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E-enabling retail India
Aniket Kavathekar
Saturday, April 30, 2005
The retail world is observing a change in India with major players in queue for IT solutions. IT helps retailers streamline their business with software tools for managing a supply chain.

These tools act as an invisible link that delivers high amounts of information in a matter of seconds, manage millions of customers all across India. The men responsible for these important developments are chief technology officers like T.M. Unnikrishnan of Shopper’s Stop and Alok Verma of ITC Wills Lifestyle (WLS).

Shopper’s Stop and WLS are part of India’s organized retail business which is only 3 percent of the overall retail market. The top three of the organized sections occupy 750,000 square feet of the retail place where more than 400,000 shoppers visit every week to seek good deals from thousands of merchandise offered by renowned brands. Managing such a capacious business requires the most innovative technology.

IT helps the retailers by bringing in process visibility across warehouses and stores. Shopper’s Stop and WLS are exploring multiple avenues where IT can help create a niche for their brands. The systems are called Supply Chain Management systems (SCM). WLS uses Infobahn VPN; Shopper’s Stop uses JDA and Crossword bookstore (also implemented by Unnikrishnan’s team) uses MOVEX. Shopper’s Stop and WLS invested six to seven percent of the revenues, in IT systems and that investment has turned into an asset for them.

These systems keep the momentum of supply chains. Customers feel happy because of high-speed transactions at billing counters. In Shopper’s Stop, transaction time is much lower than India’s average of 20 minutes. The servers also work around the clock, with 99 percent uptime. WLS claims 100 percent uptime.
Shopper’s Stop, WLS, Pantaloon and other retailers must manage growing business in addition to improving systems efficiency which includes managing store inventory, supply delivery from the warehouse to store, purchase deals with franchisee as well as manufacturers and maintaining the cash registers.

The transaction speed directly depends on the level of integration between stores, warehouses and manufacturers and also affects profit. In a smaller chain of two to three stores, hands-on management is easier.

Retailers realize problems as business grows and they start losing the overall picture of the chain. This is where the SCM solution is useful.

SCM solutions collect data from the shop’s various business transactions through devices like consumer swapping-cards, which WLS provides to its customers. These cards can provide information including the customer’s name, age, and personal choices of various seasons and festivals.

This information thus provides retailers with an enormous amount of data, which can be useful to design a campaign for next season. Retailers design clothing and apparels according to their predictions. IT systems make these predictions easier. According to Unnikrishnan, “We use the software solution developed by Intensia.

The package helps us predict the colors, fashions, designs and price ranges for next season.” This trend forecasting enables them to stay ahead of competition. From a revenue perspective, it is observed that speed of transactions and movement of goods has direct implication on daily profits. In the retail business, profits are calculated in terms of Jim Roff (return on square feet) and Jim Roll (return on inventory).

A downtime of five minutes is a hindrance to the fluid movement of goods and a possible loss of millions of rupees. Information systems also ensure a ready backup. WLS has implemented automatic heal systems for their shops. Auto-heal consistently monitors around the 90,000-strong display of pre and post season items. This system monitors non-moving merchandise and replaces them with ones forecasted for next season. It also provides a buffer stockpile to avoid stock loss and ensures the security of goods kept in the shops by continuous vigilance through integrated anti-theft devices.

These systems have a central control in head office coupled with store management systems in individual store. Head office systems oversee all supply chains like customer demand patterns, solving management problems, and transportation management through warehouses and stores. Contrarily, store management systems take care of daily point-of- sale transactions (total purchase, refund, exchange) and daily record keeping, ensure security of inventory as well as merchandise and reports to the head office.

Indian retailers face problems at both of these levels. For good visibility across supply chain from a head office, chain sub-components like store and warehouse management system, franchise shops and manufacturers need integration.

Retailers face problems if they haven’t lined up their IT systems with business process. The Indian retailer often initiates IT systems, as the business grows and realizes that the IT systems in place are not suitable to the growing business. Such situation forces the retailer to switch over to a bigger package.

Commenting on this trend, Ankur Gupta, a consultant with KSA Technopak says, “IT systems should be driven by the business process. If that doesn’t happen, you face problems when your business grows. With increasing business you go for a better option, which is when change management becomes crucial.”

Change management is problematic for retailers. According to Verma, “The retailers have to train the staff to efficiently handle the software systems in the store. On an average, training takes six months as most personnel have to be trained in basic computing skills from MS Office to important billing software.” This is a considerably long period of time and the personnel soon depart for a better work opportunity because of their improved skill set.

Problems may also arise when people switch from one vertical to another. They also need to be trained from scratch. Personnel with lower educational level (higher secondary) take considerable time to handle the systems independently and efficiently.

Another consideration for retailers is the cost of implementation. With systems like JDA or Bahn the cost reaches anywhere from Rs 100 to 150 million. Only retailers with over Rs one billion can make use of such systems.

Hence, for large number of mid-sized and small players, these applications are not viable. Difficulty arises when retailers can’t see any visible benefits of IT implementation, as it can neither be related to the customer nor sales. IT has benefits at the back-end operation.

A retailer who is investing around Rs 600 million in stores, interior and civil work should not mind investing Rs 40 to 50 million in IT.

It’s no wonder more and more mid-sized retailers are getting in line for solutions like SCM and CRM which fit their needs. Obtaining a system is one thing and using it smartly is quite another. As Gupta rightly points out “IT systems can give all the data they (retailer) want. It’s their choice how they want to use it.”
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