Retail Dude

The “I” is now synonymous with the retailers, having accepted the change needed in the hour to “Integrate” processes of the business with “Information” technology.  With the increase in the scale of operations of retailers and the globalization of the whole business, Indian retail could only bank upon Information technology to come to its rescue. From the point of sale to the point of supply, the seamless working can only take place with the IT bone in place. However it’s the, retailers who must make sound decisions supported by a rigorous business case that delivers quantitative benefits far greater than the costs with the multiple technologies in place right from RFID’s, touch screens, smart shopping carts to interactive consumer consoles.

Most of the retail operations in functionality are complex and highly customized to the format or the chain itself. The high degree of product complexity, supply chain dilemmas all along with the multiple touch points that retail face (manufacturing, C&F, distributors, retail outlets and the customer himself) calls for an integration which can only be process driven through systems. But in reality retailers who do not manage the IT systems effectively will find that this becomes the pain point more than the alleviation of it. IT networks effectively impacts the cost of goods sold, through better management of critical processes like inventory management, supply chain management and to an extent merchandising activity. We all agree that retail scope varies across geographies even within the same borders. The only way to address this variability will be to track, measure and implement the optimum products at the right places. We cannot imagine doing that effectively today without information systems in place.

There will also remain a need to maintain a proper data architecture since many a decisions are accumulated from past records ie the measure of a given sales scheme or a particular seasonal discount in the past years that was successful. Some of the most critical decisions based on data warehousing will be forecasting of trends. Our new mantra of customer centric retail is unfinished without a CRM database for that matter. A strong base of customers is what all retailers look for; and in fact the Govt felt the need of a “Do Not Disturb” policy for the telecom products. Effective use of such databases for service retail is essential, although having such a huge database of customers is nothing short of a goliath act.

Retail analytics is one of the emerging fields to conceptualization of the business from scratch to its improvements, mainly a field based on numbers and its dynamics. Most large chains of the world like Wal-Mart, Tesco, Sears and likes had set up back offices way back into early 2000’s just to support their sourcing activities in India and now slowly foraying into their front ends once when their system architecture is now robust enough to compete. ERP’s have now become a necessity to most retailers than just a showcase for better and effective management, since the prominent retailers now have a vertical integration of their products. Life is surely made easier even when your products are outsourced. Optimization can only be achieved when you can track real time. RFID’s the next gen technology can only lead to smarter supply chain and inventory management. Touted as the revolution, we have previously seen what a smart store connected to your kitchen can do. The only dampener which is the cost will surely see a reduction in future.

The cost of implementation of IT structure as said earlier has to prove its mettle and managed properly. The initial set up cost is certainly high, which reduces over time as we head towards a more profitable business reaping its benefits. Other challenges in the IT landscape would be to manage the lack of standards to move to a universal platform or towards highly customized solutions which escalates cost. This is a double edged sword to walk for the sector. However to talk of its intangible benefits, the knowhow of an advanced retail solution can be relevant to the retailer’s long-term strategy and competitive positioning. Some of the mentionable aspects would be the brand perception (by using cutting edge technology to stay up beat), to a more brand evangelist and heightened brand or store experience for its customers.

So to say, that IT can support the strategic decisions, the operational moves and the customer interfaces is only a pool to be dived into. Certainly the way ahead will be to re integrate the IT structure itself from the customer POS to the back end supports. We could productively see spends on the store itself being the hallmark of a customer experience and also the point of customer delight. We could see more value added services like Mobile POS and intelligent systems which identify the store loyalists in an informed world.

To keep up to the shifting consumer spending patterns and trends, IT is definitely IN.

 Cheers!

Sudip

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Retail was synonymous to word Boom in India before Recession. But like all other sectors, it also felt the heat of recession.

Now when India Inc. is recovering, it again seems to be the sector which is regaining its position with maximum pace. Many retailers feel that Retail was not that much affected by recession. It was only in the month of March 2009 that they felt downturn but from April, again things improved.

As per AT Kearney’s 2009 global retail development index, India’s largely un-modernised retail sector remained attractive to both domestic and international retailers, in spite of government regulations that prevent 100 per cent foreign ownership of retail stores.

We are witnessing inflow of large number of international brands in India. Walmart opened its first store last month in Punjab, and Tesco and Carrefour are also looking for JV’s. IKEA is waiting for Govt. decsion on FDI. Hopefully FDI in Retail will be relaxed in the forthcoming Union Budget.

With all these in place, I will like to ask readers whether they feel that there is a re-boom in Retail ?

