by April 3, 2007 0 comments

Atleast there is someone who wishes that you had more and more money. It
would be mere repetition, of what is more often said and heard, to say that the
retail sector is booming. It is the backbone of a country’s economy. Despite all
that is happening, organized retailing in India is only 3% of the total retail.
Also according to a study by KPMG, speciality retail (where a retail outlet
sells goods that belong to one particular category than being a general store
that sells everything) is one area that interests as many as 45% of the total
consumers as more and more people become interested in specialty stores. For
countries like India, it is disorganized retail that has its roots embedded
across all sectors of society be it urban or rural. But the picture is changing
with both Indian as well as foreign companies getting into the game of organized
retail. These include the likes of Reliance, ITC, Tesco, Walmart, Carrefour and

Hyperstores, supermarkets, malls and retail stores are seeing sporadic
increase in numbers, but only in big markets and large metros that have more
liquid money. Most of the big companies in India are going for company owned,
company-operated retail outlets. A few examples are ITC’s Chaupal Sagar in rural
retailing, the recently opened Fortis Healthworld chain that sells healthcare
products, Godrej’s Adhar chain and HotSpot Retail chain that sells cellphones
and other related products like after-sales services, games, accessories, etc.
Some aim at bringing people to where they are, while others believe in the
neighborhood-market format. While there is a noted change in the retail
scenario, how far are stores on our land from being hi-tech? How far has IT
penetrated the retail industry? How tech savvy has it become? These are the
questions we explore to understand the needs, requirements, and whether or not
they are being fulfilled by IT.

Tech in retail-dream or reality?
The door to your favorite hyperstore opens on its own when you are a yard or two
away from it. You enter your dream store, to buy all you wanted for yourself,
your spouse and kids. You reach out your hand and shelves automatically get
reorganized into what you are about to pick up. The next shelf knows you might
take that jar of cheese balls next to the ketchup you picked up first. But
strange, you cannot locate your favorite basil, and you move to that adjacent
kiosk, which tells you the exact location of what you want-the basil leaves. You
gather all you wanted, put them into the bag/shopping cart and while you are
putting things one by one into the cart, it is adding it to your bill amount.
After you have all that you wanted to buy, you move to another kiosk that
appears just like the ATM machine with a platform to place the cart in front of
it. Your cart automatically tells the kiosk what all it has, and you get a
message on screen asking you whether you want to pay cash, e-cash or m-cash. You
choose and pay, and that’s it. It checks you out of the store. And if you think
you can steal something away in your pocket or by not keeping it into the
trolley, well you are wrong. The surveillance cameras are intelligent enough to
start off alarm.

All this is a reality atleast decades away from now. While a few digitized
solutions are available even today, it would take some more time to be able to
come up with a completely digitized superstore in your vicinity. But we are not
very far away from that. Say, half a decade ago, technology was limited to point
of sales solutions, generating reports and raising invoices. To put it in other
words, the computer had only replaced the typewriter and bill books.

For the rest, the world was the same, you still had to rely on your man power
to be able to understand and keep a watch over the inventory, stock movement as
well the actual sales and consumers. Today things are different. There are more
accurate and faster solutions available to do all this for you.

Worldwide, there are various technologies that are being used by retailers.
These include biometrics, RFID tags, SCM, POS solutions, e-payment, etc. The
Indian market is also adapting very fast to the market dynamics and deploys the
best-of-breed solutions. While we are doing that, it will take some time before
our retail industry goes completely hi-tech. The reason is cost. All other
obstacles of availability of products/ solutions and skilled manpower have long
been overcome, but some of the world-class solutions like RFIDs, intelligent
shelves and kiosks, still remain out of reach for Indian market because of their
high cost.

For instance, today putting an RFID tag on a product might cost you more than
the product itself. As result, the use of such solutions becomes limited to
niche product categories. In such a case, RFIDs can be used only with goods that
have high value in terms of cost (say fashion apparel and jewelry). It would,
therefore, require the cost of implementation to come down drastically before it
can be implemented.

