RETAIL DIGITAL TRANSFORMATION MARKET ANALYSIS

Digital transformation in retail is a dynamic approach to how a retailer uses technology to seek new improved revenue streams and new business models. Increased Internet access coupled with the rise in the number of Internet subscribers has contributed significantly to the growth of global retail digital transformation market. Rising technological awareness has encouraged customers to shop and pay online through personal computers, laptops, tablets, and smartphones. Governments across the globe are investing to provide better broadband and Internet connections to encourage consumers to shop online, owing to these technological advancements.

The global retail digital transformation market is estimated to be valued at US$  5,662.6  million in 2021 and is expected to exhibit a CAGR of 13.0% over the forecast period (2021-2028).

Recent Developments:

In November 2021, Amazon.com Inc. infused 1,000 crore into Amazon Pay, the digital payments and financial services unit of Amazon India, amid an intensifying battle with Walmart-owned Flipkart in India’s booming online retail market.

In July 2021, The Walmart announced that it will begin selling the “technologies and capabilities” it developed to create a seamless shopping experience across its digital and physical channels.

Figure 1. Global Retail Digital Transformation Market Value (US$ Mn), by Region, 2020

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Asia Pacific held dominant position in the global retail digital transformation market in 2020, accounting for 39.7% share in terms of value, followed by Europe and North America, respectively. Owning to rising investments in retail digital transformation sector in emerging economies.

Global Retail Digital Transformation Market: Drivers

Increasing penetration of internet and mobile apps are expected to drive growth of the global retail digital transformation market

Technological advancements in infrastructure and rising demand for high-speed internet have resulted in high penetration of internet worldwide. Increasing access to the internet has allowed online retail service providers to offer a convenient and quick shopping experience for their customers. Moreover, it has allowed customers to gain access to various online stores and marketplaces to conveniently browse and shop their choice of products. Rising number of internet users would lead to higher adoption of online retail services as compared to conventional retail services. According to the International Telecommunications Union (ITU), the number of mobile broadband subscriptions is expected to reach about 2.3 billion across the world by the end of 2104 - a 32% penetration of mobile broadband subscriptions, globally. Furthermore, mobile broadband subscriptions are expected to increase rapidly in emerging economies at an annual growth rate of 26.0% as compared to 11.5% in developed countries. Hence, these factors are expected to drive growth of the global retail digital transformation market during the forecast period.

Rising investments in retail digital transformation sector in emerging economies are expected to propel the global retail digital transformation market growth over the forecast period

Increasing maturity and success of the retail digital transformation market in developed countries including the U.K., Germany, Australia, Japan, South Korea, Singapore, and the U.S. has resulted in growing focus on leveraging opportunities in emerging economies. Key players in the market such as Amazon, Walmart, and Alibaba Group are investing in retail digital transformation, in order to gain a significant advantage. For instance, in July 2014, Amazon.in invested US$ 2.0 Bn to support its rapid expansion in the retail digital transformation market in India. Moreover, the investments have enabled several local players in developing countries to upgrade various capabilities such as transportation and logistics, material handling, and other IT infrastructure. These investments have also enabled companies in the emerging economies to offer various discounts and offer in order to achieve higher adoption of online retail services. Thus, these factors are expected to propel the global retail digital transformation market growth over the forecast period.

Global Retail Digital Transformation Market: Opportunities

Cross-border retailing can present lucrative growth opportunities in the global retail digital transformation market

Online retail has enabled the establishment of shopping platforms accessible from various parts of the world. Online marketplaces, therefore, can cater to various groups of customers from different geographical locations with the existing product offerings. With the success in developed markets such as the U.S., U.K., Germany, Japan, and Australia, the leading players in the global retail digital transformation market can engage in targeting customers residing outside their home countries. Factors such as common language, cultural backgrounds, and customer preferences are expected to drive the growth of cross-border retailing.

