Dataquest

Publication Date: 29 April 2011 ID Number: G00212602

2011 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its
affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. The
information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all
warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors,
omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization
and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice.
Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or
services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may
include firms and f unds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors
may include senior managers of these firms or funds. Gartner research is produced independently by its research
organization without input or influence from these firms, funds or their managers. For f urther information on the
independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity" on its website,
http://www.gartner.com/technology/about/ombudsman/omb_guide2.jsp
Market Share Analysis: Retail Vertical-Specific Software,
Worldwide, 2010
Marianne D'Aquila, Jeffrey Roster
The market for retail vertical-specific software grew 5% from 2009 to 2010, driven by
highly scrutinized strategic investments by retailers. Cost containment initiatives and
frozen budgets in response to the global economic recession gave way to cautious
spending, based on intense ROI scrutiny. North America still dominates the majority of
retail software spending, but increased attention is being placed on the double-digit
growth seen in emerging markets, such as Latin America.
While, no one vendor holds more than a 4% share of worldwide spending in this highly
fragmented market, The largest vendors, by revenue (SAP, Oracle, Retalix, SAS and
NCR), held stable market shares from 2009 through 2010.
Key Findings
Retail vertical-specific software vendor revenue has shown signs of overall growth and
recovery, with total software revenue increasing 5% annually to a worldwide market size
of $8 billion in 2010, up from $7.6 billion in 2009.
North America continued to garner the largest market share (49%%), but small
emerging markets, such as Latin America with 5.6% market share and double-digit
growth (15%), are attracting the attention of vendors.
Retail vertical-specific software is a highly fragmented market, with no one vendor
dominating the market. There was no notable shift in overall total market share among
the top five vendors in 2010.
While Gartner has tracked many acquisitions in the retail vertical -specific marketplace
since 2004, the level of merger and acquisition (M&A) activity slowed for the top five
vendors in 2010.

Publication Date: 29 April 2011/ID Number: G00212602 Page 2 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



TABLE OF CONTENTS
Market Share Data ....................................................................................................................... 3
Analysis ....................................................................................................................................... 3
Overall Market Segment Performance Analysis ................................................................ 3
Top Vendors Analyzed ..................................................................................................... 4
SAP Continues to Leverage Its End-to-End Support of Retailer's Ecosystems ..... 4
Oracle's Retail Software Drives Growth in 2010 ................................................... 4
Retalix Penetration of High-Volume High-Complexity FMCG Contributes to
Industry Growth ................................................................................................... 5
SAS Experiences Double-Digit Revenue Growth for Vertical-Specific Software .... 5
NCR's Growth of 4.5% Results in Expanded Efforts in Latin America ................... 5
Mergers and Acquisitions ................................................................................................. 6
Recommended Reading ............................................................................................................... 6

LIST OF TABLES
Table 1. Top Five Retail Vertical-Specific Software Vendors, Worldwide, 2009-2010 .................... 3
Table 2. Top Retail Vertical-Specific Software by Region, 2009-2010 ........................................... 3
Table 3. M&As for the Top Five Retail Vertical-Specific Software Vendors, 2010 .......................... 6

Publication Date: 29 April 2011/ID Number: G00212602 Page 3 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



MARKET SHARE DATA
Table 1 provides revenue for the top five retail vertical-specific software vendors, and Table 2
shows retail vertical-specific software spending by region.
Table 1. Top Five Retail Vertical-Specific Software Vendors, Worldwide, 2009-2010
2009
Rank
2010
Rank Company 2009 2010
2010
Growth (%)
2010
Share (%)
1 1 SAP 230 253 10.0 3.1
2 2 Oracle 203 221 8.9 2.7
3 3 Retalix 78 86 10.3 1.1
4 4 NCR 66 69 4.5 0.9
5 5 SAS 27 30 12.2 0.4
Others 7073 7431 5.1 91.8
Total 7,677 8,090 5.4 100
Source: Gartner (April 2011)
Table 2. Top Retail Vertical-Specific Software by Region, 2009-2010
Region 2009 2010
2010
Growth (%)
2010 Share
(%)
Asia/Pacific 572 618 8.0 7.6
Eastern Europe 169 173 2.4 2.1
Japan 813 825 1.5 10.2
Latin America 392 451 15.1 5.6
Middle East and Africa 126 132 4.8 1.6
North America 3,792 3,986 5.1 49.3
Western Europe 1,813 1,905 5.1 23.5
Total 7,677 8,090 5.4 100.0
Source: Gartner (April 2011)
ANALYSIS
Overall Market Segment Performance Analysis
Gartner defines retail vertical-specific software (VSS) as software applications unique to the retail
vertical market. These are stand-alone applications that are not modules or extensions of
horizontal applications. Merchandising and point of sale (POS) software are both good examples
of retail vertical-specific software (see "Market Definitions and Methodology Guide: Vertical
Industries"). This report includes only the retail VSS as part of the market share analysis.
2010 was similar to 2009 for retail VSS with no single software vendor dominating the fragmented
retail software market. The retail industry has historically been very comfortable operating in a
best-of-breed software environment, where needed functionalities are cobbled together to create
an IT architecture. This meant retailers had numerous vendors side by side in their technology
stacks. This means vendors need to compete in every deal as opposed to developing exclusive

