Dubai - It is still early days for the Internet of Things (IoT), both here in the Middle East and Africa (MEA) and globally. But, according to IDC, signs that it will soon be mainstream are already appearing.
For retail, this is literally true. 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 a recent IDC study looking at four key markets (Saudi Arabia, South Africa, Turkey, and the UAE), spending on IoT solutions among retailers will grow by an average of around 19% annually for the foreseeable future, representing nearly $1.6 billion in spending from 2014 through 2018. While this growth is a bit slower than for IoT across all industries in MEA, it is a bit ahead of global trends, where overall IoT spending is soaring by an average of around 17% per year.
Despite the visibility of the signs, the great majority of IoT projects will relate to in-store promotions and personalized promotions as well as ad-hoc improvements to supply chains, in-store inventory systems, and transportation or delivery systems. This stems from a need for basic infrastructure and process optimization. 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 the three Middle East markets involved in the study, IoT goes hand in hand with high-end retail. While digital signage tends to be employed more equitably in terms of location, and IT more generally is working its way into lower-end shops (even if just as a PC or a mobile phone), the bulk of IoT solutions are being installed in large, midrange, and upscale shopping areas, particularly in the Gulf Cooperation Council (GCC). IoT products can undoubtedly help convey a 'luxury feel', a crucial element of the Middle East's high-end value proposition.
For all four markets, international brands will be the driving force. While high-end brands are already spreading throughout shopping centers and airports in the region, the markets remain underserved. The great majority of retail sales still happen in small, independent shops (in Sub-Saharan Africa, this proportion can be up to 90%). 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 term is not widely used in the region's retail sector. While forward-thinking retailers in the Middle East and Africa readily embrace cutting-edge technology, they do so with an eye towards streamlining operations, reducing costs, and enhancing the customer experience. A point-of-sale system integrated with a customer-relationship-management system that connects web and mobile access points may be based on cloud technology or it may be located on client servers. For the retailer running it, the task it performs comes first.
For more information, please see IDC's latest report, 'The Internet of Things in Retail in the Middle East and Africa' or contact Anulekha Shetty, IDC's marketing manager for the Middle East, Africa, and Turkey, at ashetty@idc.comor on +971 4 391 2741.
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About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
About IDC in the Middle East, Africa, and Turkey
For the Middle East, Africa, and Turkey region, IDC retains a coordinated network of offices in Riyadh, Casablanca, Nairobi, Lagos, Johannesburg, and Istanbul, with a regional center in Dubai. Our coverage couples local insight with an international perspective to provide a comprehensive understanding of markets in these dynamic regions. Our market intelligence services are unparalleled in depth, consistency, scope, and accuracy. IDC Middle East, Africa, and Turkey currently fields over 130 analysts, consultants, and conference associates across the region.
Contacts
Pallavi Sharma, Tel: +971 56 774 8804, Email: PSharma@golin.com
© Press Release 2015
