continuity of almost every industry — most notably manufacturing, retail, and wholesale — the trade value chain was heavily disrupted by the pandemic.

According to IDC’s COVID-19 Impact research, IT spending by retail and wholesale industries in the Middle East, Turkey, and Africa is estimated to have contracted 7% year on year in 2020. But the disruption within the sector was uneven — while food retail remained resilient, non-food retail slumped. Looking ahead, IDC expects IT spending in the sector to increase by more than 5% in 2021. A wake-up call for many, 2020 saw a massive spike in online retail, as traditional retailers realized the gravity of the situation. The businesses that were already digitally transforming picked up the pace significantly, while those that hadn’t were forced to hit the ground running, rapidly scaling up their online platforms to compete with established ecommerce heavyweights.

Retailers today are also realizing that customer demand in the post-pandemic market environment can be fairly volatile. Turning en masse to digital innovation, more and more are concluding that they need to develop resilient and agile operations and supply chains in order to prepare themselves for further demand volatility in the future. For most, this means substantial investments in supply chain visibility, digital integration across the supply chain, and dynamic demand management based on data.

While on the IT side, this needs a scalable IT architecture based on a cloud foundation that allows for flexibility, agility, and scalability. Equally important is investing in the wider automation of warehouses and leveraging robotics, IoT, AI, analytics, and other technologies in distribution centers to optimize health and safety. As consumer demands evolve, retailers are increasingly focusing on experience as a product. And as price-driven competition intensifies, digitally augmented experiences are becoming differentiators, with retailers increasingly engaging customers through innovative personalized experiences. This is driving change in the sector by forcing retailers to adopt a more holistic approach to their businesses.

Retailers running multiple physical and digital channels in siloes are now looking to build proper omnichannels. As this approach gains traction, it is transforming the physical store into a space for experiencing the brand rather than the primary location for performing transactions. In this regard, the personalization of omnichannel experiences by leveraging data, analytics, and AI will define the success of the business. As we continue to weather the storm and move into recovery territory, customer demands will keep changing. In response, retailers will continue to look for – and innovate – new business models, such as extending from online storesto marketplaces, engaging in new delivery and distribution partnerships, and participating in revenue-sharing deals. Enabled by digital platforms, the industry is set for a quantum shift, with retailers evolving to meet the challenges and demands of the new normal.