It is still early days for the Internet of Things (IoT), in the Middle East and Africa, but reports suggest that it will be soon mainstream.
According to a recent report of International Data Corporation (IDC), for retail, this is literally true. The report studied four markets mainly Saudi Arabia, South Africa, Turkey, and the UAE and finds that ‘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.’
The report predicts that 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. Online and mobile sales along with customer relationship initiatives will be taken up by retailers to create the perfect omnichannel experience for consumers.
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’, the report said.