Publication Date: 29 April 2011/ID Number: G00212602 Page 4 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



relations with a retailer; therefore, it is very unlikely any one or even two vendors will
dominate in the near future. The top five vendors represent 10% of the market, which grew 5%
worldwide in 2010. The 5% growth is evidence that the retail industry is gradually recovering from
the recession. Retail spending was $8.0 billion in 2010, evidence that retailers are investing
cautiously as their bottom lines improve, but they are wary of potential pullbacks in consumer
spending as the global economy continues its uneven recovery. Wary does not mean that
retailers didn't drive new investment, but instead, they made better, well-thought-out strategic
investments with careful consideration to ROI and functionality requirements, such as social
media and mobile applications.
Worldwide, the North American region accounted for the bulk of software sales to the retail
market, with 49% of spending. The consumption pattern in the retail industry in Latin America
changed rapidly, and spurred a double-digit-growth opportunity for vendors of retail VSS, with a
growth of 15% in 2010. Economic development and increases in purchasing power have
expanded the focus from household consumption to personal consumption.
Top Vendors Analyzed
In the following section, we provide a brief analysis of the performance of the top five software
vendors and their growth in 2010.
SAP Continues to Leverage Its End-to-End Support of Retailer's
Ecosystems
SAP's retail solution portfolio targets grocery, hardline and softline retailers with solutions
designed to help drive profitable multichannel retailing through insight into shopper behavior and
business, improving operational efficiency and increasing flexibility to capitalize on growth
opportunities.
The company's VSS revenue grew by 10%, mainly because of their Integrated Merchandising
and Marketing solutions and their Demand Driven Supply networks solutions. The former
includes: shopper insight; merchandise and assortment; life cycle pricing; marketing and
promotions; and loyalty management. The latter includes integrated demand and replenishment
planning. Retailers have invested aggressively in improving their forecasting and merchandising
capability. Ongoing Gartner surveys indicate this focus will continue for the next few years. SAP
is poised to take advantage of this trend. However, given the aggressive competition with Oracle,
SAP's closest competitor, it is unlikely that SAP will become dominant in this space.
SAP's large and active installed base, dedicated retail business unit and active sponsorship in
industry events, such as the National Retail Federation (NRF) convention, contributed to its No. 1
market share position.
Oracle's Retail Software Drives Growth in 2010
Oracle's Retail Global Business Unit houses its retail-specific software. Assets include:
merchandise management, merchandise planning and optimization, supply chain planning,
supply chain execution for retail; store and multichannel retailing: and customer relationship
management (CRM) for retailing. Oracle grew its retail VSS revenue 8.9% as a result of its go-to-
market strategy of offering complete, open and integrated portfolios of retail-specific, business-
centric software solutions that integrate easily with the rest of its footprint, including corporate
administration, enterprise infrastructure, middleware, database and hardware solutions.
Oracle positioned itself to capitalize on retailers' planned investments around merchandising, in-
store technology and business intelligence (BI). From bases in North America and Europe, it has
expanded aggressively into Latin America and Asia/Pacific. Oracle has invested aggressively in

Publication Date: 29 April 2011/ID Number: G00212602 Page 5 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



