Monday, July 25, 2011

Some Thoughts on Current & Future Information Technology Trends in Organized Retail



The last 5 years has seen the retail industry take a giant leap to establish itself as a key contributor to India' GDP. India's retail market is currently estimated at about 435 Billion USD. The market is constituted of the organized and the unorganized sectors. The organized sector mainly constitutes of homegrown Indian companies and a venture of Indian companies with foreign players.
The organized sector which is currently at 5% is expected to grow to 24 % by 2020. It mainly consists of large Indian firms operating in different formats. The unorganized sector which accounts to the bulk of 12 million retail outlets mainly consists of mom & pop stores, family run businesses, and kirana stores.
Source: Technopak Research
 
The following are some of the leading retailers, who are owned by homegrown Indian companies,
  • Pantaloons Retail & Big Bazaar
  • K Raheja Group’s Shopper's stop
  • Reliance Retail Limited
  • Trent Limited: A subsidiary of Tata group, the company operates with the brand names of Westside in apparel retailing, Star Bazaar in hypermarkets. Titan the manufacturer and retailer of watches is also part of this group.
  • Aditya Birla Group
  • Wills Lifestyle stores
  • Spencers Retail
  • Globus Stores Limited
  • Food World
  • Mahindra Retail
Global retailers like Metro Cash & Carry of Germany, Mark & Spencers, Wal-Mart, Carrefour, Tesco etc have either started their Indian operations or will be starting it shortly. Unlike earlier times today the organized retail has spread beyond tier cities. It is quite common to see a Big Bazaar outlet in tier 2 cities like Hassan, Mysore, Kozhikode, Lucknow, Indore, etc
The Government of India allows the entry of foreign retailers through the following routes,
  •  100 % FDI in cash and carry through the automatic route
  •   51 %  in single brand
  • Franchise model approach
Information Technology has established itself as one of the key factor in improving a retailer’s operational efficiency. The big players in the industry like SAP, JDA, Retek, NCR, Wincor Nixdorf, Microsoft, have made their presence felt in the market. These companies face tough competition from Indian companies like TVS Electronics, TYCO, HCL, Wipro, etc and a host of small and middle tier companies.
The following are some of the trends that were observed during the course of our research,
  • Technology solutions are used for back end operations, stock management, point of sale, CRM and EAS
  • SAP Retail seems to be well ahead of its competitors like JDA and Retek. Retailers like Future group, Reliance Retail, Tata Trent, ITC Retail, Great Wholesale Retail Club, Vishal Mega Mart, Nilgiris Dairy Farm, Videocon, Spencers etc use SAP retail while Shoppers Stop uses JDA.
  • Enterprises are exploring Saas: An example of this is the CRM system at Shoppers Stop and SAAS based ERP system at Oxford Book Store
  • Most leading retailers are constantly upgrading their Warehouse Management Systems
  • Improved information exchange between warehouses and retail stores thus enabling better decision making
  • Improved focus on customer data: Shoppers Stop’s project Drishti which was the company’s DW & BI system that helped them micro segment customers across formats and better manages targeted offers. A 6 month study of the Gujarati community resulted in targeted offers and increased that customer base (within a city) by 2 %.
  • Usage of handheld devices for gaining supply chain visibility
  • Handhelds / tablets for store managers and inventory management: Examples include handheld devices for tracking incoming and outgoing inventory at warehouse, store manager’s dashboard
  • ost leading retailers now have an online presence
  • SEO, Digital commerce Platform, SAAS model, Social Commerce are becoming the new key buzz words
  •  Trained manpower and attrition are a major challenge.
  • Microsoft AX is the latest entrant in the ERP sehment
  • The urban youth are increasingly ordering books, CD, camera, etc through the online channel. The growth of online retailers like Flipkart, Landmark, and online channel of retailers like Pantaloon, Shoppers Stop, stands testimony to it. However industry analysts opine that ecommerce is not going to make a huge impact in apparel retailing. Most Indians however prefer to feel a product before buying it

Reference




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