Research and development activities can provide major business opportunities in the global retail digital transformation market

Key companies in the market are focused on research and development activities, in order to enhance the market presence. For instance, in January 2015, Amazon.com, Inc. introduced its Amazon Seller App, which enables numerous sellers across the world to manage their businesses over Amazon Direct through their mobile devices. In December 2014, Rakuten, Inc. launched its new membership program, called Rakuten Young, which is available to young adults aged 18 to 24, and students in higher education.

Market Trends:

Increasing number of internet users is boosting the market growth

Increased Internet penetration within the retail sector and rise in the number of Internet users have contributed to higher sales in the retail digital transformation market. Improved logistical infrastructure, enhanced and secure modes of payment, and optimized shipping services have built confidence among customers to shop online. Technological awareness and advancements have led to a rise in number of Internet users, thus significantly increasing the traffic of online shoppers. Higher penetration of mobile devices for online shopping, increase in the number of online applications for shopping, and investment in development of m-commerce has further propelled the growth of global retail digital transformation market.

Consumer electronics market to witness massive growth

Consumer electronics and appliances are a well-established market segment due to the standardized nature of products and increasing sale of products through online portals. Moreover, apparel and footwear is considered as the fastest-growing segment due to increase in the availability of products and quality brands choosing to sell their range of products online. The retail digital transformation market in China continues to grow at a significant rate; hence, several foreign players have made significant investments to penetrate the market. Moreover, factors such as increased Internet access and a rise in the number of Internet subscribers have made the retail digital transformation market in North America more lucrative.

Figure 2. Global Retail Digital Transformation Market Share, By Access, 2020

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Key Takeaways of the Graph:

• Among access, the website segment held dominant position in the market and accounted for 71.5% share in the global retail digital transformation market in 2020. The segment is expected to reach US$ 9,503.9 million in 2028. Owing to increasing internet users.
• Among products, the Consumer Electronics and Alliances held dominant position in the market and accounted for 36.9% share in the global retail digital transformation market in 2020. The segment is expected to reach US$ 4,902.1 million in 2028. Owing to increasing demand of consumer electronics goods.

Global Retail Digital Transformation Market: Restraints

Lack of personal touch and product feel during shopping is expected to restrain growth of the global retail digital transformation market during the forecast period

Online retail has offered a convenient and easy solution for shopping for various products and services at any time of the day. Furthermore, it has allowed customers to browse various products and compare prices on the online shopping portals. However, retail shopping fails to offer a personalized shopping experience, which is offered by conventional retail stores. Customers across the world prefer the personalized services offered by traditional retail shops. Furthermore, factors such as customer relationships, customer engagement, and enhanced shopping experience make traditional retail shopping more preferable among the customers. Although online shopping offers convenience, the majority of customers choose to visit physical stores, particularly for luxury products. Thus, these factors are expected to restrain growth of the global retail digital transformation market during the forecast period.

Low awareness regarding the benefits of online shopping is expected to hinder the global retail digital transformation market growth over the forecast period

Despite offering various benefits, there is still a vast amount of population that does not use online shopping, especially in emerging economies such as Middle East and Africa. This, in turn, is expected to hinder the global retail digital transformation market growth over the forecast period.

Global Retail Digital Transformation Market: Competitive Landscape

Major companies operating in the global retail digital transformation market are Amazon.com, Inc., MercadoLibre, Inc., eBay, Inc., Otto Group, Wal-Mart Stores, Inc., Snapdeal.com, Alibaba Group Holding Limited, Tesco PLC, Alibaba Group Holding Limited, Tesco PLC, Rakuten, Inc., and Flipkart Internet Private Limited.

Global Retail Digital Transformation Market: Key Developments

Major companies in the market are focused on product launches, in order to enhance the market presence. For instance, in March 2020, Amazon.com, Inc. introduced a new set of business line technology for cashier-less convenience stores.

Key companies are involved in mergers and acquisitions, in order to gain a competitive edge in the market. For instance, in April 2017, Flipkart Internet Private Limited acquired eBay India.