The global Retail Sourcing & Procurement market size was estimated at USD 2,748.7 million in 2016. Globally increasing adoption of the solutions by various retail businesses is anticipated to be the growth factor of the industry over the forecast period. Moreover, emergence of internet of things, cloud technology, and big data is the key factor to boost the implementation of the solutions within the businesses.
With continuous development in mobile and online shopping behavior causing a substantial disruption in the retail landscape, market pressure such as volatility of fuel prices and increasing raw material costs are adding to the daily challenges faced by retailers. All these challenges pose a continuous threat to the profit margins. While the main strategies of retail organizations are presently aligned towards advanced planning and quality assurance to ensure enhanced customer satisfaction, there is a pressing need for executing strategies for improved purchasing and decision making.
U.S. Retail Sourcing & Procurement market by solution, 2014 - 2025 (USD Million)
Procurement practices are in place ever since the beginning of business practices. However, the evolution of technology sourcing practices have significantly changed the scenario. The strategic purchasing software helps enterprises housed to trace and procure goods in quick time, most efficiently, maximize saving, as well as evaluate and keep track on future business transaction and supplier performance. Thus, adoption of such technologies within the business is anticipated to propel the industry growth in the future.
The automation in procurement activities is observed during last few years and is likely to continue owing to the high adoption of mobile application and supporting tracking and procurement processes. Moreover, technological adoption in retail sourcing and procurement solutions and software is leading to increased competition in retail sector owing to the low barrier for small niche organizations to enter in to the industry and growing online purchasing and tracking services due to geographic proximity.
To sustain the market position with progressing technological advancement, large retail enterprises poses opportunities to become retail industry infrastructure providers owing to the high demand for store operations and inventory management in the coming years The demand for enhanced visibility in tracking related data, centralized procurement processes, and improved collaboration between retails and suppliers is anticipated to augment the market over the forecast period. Furthermore, the industry is likely to grow as end-users are becoming more knowledgeable about resources and product choices flourishing rapidly due to globalization. However, reluctance to adopt new technology and inappropriate management is hindering the growth of the market. The adoption of procurement and sourcing processes by apparels and food and beverages are further projected to augment the market over the forecast period.
Widening impact of indirect tax such as custom duties, revenue recognition, and VAT in countries requires consideration. On the other hand, obtaining goods from a range of countries and switching suppliers from one nation to another involves more flexible tracking systems. This factors have encouraged adoption of advanced sourcing and procurement tools and techniques among retailer to collaborate between back, middle, and front ends of business and broaden customer experience.
Strategic sourcing emerged as largest sourcing and procurement solution segment while accounting for around 21% of the overall volume in 2016. The ability of strategic sourcing to consolidate purchasing power of the retail business to secure best value obtainable in the marketplace is the prime factor that is likely to develop its market in the near future. Additionally, it helps in increasing efficiencies by formalizing the method of gathering, analyzing, and factoring of spend information in to the procurement process.
It plays a vital role in competitiveness and cost structure of small and large businesses. Strategic sourcing involves developing long-term partnerships and analyzing high-volume purchases with select group of suppliers capable of offering quality services and products with low costs. Retail businesses with high-volume purchases are likely to implement strategic sourcing solutions owing to its significant impact on lowering cost structures.
Spend Analysis emerged as the second largest solution category and accounted for over 16% of the total revenue in 2016. The rising awareness of potential savings within the organization in European and Asia Pacific region to be the key driving factor for the growth of spend analysis solution in the next eight years. A spend tool facilitates transparency into spend, facilitating category managers to search new saving opportunities. It also allocates free time for purchasing staff which can be used to include more categories under competitive sourcing. Moreover, spend analysis also ensures compliance savings, that helps to manage supplier portfolio with preferred contract suppliers.
The global demand for retail sourcing and procurement has seen a paradigm shift owing to the automated and cloud-based procurement and sourcing solutions available to retailers. Consulting services emerged as the largest service segment and accounted for over 39% of the total market revenue in 2016. Retail purchasing is quickly evolving in response to advancements and changes in technology, hiring, and personnel requirements, business practices, and consumer demands and concerns. Big data will become a larger part of procurement and will assist in simplifying procurement decisions, form processes, and select suitable procurement solutions. Moreover, artificial intelligence and big data together will revolutionize the overall efficiency and speed of sourcing and procurement processes.