 - Rajeev Damani

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Hello Readers,

We have opened our new Poll. Please feel free to give your response. Our new Poll topic is:

“Will Govt. increase FDI in Retail in Budget’09 ?”

Readers can post there views and comments on this topic as a comment to this thread.

Thank You,

-Team : RetailDude

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It was hot summer of Chennai which made me realize of this unique pricing strategy of Cola Companies. Few days back while quenching my thirst in a local cola shop in Chennai, I discovered how these Cola companies have strategically shift there pricing by selling 200ml of soft-drink at the cost of 300ml. I had to quench my thirst by consuming 2 bottles huhhh!!

It was few years back when these companies come up with the concept of “Chota Pepsi” or “Coke” for that matter. They offered consumers 150 ml of soft-drink for Rs.5. It was well accepted by consumers who were use to drink 300 ml. At this point of time both 150 ml and 300 ml (for Rs. 9) were available in the market.

Then after some time they increased the volume and price of small bottles to 200 ml and Rs. 7, though 300 ml was at same price. These companies discovered a new trend in consumers. They realized that still consumers prefer small bottles. This appeared as a great opportunity for them. Bingo!! The result of this we are seeing now.

Finally, these companies are now selling same “Chota Pepsi” or “Small Coke” at the price of “Bada” i.e. Rs. 9. And we without realizing this have happily accepted this. And the price of pet jar i.e. 500 ml has just increased from Rs. 18 to Rs. 20, where as the prices of 1.5 liters and 2 liters have been decreasing or is mostly with some offer like free my can or something. 300 ml bottles have almost vanished from the market now.

Hats Off to the pricing strategy of the Cola Companies who have been successfully able to sell 66% of the product at the cost of 100% almost in a phased manner and making consumer habitual and unaware of the increased price.

- Rajeev Damani

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Hello Readers,

Its been an awfully long time since any post in the blog and due apologies for it. This post is more of a thought, that i was having for a long time now and thus wanted to share with all of you.

India has now proven what a strong economy is all about. Although it has been the last fortress to conquer to all brands across the globe, they still flock to this amazing demography. The varied profiles of the Indian masses have made it even more challenging for hitting the right positioning bucket. Brands are made and brands are eroded in this country. But when i come down to the basic idea of branding and its stages, the last being its ambassador, i wonder does it still work that way?

A simple exercise: Think of a 2 brands (Products, Goods etc) which have in the last 10 years been built routinely built upon from scratch?

In most probability you will come up by sayin “Ipod” (but wasnt it Apple Incs branding that it shouldered), or say Viao (but isnt it a Sony First?). The point i am tryin to make is that do not count brands which are the children of some huge names. Are you left with any? Yes you might get a few in the service  category! (Websites, Restaurants et all)

The most popularly talked about brands and leading examples in classrooms are all brands which are pre millenium. Does it mean, that it is getting increasingly difficult if not impossible to follow the brand building exercise? Or are they very short lived? What about brand icons, associations that we have read about? Do they dont apply anymore.

If i may talk of the Indian Consumer, is it becoming difficult to get that brand loyalty or followers from them? or Is it that the basket of offerings have increased and hence the result?

These questions are more or less inter related and have plagued me for quite some time now. I wanted to know the various points people make to encourage a discussion. The most logical thing that came to my mind was that the consumer today is more aware and therefore has comparisons and benchmarks of their own. They know what quallity and service means to them in their own yard sticks. I do not see any company fulfilling them all at any point to all the segments. Therefore a universally appealing brand is missing. We have more switchers than ever in any context. What people think is branded (having a name tag) is what is craved for. It could be the technology, the product offing or even the latest “in thing” that enthuses its customers. Its not about the association you build these days. That stong presence of a community is certainly missing. Its something that you want to “own” , which in branding terminology is something in you, that wants to be a part of the brand. Aspirations being build onto a personality to create ambassadors of it. Branding expertise is very low in India where manufacturers still think that branding means advertising. Ideally the brand response has been low to the consumer expectations is what comes to me.

This wasnt the case in the past, where the most strongest of brands today in the market have been created with a certain degree of pedigree in their own fields. How was the associations made, which is remote in todays context? I also beleive that the brands in history are the ones where the product arose of a need, which ideally gave them the exclusivity of addressing a need. Most brands today compete with each other of pushing products to people. Lifestyle concepts have risen only in the last decade, which might be another contributing factor of very less brands making its presence felt.Companies that build for the long-term and establish brand equity, rather than brand image, should outride any ups and downs of markets and of customers.

Will it then help build a brand in its true sense?

Cheers

Sudip

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