thought leadership efforts, including: customer advisory boards; its Retail Industry Strategy
Council; Oracle Retail CrossTalk, its retail industry event; and Oracle OpenWorld. Another
strategic 2010 iniative includes Oracle's 2010 announcement to acquire Art Technology Group.
The acquisition was subsequently closed in January 2011.
Retalix Penetration of High-Volume High-Complexity FMCG Contributes to
Industry Growth
Retalix grew by 10.3%, for VSS, with its retail VSS marketed to fast-moving consumer goods
(FMCG) retailers and distributors worldwide. Retalix specializes in: grocery chains; independent
grocers; convenience and fuel retailers; drug and department store chains; and food, beverage
and consumer packaged goods distributors. Retalix uses a combination of direct, partnership,
dealer and indirect sales channels. Retalix's initial strength had come from in-store operations,
mostly POS. However, long-term growth will need to come from merchandising management and
supply chain as the POS refresh cycle begins to slow down in the next couple of years. Retalix
has a potential advantage with its ability to service Tier 2, Tier 3 and even Tier 4 through its
indirect sales channel strategy. That's a capability many of its competitors don't have.
SAS Experiences Double-Digit Revenue Growth for Vertical-Specific
Software
SAS's retail VSS revenue for 2012 was $30.4 million, which was a 12% increase over 2009. This
revenue includes on SAS retail merchandising solutions, not the horizontal solutions sold to
retailers.
SAS's loyal retail team provides retail VSS across all retail market segments, including: apparel;
fashion; grocery; specialty retail; general merchandise; online; and hardline retail. The company's
retail focus is mainly outside of VSS with enterprise retail intelligence solutions. With high levels
of expertise in loss prevention, allocation, merchandise planning and marketing and customer
support.
SAS benefited from the revived North American retail IT landscape. Retailer investment around e-
commerce, campaign management, analytics and loss prevention will drive new software sales.
However, the top five rankings did not shift because of this new activity.
NCR's Growth of 4.5% Results in Expanded Efforts in Latin America
NCR's retail VSS experienced slow growth in 2010 of 4.5%. NCR has entered into the Latin
American market in 2010, and, while the Latin American region did well, it wasn't enough to
overcome the slower-moving U.S. market. NCR describes its retail solutions as the converged
experience, helping companies interact, transact and connect with their customers in
revolutionary ways. They continue to move from a business-to-consumer (B2C) model to a
consumer-to-business (C2B) approach. The move beyond multichannel to a seamless
"converged retailing," or "c-tailing," experience encompasses stores, the Internet, self-service
touchpoint and mobile devices. This messaging is definitely in line with retailers' worldwide focus
on transforming the in-store experience. Retailers are increasingly investing their capabilities
around mobility and social media, attempting to bring these experiences into the store. The 2011
Gartner/RIS News retail tech study indicated the No. 1 initiative for North American retailers is
adding new stores. That focus will certainly help NCR drive hardware sales around its core
products of kiosks and POS, as well as software sales around POS, marketing and loyalty.

Publication Date: 29 April 2011/ID Number: G00212602 Page 6 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



Mergers and Acquisitions
M&A activity that has a significant impact on the technology and service providers identified in
Table 1 for 2010 and 2011.
Table 3. M&As for the Top Five Retail Vertical-Specific Software Vendors, 2010
Company Name M&A Activity
NCR October 2010 NCR acquired Mobiqa, a global
pioneer and market leader in the delivery of mobile
optimized content and a provider of tickets,
boarding passes, downloadable applications and
coupons in the travel, entertainment and retail
sectors.
Oracle January 2011 Oracle enters into a strategic
agreement to acquire Art Technology Group
(ATG).
Source: Gartner (April 2011)
RECOMMENDED READING
Some documents may not be available as part of your current Gartner subscription.
"Market Definitions and Methodology Guide: Vertical Industries, 2010"
"Forecast: Enterprise IT Spending by Vertical Industry Market, Worldwide, 2008-2014, 2Q10
Update"
"Competitive Landscape: Retail Software, Transforming the Business in 2010 and Beyond"
Evidence
Gartner uses public sources of information, primary research surveys and discussions with
software vendors to establish estimates for this market. Information from Gartner's secondary
research and internal community meetings has also been used to arrive at certain conclusions.
The data in this research report is published as Gartner estimates/opinion, not as facts that the
vendor reported.
This document is published in the following Market Insights:
Industry Market Strategies Worldwide

Publication Date: 29 April 2011/ID Number: G00212602 Page 7 of 7
2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved.



REGIONAL HEADQUARTERS
Corporate Headquarters
56 Top Gallant Road
Stamford, CT 06902-7700
U.S.A.
+1 203 964 0096
European Headquarters
Tamesis
The Glanty
Egham
Surrey, TW20 9AW
UNITED KINGDOM
+44 1784 431611
Asia/Pacific Headquarters
Gartner Australasia Pty. Ltd.
Level 9, 141 Walker Street
North Sydney
New South Wales 2060
AUSTRALIA
+61 2 9459 4600
Japan Headquarters
Gartner Japan Ltd.
Aobadai Hills, 6F
7-7, Aobadai, 4-chome
Meguro-ku, Tokyo 153-0042
JAPAN
+81 3 3481 3670
Latin America Headquarters
Gartner do Brazil
Av. das Naes Unidas, 12551
9 andarWorld Trade Center
04578-903So Paulo SP
BRAZIL
+55 11 3443 1509