by October 8, 2010 0 comments

The retail industry has been growing at a steady pace presenting more and more strategic & business opportunities everyday. These opportunities play a vital role in attracting customers and in retaining the customer base to stay ahead. While using solutions such as barcoding, inventory management, BI to electronic POS systems, the prime focus is to retain existing & attract more customers while keeping costs low. We can classify activities of the retail sector into: food retailing, automotive services & retailing, personal goods stores & non store retailing that includes vending machines, etc. In this story we would be discussing different functions, their needs and types of retail businesses and the role of IT in retail.

Why should retail sectors automate?
Nullifying the errors and improved efficiency are the two key factors by the result of which retail organizations benefit by automating the business processes. Not only this, better and informed decision making capabilities has improved with real time information available to retail companies.

With automation, retailers are able to effectively track the customer information so as to provide better & uninterrupted services to the customers round the clock.

Retailers are no less in exploring the Internet world. Retailing over the Internet enables their businesses to be available 24/7. Moreover online retailing draws larger audience spread across the globe. Customers are given freedom to customize, browse online catalogues, choose from a wide variety of options without having to leave their homes or offices. Also customers get the best deals and discounts through online retailing.

Retail channels
Let’s look at the popular channels through which sales take place these days:
Supermarkets: With the enormous range of products available under one roof, IT solutions are relied upon heavily in such large scale operations where a number of logistics tasks have to be taken into account. POS plays a highly important role and is the primary gateway between the supermarket and customer service.

E-tailers: Retailers providing online buying and selling of products and services have noticed a surge in the last couple of years. The Internet plays a huge role by providing a medium of transactions to customers. E-tailers primarily use comparison shopping, data feeds, aggregation mechanisms and end user customization to set them apart from physical retailers.

Departmental stores: General retail merchandisers offering products and services at lower prices to consumers tend to use barcode readers at checkout counters and inventory management plays a large part in the organization of products.
Shopping malls: Shopping malls offer customers different types of products and services under a single roof. IT deployment can be found throughout the mall from the electronic cash counters to the RFID (Radio Frequency Identification) ensuring smooth functionality and automation.

Discount stores: Factory outlets give discount on the price and maintain a direct link with the manufacturer through the use of various IT systems. The supply chain system monitors the store level demand and inventory and accordingly stocks the products.

IT Solutions for Different Retail functions
The various retail functions can be categorized as under:
Inventory management: Inventory management describes the method which is used to keep a track of stocks in retail business. We can define it as a program that allows the management of sales, payments and purchases. By deploying retail software or an inventory management system you can help your business in identifying what you have, what are your needs, thus helping you run an efficient business.

Integrated with BI, an inventory management system has the capability to keep a track of items that are in demand and the items which are not. This helps in making better decision making as it identifies the hottest and coldest items. It also helps in differentiating between slow moving items and items that are purchased frequently which helps in grouping them, pricing the slow moving items and other issues.
Role of BI in retail sector: The BI systems or analytics along with operational systems such as POS forms two fundamental categories in a typical retail IT infrastructure. The operational systems such as ERP, POS, etc can provide retailers with right information at the right time. BI systems combine data management with predictive analysis such as data mining, forecasting, optimization. BI offers the retailer with insight and thus help run their businesses more efficiently.

Standard ERP: The basic needs of a retailer who deploys an ERP solution can be classified into two. First, to have an enterprise wide platform and second, to have a transaction management system. So in order to fulfill these needs many of the ERP vendors focus on developing retail ERP solutions that can help in consolidating all the functions. The retailers want that the entire solution should incorporate POS, supply chain, inventory reporting, billing management, etc. Now with the use of ERP system in place, it focuses more on retail centric components that fulfills the requirements of a retailer or a retail organization. With such a wide range of segments in retail sector that differs in nature & scope of operations, a retail ERP package has the capability to meet the needs of such segments. Not only this, tasks such as track of inventory, stock, sales, MIS reports, etc are also handled with this.