Behind the scenes
From a distance it may appear that the technology is really making waves and a
lot of it is being used in the mushrooming supermarkets/hypermarkets.
Unfortunately, it is not so. The case is crystal clear. A major chunk of the
Indian retail market still consists of fresh start-ups. As a result, the CIOs
are working towards getting the basics right first, and in some cases going
beyond what they need right now. That is, the need of the hour is to get the
basic systems such as logistics, inventory management, supply chain management,
stock keeping, sale purchase management, invoice generation and bar-code reading
in place. Further than this, some retailers have gone beyond this to the extent
of integrating their systems through various cities, so that the duplication of
work, say, report generation can be avoided.

It will not be wrong if we say that in both organized and disorganized
retailing, IT serves as a mere enabler for business but only to the extent of
being a support function. There are not many organizations today that take the
pain of implementing IT for any revolutionary or innovative purpose. Each retail
outlet today takes complete care to use solutions that would make sale purchase
and service delivery easier for the customer. This means using more efficient
and updated PoS and stock/inventory management solutions. This not only gives
the consumer a better experience with fewer delays, but also helps a store
manager to manage data more efficiently. And each time a new store opens across
the country, it is made use that it runs same solutions, integrated with the
central data warehouse and real-time data is available to each location readily.

Mind game-Read it, rule it
The customers mind! A great attempt on retailers part would be to read it, and
rule it. The companies still rely mainly on the top of mind recall of the store
manager, sales staff, actual sales of commodities, etc to make a rough sketch of
the buyer patterns.

Beyond that, going by the trend of having franchise retailers, how many of
the shop managers and the CEOs of those multi-crore stores are actually
interested in getting to know why some people did not buy a product they
recently launched. All they do is, take the product, that did not sell, off the
shelves. But for the big players who have launched the product- the
manufacturers-this is a net loss for they invested in almost a new assembly line
to get that thing out in the market. They cannot afford the stocks back into
their warehouse for a product like they worked for months together. So, they
need to know the customers, their buying habits, get answers of the questions

  • How many people even think of buying a new item in the store?

  • How many go ahead and really buy it?

  • Is there a pattern in clubbed sales, that is, what items are bought

  • Which goods grab the attention of the customers?

Is it because of its placement or necessity?

That is, the industry needs to do is to get into the minds of the consumer to
deliver what they are going to think of buying next. While technology is no
hinderance to doing this, there are already many solutions available that one
can make use of. All that needs to be done is taking that extra step and deploy
them in an innovative manner. Data mining as a process can be of major help to
begin with. The data generated by the retailers can also be analyzed for getting
more information about the consumers and their buying habits, and getting the
answers for the questions posed a while ago.

Avoiding retail shrinkage
Talk of security and it appears that a shoppers’ paradise is also shoplifters’
paradise. That’s because even the most secure retail outlets in the country rely
on CCTVs surveillance cameras for security when it comes to using technology.
But even this is a secondary support after the trained security staff who check
you in and out of a store.

Mr Rajat Das Gupta, Head IT, Spencers Retail told, “about 1% of shrinkage is
a worldwide phenomenon and most of that is internal in most cases. It is a
matter of how much control you want to exercise. While you make the processes
more rigid and ask for checks at each stage, you also have to keep in mind that
nothing should hamper the customer experience while he is at the store.” Despite
all this, shrinkage can be minimized with the more efficient use of technology.
For instance, you could use smart tags that would generate alarms if someone
tries to take them out without the bill. But again, cost is a major factor that
has limited the use of technology in this area.

Lessons to be learnt
As we have mentioned earlier also, organized retail in India is in infancy. So
as and when the retail vertical stabilizes and retailers are able to get the
goods directly from the producers removing the middlemen from the loop, the
profit margins for the retail sector will definitely increase, in turn bringing
the prices down. That would be the time that CIOs will be able to concentrate on
making their IT implementations state-ofthe- art as today they are hard pressed
to meet the exponential growth this sector is witnessing. They can then look at
specialized solutions for warehouse management, project management, merchandise
management, DW and related sales/customer analytics.

The need of the hour, thus, is to use IT innovatively to make more sense out
of the data generated. This would not only take the retailers closer to the way
customers think, but also bring more tangible business benefits.

Future group

Pantaloon Retail is a flagship fashion retail chain under the Future group
umbrella. Future group owns other brands like Central, Big Bazaar and Future
Bazaar. The group is currently undergoing brand integrity programme, which will
establish all their brands as a part of the Future brand. They prefer to call
their IT department as the ‘Business Solutions Group’ as it offers solutions to
all business needs. We talked to their CIO to get a detailed insight of how they
make use of IT.