U.S., Canada, and Europe are anticipated to account for the largest share for solutions due to better network infrastructure, and digital penetration in logistics and support. Consulting services emerged as the largest segment in the regions and was accounted for about 38% in the year 2016. Major companies including SAP SE, IBM Corporation, Oracle, SciQuest, and others facilitate expertise solution with their range of consultancy portfolio that helps businesses to assess trends and current practices as well as achieve value-added results into their operations. Also, various companies facilitate market intelligence solutions in spend analysis, strategic sourcing, supplier relationship management, and industry benchmarking to provide a holistic view of expenses for future spend-management.
Within the deployment segment, on premise emerged as the largest segment and accounted for over 41% of the total revenue in 2016. With rise in the popularity of running software at remote locations, on premise procurement software is gaining high market share globally. However, due to high investment in time and money is hindering the growth among small and medium size businesses.
Cloud based procurement and sourcing software is poised to have largest CAGR of 12.1% between the forecast period 2017 to 2025. Procurement cloud helps to streamline source-to-pay process through social collaboration and automation, thus, achieving high margins by controlling costs. Additionally, cloud based software supports seamless accessibility without additional IT effort to the device. With timely upgrades and maintenance made in the cloud based procurement software, the segment is likely to experience highest growth in the coming years.
Many enterprises currently pursue a contemporary tracking strategy, i.e. set up shared service centres along with engaging in business and IT processes to the third party providers. Many of them manage their external and internal sourcing engagements with the help of hybrid tracing strategy owing to its enhanced performance, reduced overheads in internal sourcing functions, and better relationships with the external vendors. Moreover, hybrid sourcing strategy have transformed the internal sourcing function into a proficient sourcing unit, thus, feeding the growth of the segment among retailers.
End user Insights
The small & medium enterprise segment occupied the largest market share, accounting with 51% of market share in 2016 and is anticipated to emerge as a fastest growing segment with a CAGR of 11.7% from 2017 to 2025. The rising demand for product availability and timely delivery has been pressurizing small & medium enterprises to meet the demand along with maintaining the same margin levels. The sourcing and procurement solutions help enterprises in sourcing, inventory, contracting, and other purchasing related activities, and precisely reflect updates made in any process or region across an organization.
The retail procurement and sourcing is a business function that has significant and direct impact on the bottom-line performance of the enterprise. These techniques enable more informed and detailed status to the end users, compared to other solutions available in the industry. The rising adoption of these solutions in electronics, food and beverages, and manufacturing suppliers is likely to augment the growth of the market during next eight years.
Global Retail Sourcing & Procurement market by end user, 2016 (%)
North America was the leading market and accounted for around 33% of the total market revenue in 2016. Increasing adoption of automation in procurement and sourcing processes and constant technological advancements in the fields of analytics, cloud, and BYOD (Bring Your Own Device) trends in the region is expected to have significant growth for the market in the next eight years.
Asia Pacific is projected to grow with a substantial CAGR of 12.9% within the forecast period owing to an exponential growth of retail businesses in last few years. Emerging economies such as India, China, and Japan have been experiencing strong economic growth. Also, growing technology user base and rapidly developing infrastructure are responsible for driving the industry.
The global Retail Sourcing & Procurement market is highly competitive and fairly concentrated, with top four companies accounting for maximum share of the global production in 2016. Key market participants include SAP SE, Oracle, IBM Corporation, and SciQuest. The market players are using strategies such as collaboration, acquisition, and new product development and launches to strengthen their position in the market.
Application development and customized software are expected to be key parameter for being competitive in this market, with frequent mergers and acquisitions being undertaken as an attempt to diversify product portfolio and gain market share. Amazon, world’s largest eRetailer purchased Whole Foods Market, a grocery chain worth USD 13.7 billion, with a view to make a remarkable expansion in its business.
Base year for estimation
Actual estimates/Historical data
2014 - 2016
2017 - 2025
Revenue in USD Million and CAGR from 2017 to 2025
North America, Europe, Asia Pacific, Latin America, Middle East & Africa
U.S., Canada, Germany, UK, China, India, Japan, Brazil, Mexico.
Revenue forecast, company share, competitive landscape, growth factors and trends
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Segments covered in the report
This report forecasts revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global Retail Sourcing & Procurement market on the basis of product and region:
Solution Outlook (Revenue, USD Million, 2014 - 2025)
Service Outlook (Revenue, USD Million, 2014 - 2025)
Training & Support
Deployment Outlook (Revenue, USD Million, 2014 - 2025)
End use Outlook (Revenue, USD Million, 2014 - 2025)
Small & Medium Enterprise (SME)
Regional Outlook (Revenue, USD Million, 2014 - 2025)
Middle East & Africa
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