CRM systems: We all know that a CRM solution helps in managing and building relationships with customers using different methodologies and technologies. CRM solutions help in building relations with the customers by tracking their interests, their needs and their buying patterns.

POS terminals: POS or the point of sale terminals can be described as cash register replacements. They are the systems that have the ability to track, record customer information as well as process and verify credit card transactions. For businesses such as outdoor sales kiosks etc, small options like wireless POS modules, credit card readers, etc are handy as they help them to record and process credit card transactions.

A retail point of sale system comprises of components that includes a computer, monitor, bar code scanner, cash drawer, etc. Nowadays, a complete or all in one unit fulfills the requirement as the POS monitors use touch screen technology and computers are built into the monitor chassis that also helps in saving counter space for retailers. The software is designed in such a way that it is capable of handling different customer based functions such as sales, returns, loyalty programs, discounts, etc. We can also categorize the POS system into two: the first unit handles the sales information for reporting purposes, sales trends, cost analysis,etc, while the other comprises of ‘back office’ computers. An accounting interface is also used, to feed the information related to sales & cost of goods in many retail POS systems.
Bar code readers: The bar code readers are basically hand-held or stationary input devices. They are also known as price scanners or point-of sale (POS) scanners & their functionality is to capture and read information that is contained in a bar code. A unique identity is provided to all the products so that after scanning the product, details like price, weight & other details are gathered. This information helps to keep track of total sales, inventory list, etc when the information is entered into the systems. Barcodes have completely redefined the system of tracking sales & thus helped in increasing the integrity of POS transactions. They also help in saving time, cost and effort and at the same time helps in maintaining accuracy with less possibility of errors.

Woolworth: A Retail Success Story
Woolworth deployed ARC of Manthan Systems as its BI-DW solution to meet growing demands of business including creating new reports, meeting ad-hoc reporting needs and performing complex queries for business users.
Deutsche Woolworth GmbH and Co. OHG is a Frankfurt, Germany based retailer with operations in Germany and Austria. Currently it operates about 444 stores with an average store size of 10,000 square feet, and employs more than 14,700 people. Woolworth stores carry a variety of general merchandise including apparel, electronics, music and video, toys, home accessories, and offer a deep discount proposition to their customers.

Challenges – Growing needs,
limited analytics

Woolworth managed its analytic needs using an internally architected data warehouse, along with a leading generic BI software. Since deployment, Woolworth frequently changed the data warehouse design and architecture in order to tactically meet immediate and changing reporting needs. The data warehouse integrated data from custom developed source systems (for Sales, Merchandising, Inventory and Promotions), Tradestone purchasing and i2 planning. The platform’s architecture and deployment was becoming unwieldy to maintain, customize and scale as Woolworth’s business grew. The complexity and dynamism of Woolworth’s business was placing an increasing strain on the existing business intelligence platform. The system was unable to create new reports, meet ad-hoc reporting needs and perform complex queries like category margin performance for the business users. Woolworth was incurring heavy expenditure on IT resources for managing and maintaining the DW. Extracting, transforming and loading more than a million sales invoices a day from over 400 stores was becoming an increasingly difficult task with the current ETL and DW design. As the number of their business users grew, the Incremental BI licensing cost was becoming prohibitive for extending usage across the enterprise.

The BI Solution
Woolworth selected ARC of Manthan Systems as its enterprise BI-DW solution of choice. Sales, Merchandising, Vendor, Promotions and Inventory functions of the data model were enabled at deployment.The solution uses a Hybrid OLAP, retail-centric data warehouse design that understands and anticipates retail data structures, optimizes query performance, aggregation and cubing. The solution provides Woolworth’s business comprehensive, cross-functional analytical coverage. This helped institutionalize performance analysis and reporting across multiple business functions in the organization. The solution is pre-built for retailers, and therefore could quickly be deployed. The deployment used an IBM P-Series Linux system running a IBM DB2 400 database server.