Chinar Deshpande, CIO,
Pantaloon Retail

Tell us something about your organization and the kind of IT
infrastructure you have in place.
We are thinking of moving beyond just being a retail store to being a
consumption player. With this vision, we intend to give the customer a never
before experience, bringing him to a place that provides everything he needs
under one umbrella. Since we are a multi-business foray, we have a very strong
technology-business architecture in place. We are using the financial and cost
accounting modules of SAP-SAP FI/CO for all our systems. All our stores are
connected over VPN (about 85% of them on Sify backbone) and real-time data is
available to work with across all locations. The last mile connectivity is on

For the 3000 users and crores of purchase orders we generate, we have SAP
that runs at the core while actual billing and peripheral apps (like loyalty
management, etc) is out of SAP.

What’s your future focus?
While we are focusing on the growth right now, making ourselves available to all
kinds of consumers, we’ll soon have visual connect between our stores and
office. This would give us a much closer look into the consumers’ minds, their
paying capacities and their buying habits. As people at the store are closest to
the customer, we have plans to provide store managers with a dashboard that will
give him all information like A/V from surveillance cameras, alerts, sales as
they take place, real-time data as well as the target sales, over one solution.

We need a technology platform where all transaction- related decisions are
driven by actual data. It would also enable automatic stock replenishment and
cross talking. This way, the stocks can be delivered straight to the stores from
the merchandise and the warehouse would be used for the minimum time for docking
purposes. As a result, the need to have more storage space will decrease.

I must confess that we do not have much of intelligent technology and
analytics in place. But, we have been thinking about inducting pattern
recognition and demand forecasting tools in the BI system for our needs in due
course of time. Right now we trust the store managers and their analyzing skills
for understanding our customers. For instance, we have noticed a pattern that
men who shop for themselves also pick up something for their kids. Such patterns
are taken into account to decide product placement.

Have you integrated tools like loyalty cards and similar schemes into your

Currently, our loyalty card system is operational in Pantaloon stores only, but
it is extremely high on priority so that we can centralize the data and analyze
it. We are working on the concept of ‘Future Wallet’ or ‘Future Money’ which
will provide a single identity for a customer that uses any of our services or
visits any of our stores within the Future brand. This will not only give us the
ability to get a bigger data warehouse but also help in mining the data to help
serve customers better.

What challenges are you facing in getting relevant technology and solution
for your needs?
Technology is no bottleneck, just that the implementations needs to happen.
Our focus today is to expand our reach in all areas be it investments, consumer
goods, services, financials, capital market or any other thing. We have,
therefore, been focusing on setting up an IT infrastructure across all our
stores that would serve our basic needs like inventory management, stock keeping
and replenishment, SCM and PoS. As the priority today is to grow ‘Bigger’ in
terms of the services and products we provide, we cannot be experimenting with
new technology and implementation. It will take some time before we will make
use of technology in an innovative manner, in order to analyze the data and use
business intelligence to enable decision making.

Spencers Retail

Spencers Retail, one of the oldest retail chains in India, opened Spencers
Hyper in NCR on 8th March 2007. The same day we caught them right there rolling
out SAP in their Books store called Books and Beyond. At the launch of their
‘Hyper’ store, we met the IT head and his team responsible for this roll out.
Here are some excerpts from that interaction with Mr Debashish Roy, Vice
President, Systems, Rajat Das Gupta, Head IT, ERP Project Cell and Mr Indranil
Guha, Sr Manager-Technical.

Debashis Roy
VP Systems, Spencers Retail

Tell us something about your IT infrastructure and your recent SAP
We are pioneers in organized retailing, and now with the group (we’re a part
of the RPG group) is focusing more on making it a pan India initiative, our
scale of operations is going to increase manifold. To manage this kind of
growth, it was necessary to move out of legacy systems, as they didn’t provide
the scalability that was needed. Plus, some of our stores are currently working
on as many as four different legacy systems, managing which was very difficult.
We needed a solution to manage everything under one umbrella. So we engaged a
team of experts to evaluate various solutions in the market. We found that SAP
came closest to fulfilling our needs. Project Shakti has been operating for the
last one year out of Chennai and we have already gone live in two states-
-Andhra Pradesh (Vizag since 17 November 2006) and Haryana (Gurgaon, since March
08, 2007). We are using the latest MySAP ERP ISRetail ECC 6.0 for our operations
in Books and Beyond, and are gradually migrating the rest to SAP.

