The Hindu Business Line : Connected retail

Delivering the right product — in the right quantity, at the right location, and at the right price — needs the ability to evaluate, conceptualise and execute.

Anil Bhasin

Competitive advantage in the retail industry hinges on the relentless drive to increase productivity, make prudent investments to deliver customer value, and execute precisely to provide consistency and quality. Retail organisations, therefore, continually work to improve the productivity and efficiency of service delivery, while enhancing customer service and satisfaction.

Delivering the right product — in the right quantity, at the right location, and at the right price — requires the ability to evaluate, conceptualise and execute.

However, challenging economic conditions have led to a drop in customer spending, reduced footfalls and eroding bottom lines. Cost optimisation measures and caution about any additional expenditure is then only natural. But, the one investment that retail units cannot choose to ignore and which, in fact, has the potential to brighten this outlook, is technology infrastructure. Technology is proving to be a powerful resource that can help streamline operations, track merchandise, evaluate purchase history and ultimately delight customers.

In India, retailers have already realised the benefits of technology as an enabler, with both large enterprises and smaller players investing in organised retail. Driving this growth is increasing urbanisation and affluence in both the metros and small towns. With this shift, lucrative opportunities have opened up in the retail space, upping local competition and attracting global players. However, urban retail is not the only segment in transition — rural retail is also poised for rapid growth.

Rural retail a growing force

According to a CII & Yes Bank study, the Indian rural retail market is expected to be worth $45.3 billion by 2010, providing a promising and largely untapped market opportunity. A case in point — I-Serv, an initiative by 3i Infotech, caters to rural customers through 12,500 stores across nine States in India. The stores provide a comprehensive range of services such as banking and insurance to consumers in remote areas, thus, empowering them.

These I-Serv stores are fully equipped with the latest IT infrastructure including computers, scanners, telephones and 24x7 connectivity, thus, providing effective services in remote rural India.

The road ahead is challenging — retailers are constantly pressured for revenue and profit growth, causing them to look for new ways to bring in customers. But once the customer is in the store, often one finds that the right product is out of stock or simply unavailable. As a result, the investment that the store has made is rendered ineffective!

Finding a solution to these problems is critical for store managers, marketing departments, and supply chain partners in order to efficiently restock so as to retain customer satisfaction and profitability. In such an environment, technology and innovation have become vital components to gain competitive advantage.

Retail technology

Here, technologies such as Retail Media Networks (RMN) and Retail Architectures can offer a solution. RMN transforms how consumers engage with their retailers by understanding the consumer’s buying process.

In essence, RMN contributes to sales by increasing the level of impression, awareness, and compliance. For example, a retailer who sells private label merchandise developed exclusively for his stores can deploy an average of two digital signs per store. The content displayed could be run in a one-hour loop with low, directional sound, feature two-minute segments on lifestyle content consistent with the retailer’s brand, interspersed with promotions, local events, and brand-building content.

Retail Architectures, on the other hand, can reduce the complexity of data management, by storing operation expenses and capital expenses in the data centre, thereby, increasing in-store functionality.

Wal-Mart, the world’s largest retailer, has signed a joint venture with Bharti marking its entry into the Indian retailing industry. Retails giants with a large network, complex logistics and warehousing require robust IT architecture.

Implementation of strong IT infrastructure optimises cost, increases customer satisfaction and operational efficiency.

Additionally, a retailer’s need to maximise interactions with customers has become the focus of a new series of strategic and tactical initiatives. Awareness capabilities, such as RFID tags and ‘Personal Shoppers’, are also used to track customer preferences, hence, minimising selling time.

Retailing giants such as the Future Group have implemented solutions catering to supply chain, store level and consumer experience-related areas through effective deployment of RFID systems in their stores.

Another aspect that is crucial to the retail industry is security. The payment card industry has made it mandatory to provide protection during the handling of sensitive credit card and user information.

All these technologies enable retailers to make more accurate and relevant decisions — allowing them to leverage on the benefits of spending less time while being more efficient. Customers are welcoming this change as part of their shopping experience. So, if retailers shift their network foundations to leaner processes, the new retail business models will maximise year-over-year, they will see increased net profit margin, customer loyalty, and brand recognition.

To illustrate, the Metro Group built a structured IT framework and corporate governance model that enabled it to maintain its competitive advantage and offer sustainable and differentiated value to its customers.

Investing in technology infrastructure now will allow retailers to meet their current and future business needs. Looking ahead, the retail sector is on the verge of a massive transformation. Incomes, tastes and spending habits are all changing in line with a demographic profile that is becoming younger — 63.6 per cent of our population is between the ages of 15 and 64. Hence, in order to reap the benefits of organised retail, CIOs will need to revamp their existing technologies and create a win-win situation.

(The writer is Senior Vice-President, Western region, Cisco, India and SAARC.)

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