IT In Retailscape: For Customers Now, Competition Later

New Delhi: | Updated: Aug 26 2002, 05:30am hrs
Retailing in India is undergoing tremendous metamorphosis. The entry of corporate houses like Tata (Westside) and ITC (Wills Lifestyle), venture capitalists like ICICI and IL&FS Venture Cap, and real estate companies like Ansal Plaza and Spencers, has redrawn the domestic retailscape. The new developments point to a shift in favour of organised retailing, which is characterised by sharper consumer focus and greater use of IT (information technology).

Tata Consultancy Services retail practice senior consultant Vivek Mehta, says: Increasingly, the organised retail industry is realising the importance of IT in bringing about process improvements, which would result in greater operating efficiencies and hence increased profits. But the awareness of IT systems which are available is low, resulting in poor decision-making. A number of organised retailers in India have installed solutions ranging from the simple point of sale (PoS) systems to complex retail ERPs.

E-cheque Payment Solution For Retail PoS

RichSolutions, MagTek and Global eTelecom teamed up recently to provide the first end-to-end e-cheque payment processing solution designed to electronically integrate cheque deposit, cheque image capture and cheque retrieval services for retail point-of-sale. RichSolutions Inc, leading provider of ePayment web services, said the electronic cheque capture and retrieval service (ECCRS), a paperless cheque processing system, automates deposits of cheques into merchant bank accounts, while securely capturing and storing the cheque images, virtually eliminating bank disputes and the need for merchants to manually store and process paper cheques. With RichSolutions ECCRS, cheques taken at the point-of-sale are scanned with MagTeks new MICRImage reader, a device that reads the MICR data with accuracy, and captures the cheque image in a single pass.

Lets begin with understanding Indian retailers and the kind of IT systems they have deployed. Mr Mehta divides retailers into four categorieslarge, mid-size, manufacturer and small retailer.

Large retailers are those having a chain of at least 30 stores. These large retailers, mainly supermarkets and department stores, use custom-built systems. Some of them have implemented ERP packages to take care of their back-office systems.

Mid-sized retailers are the ones handling more than five stores, with plans to expand to about 15-20 stores in the next two years. These retailers have departmental store formats catering to a variety of merchandise. A number of them have their own private labels for all the merchandise sold in their stores. They have spent a lot of time and effort in implementing packaged IT solutions for point of sale (PoS), demand forecasting, purchase orders and inventory management. A proven solution in many countries, which has found acceptance with many retailers in India, is Retail Proa good fit for retailers with 1-50 stores.

Then there are manufacturer retailers. These retail showrooms are exclusively owned by the manufacturer or franchisee-operated. Some of these retail outlets also have RetailPro for point of sale (PoS) as well as the back-office while others have their software developed from vendors for the same functionalities. Also, there are small retailers with less than five stores. These could be speciality apparel retailers, discount stores or departmental stores. They usually have a vendor-developed PoS system connected to an inventory system.

IT Priority: But, against the backdrop of some major retailing collapses around the world and a sluggish domestic retailing growth last year (five per cent), is IT a priority area Mr Mehta holds that in the next few months, Indian retailers will try to make do with their current systems.

Even as new stores will be opened and different formats will be experimented with, in the short term, the emphasis would be on using the existing IT resources to generate more information, says Mr Mehta. Retailers, at this stage, plan to leverage gains from their IT investments. One way of ensuring this is to have information about its customers and how to get repeat business from existing customers. In order to do this, the retailer would need customer relationship management (CRM) or online analytical processing software (OLAP) to run on top of their existing databases.

Though the short-term IT needs of the organised retailer would revolve around its ability to service the customers in a better manner by using CRM and OLAP tools and to reduce costs by using web-based systems of vendor management and CPFR (collaborative planning and forecasting tools), in a longer time frame of two-three years, retailers need to reconsider their IT priorities to retain their competitiveness.

For starters, CRM packages could be used for campaign management, to understand the buying patterns of loyalty cardholders and the integration of multi-channel sales. OLAP allows retailers to segment the sales and carry out behaviour analysis.

Future Trend
The requirement of the future would be to evolve IT as a strategic enabler for the organisation, according to Mr Mehta. Large to mid-sized retailers need to upgrade their IT systems and take into consideration the technology trends, some of which are nascent currently, but will evolve into important assets for the future, he says. There would be a need to evaluate if retail ERP packages like JDA, SAP IS Retail and Retek are suitable for Indian retailers.

Pricing: In the area of pricing, which is one of the critical challenges in the sector, software products are already helping retailers. Says Mr Mehta: DemandTech and Khimetrics, software products vendors in the USA, have come up with products which help retailers optimise the prices of their products. These companies have been beta-testing their software product with some of the retailers in the US.

Supply & Demand: Interestingly, a new set of software applications have been developed which accurately determine future patterns of supply and demand at the item and store level. These types of business optimisation software are still at a nascent stage in usage, even in the developed retail markets like the US, but in the years to come these software applications will be used by a large number of retail organisations, says Mr Mehta.

Mobile Computing: WAP (wireless application protocol) enabled hand-held PDAs (personal digital assistants) and mobile phones are becoming important for retail operations. With the use of mobile computing, inventory positions of actual stock in hand at the stores can be entered in the mobile hand held devices and transmitted to the back office computers for verification of stock.

B2C Retailing: The B2C (business to consumer) retailing will get a fillip once the consumer is assured of the retailers secure payment systems and efficient supply chain. To enable transactions over the net, the retailers would need to build the IT infrastructure.

Retail Exchanges: A need to set up retail exchanges is being felt as these help in reducing transaction costs. This development would be in line with the setting up of various retail exchanges (like World Wide Retail Exchange) in the US and Europe, which enables retailers to interact with vendors and other retailers for B2B transactions.