With ERP, high-availability is a challenge as the network over which the data
travels from, say, a datacenter to the store is not within our control and
belongs to an external agency. Our ERP datacenter is based out of Kolkata along
with the business warehousing servers. For data processing, we have ‘staging
servers’. These are intermediary servers to store data temporarily before moving
it to the SAP Production server. Eventually, all stores and warehouses across
all locations will be integrated with our datacenter and shall be working on a
real-time basis, except for the PoS billing system. At the end of each working
day, the data is sent to the parent datacenter for processing and analytics.

What solutions have you deployed for analyzing customer needs, buying
patterns, buyer behavior and instincts?

In our legacy systems, we have deployed solutions like SAS and SAPZone. We use
them to do bill-value and time analysis. We are also going to use MySAP Business
Warehousing BW 7.0 for analytics. While our aggregated sales data goes to the
SAP production server, the non-aggregated data goes to the business ware housing
server for analytics at Kolkata. The latter helps us analyze customer buying
patterns. The former data helps us manage inventory, stock keeping, etc. While
some basic infrastructure is in place already, we are definitely going to
implement business intelligence into our system in due course.

What challenges did you face in moving to the new system?
An important pillar of retail business is ERP, which has three elements-People,
Process and Technology. People part is most difficult to manage as you need to
recruit, train and motivate people constantly, generate awareness and do change
management. This makes our task more challenging, as we need to manage
deployments in such dynamic environment keeping pace with the company’s
exponential growth plans.


TCS has long been serving the retail industry by providing various solutions
their clients ask for. But what are the needs and requirements of a retailer
when they approach a solution provider for a solution? We talked to the man who
heads the Retail Practice at TCS.

What are the business objectives of deploying IT in retail?
The business objectives for a retail solution depend on the size of the
retail venture. In my opinion, smaller retailers (who own 1 to 5 stores) look at
computerizing their financial accounting, inventory, purchase and store sales.
Mid-Market retailers, (6 to 15 stores) look at the same as small retailers, but
also envisage having solutions for maintaining warehouse operations. They would
also look at some basic merchandise planning solutions. The large retailers (>15
stores) look at the complete retail business functionality covering planning
(Merchandise and Assortment Planning), buy (Merchandise Mgmt, Purchase and
Inventory Status), move (Merchandise Receipts and Issues, Inventory Management
at warehouse and stores), sell (Store operations and store sales) and analyze
(complete MIS and analytics) along with financial accounting and HR mgmt.

This depends on the size of the retailers. Midsized retailers go for smaller
IT systems, which cover the business process defined above while larger
retailers go in for Retail ERP solutions available in the Indian market. Cost of
ownership also plays an important role in selecting an IT solution. Some large
retailers would look at a best of breed solutions where basic systems of Buy and
Sell are covered by a Retail ERP and PoS while planning and warehousing
operations could be managed by specialized niche solutions.

Vivek K Mehta Heads Retail
Practice at TCS

What are the challenges that you as a retail solution provider face in
leveraging IT?
The challenges relate to defining the business requirements. Indian retail
is currently characterized with a large number of start-up operations and
getting the skilled personnel in that organization is a challenge.

Are your clients concerned about customer buying habits and analyzing
sales data for the same? How useful is data analytics in sales?
Yes. Retailers are concerned about understanding customers and, hence, they
are go for loyalty programs for retail chains and also analysis of sales data.
Sales Analytics looks at the nature of sales, the SKUs and category and
sub-category of sales. Analysis is also done of customers using their loyalty
cards. In the future, apart from sales analytics, retailers would need to go in
for Price Optimization, an IT solution which would forecast the price points at
which the item should be sold for maximizing the margins and returns. Such
solutions are already in the market and are being used by retailers in the US
and Europe but it will be a few years before these solutions would get
implemented in India.


Vivek K Mehta Heads Retail Practice at TCS

No Comments so far

Jump into a conversation

No Comments Yet!

You can be the one to start a conversation.