Benefits of a retail-centric BI design
By deploying the solution, Woolworth reduced its average reporting time from over 30 minutes to less than 30 seconds. Users now have all the analytics they needed and more, accessible at the click of a button. Exception management, alerting and scheduled reporting features of ARC provided actionable reporting and analysis capabilities to Woolworth’s managers. Important reports like supplier performance analysis, best and worst sellers, promotion effectiveness, pricing performance, product range performance, stock performance and margin performance are now available to business with a host of drilling, filtering, and multidimensional analysis features. Store managers collaborate with category managers using ARC’s collaboration utilities like KPI alerting, scheduled promotion progress monitoring, daily sales report bursting, and enterprise email integration. ARC simplified Woolworth’s BI support and maintenance capabilities. The deployment is today administered by a team of only 2 people internally even as BI usage increased from 150 to 200 users. ARC’s warehousing design reduced data redundancy from 1.5 terabytes to 250 gigabytes. In the end, Woolworth’s BI-DW management overhead costs reduced by almost 50 percent.

Shopping Innovations@Shopper’s Stop
With new and innovative apps being adopted every other day by the retail sector, let’s take a look at the innovations Shopper’s Stop implemented over the last year
With almost 19 years in the business, Shopper’s Stop is the oldest retail chain in India. Over the last few fears, Shopper’s Stop has implemented a number of innovative systems and applications to improve customer experience. Ranjit Sathyanath, Head IT, of Shoppers Stop affirms Shopper’s stop innovations in IT applications. The 33 branch retail chain has implemented, in the last year, the Wireless Cashing system, the Promotion Integration System and Google Maps Mashup. None of these projects have been officially christened but have been an integral part of the shopping experience.

Wireless Cashing system
Budget: Under 1 lakh
Implementation time: Eight weeks end to end
Vendor: Mobicule
This application is focussed at the privileged high spenders. The most painful part of the shopping experience is waiting in line to be billed, explains Sathyanath. The team at Shopper’s Stop decided to build a bridge to luxury. The system would be able to bill the customers through a wireless thimble running on Windows Mobile 5. The thimble reads the price through the barcode, and prints a receipt; all of this while the customer sits in a lounge. The thimble, provided by Mobicule, comes equipped with the facility of swiping credit cards.
Promotion Integration with ERP
Budget: Under 1 lakh
Implementation time: Six weeks end to end
Vendor: In House
This application is focussed on increased awareness for both customers and the front-end staff. A retail chain like ours constantly has some promotion or the other and customers need to be made aware that their favourite brands and what they offer, says Sathyanath. The in-house developed application uses simple tools to develop an interface, which gives access to the distributor and allows them to control the kind of promotional offer that the customers can access all through a simple table. When a customer gets on the website, they see promotional offers for particular brands. The distributor controls the time and the type of offer. This also gives a chance for the front-end staff to stay abreast with the offers available through the various brands.

Google Maps and First Citizen Mashup
Budget: Under 2 lakh
Implementation Time: 6 months
Vendor: Mobicule
First Citizen in Shopper’s Stop is the premium customer card that entitles them to various perks. The mashup of Google Maps with individual customer information aligns customers down to the street number on Google’s Map. This system helps us make a quick report of our customer base, he says. The maps lend a visual element to report making. The map shows the spending patterns of the customers walking into the store and it helps establish a target audience for particular type of advertisement. The mashup helps us establish the spending power so we change the merchandise according to the kind of customers visiting the shop. The maps have also helped Shopper’s Stop in the establishing new outlets. The maps helps us establish if our customer base overlaps, explains Sathyanath.
Sathyanath’s team spent three months learning how to use and establish a link between the database and the maps. Google Maps has a limitation which does not let Maps to be used commercially by limiting the number of hits, he said. Sathyanath needed to script in a way that would update and populate the data on the maps with a significant time delay to find the loophole. He also had to figure a way out to integrate location with latitude and longitude.

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