Retail lessons from Europe

In this German retailer’s store near Duesseldorf, managers are equipped with tablet PCs that show a dashboard with a flood of alert messages, arranged in the order of exigency.

Messages such as ‘the private label full cream milk is selling more rapidly than expected’ and ‘the new brown bread in the shelves is not selling as expected’ are sent to the dashboard. Together with the alert, the store manager receives suggestions on what measures he could take, such as replenishing stocks of milk, marking down the price for the bread and communicating the new price to the shoppers’ smart phones.

Staff on the shop floor then perform appropriate measures such as offering price reductions or programmed discounts at the checkout.

Welcome to the incessant retail revolution in Europe!

Out here, by the time consumers grasp — with whatever cognisance they have — and keep pace with the rapid technology changes, the retailing world around them has already changed.

European retailing seems to be a narration of ‘revolutionary’ changes in the world of buying and selling.

This ‘revolutionary’ wave began in Western Europe in 1945, during the period of post-War reconstruction. Its most stunning outcomes included the retailing concept of self-service, the establishment of supermarkets and the expansion of new shopping areas in pedestrian zones in the city centres and in gigantic shopping malls on the urban fringes.

There is an elemental process of continuous innovation in Europe’s retailing which is dominant to this day.

In the Indian retail context, the UPA Government is now getting ready to open the sector to foreign direct investment (FDI), after winning parliamentary approval for the measure. Will it succeed? Whatever the intentions, the devil is in the execution. And there are good lessons to be learnt from European retail.

Supply chain and Skills

The central ‘actors’ in the narration of retailing in Europe are, without doubt, the various EU States, whose laws and administrative practices more or less regularly intervene in the market, whether it be through specification of shop opening hours, hygiene and food regulations and, the protection of consumer rights.

Moreover, the stakeholders also include those working in retail and their lobby groups, as well as the consumers.

The most effective parts of the sector in Europe are embracing rapid change in technology, supply chain management, marketing and customer service. European retail experience shows that the right professional skills need to be available exactly where they are needed.

Some of these, such as accountancy, information technology, finance and human resource management, are similar to those in most other sectors of the economy. Others, such as supply chain management, retail marketing, category management and mining of retail data are either specific to the sector, or are present in the sector in a very specialised form.

Retail management and allied subjects are offered in many universities as part of the core curriculum. In-house and private training and re-training programmes are offered in most countries within Europe.

logistics

In Europe, as much as 50 per cent of household waste, which ultimately ends up in recycling centres, originates from a retail supermarket chain purchase. Packaging and waste are visible aspects of sustainable consumption, about which Europe’s retail trade, producers, consumers and the government, as a rule, are alert.

Large retailers in Europe are facing challenges in terms of seeking innovative solutions to manage carbon emissions.

The European experience indicates that proper logistics performance requires the ability to manage and coordinate an extended supply chain. Economies of scale in single functions are not enough anymore. The whole supply chain needs to be managed and controlled. This includes ‘in-store’ logistics handling.

To integrate the last few feet of the supply chain in the distribution chain will make considerable contributions in the form of cost and service improvements.

IT at play

The IT sector plays a huge role in enhancing performance and cost controls in European retailing.

A prerequisite for more efficient utilisation of IT systems is standardisation of tagging and labelling of products. This becomes important due to increased competition and wide range of products. RFID technology is used within Europe in sectors, especially with high-value products.

As against these features of European retail, the Indian sector faces infrastructure limitations, be it transport or storage functions. The concept of cross-docking, used in Western Europe, cannot be applied in the Indian context due to poor infrastructure.

The retail revolution about to happen in India will have a ripple effect throughout the economy. The stakeholders will need to work together to make retail a success story.

The author is former Europe Director, CII, and lives in Cologne, Germany. blfeedback@thehindu.co.in )

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