Asia retailers facing IT arms race

Small and medium sized businesses in Asia's retail sector are expected to spend $11.6bn on PCs, servers, IT services and other IT-related products this year.

Spending by these companies in some of the region's developing nations will rise more than 15 per cent, predicted analysts from research firm Access Markets International Partners (AMI). 

"Both types of companies will face the disruptive threat to their business models from larger retailers, which will compel them to reinvent themselves using IT as a competitive differentiator," said Nishant Dave, AMI's Asia-Pacific research director.

Among the factors driving the rise in spending is the growing availability of the internet in the region.

Shop owners and other retailers are beginning to take advantage of high speed connections to reach customers and suppliers, AMI reports, and must invest in equipment and services to do so.

Retail sales of desktop and notebook PCs rose 11 per cent to $7bn in 2006, according to research firm GfK Asia. 

Although SMB spending is rising in all significant markets, the increase is not spread evenly across the region.

"While retail SMB IT spending in emerging markets such as India, Indonesia, the Philippines and Vietnam is set to grow more than 15 per cent year-on-year in 2007, spending in mature markets such as Australia and Singapore will grow less than 10 per cent in 2007 over 2006," he explained.

Spending by small and medium retailers is increasing, but the two sectors are at different stages on the development curve, according to AMI.

Small businesses are focusing on basic computing infrastructure, while medium businesses are enhancing existing IT infrastructure and implementing service delivery platforms.

AMI defines medium businesses as those with between 100 and 1,000 employees.