IT Trends in the Retail Sector in India
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IT in Retail: What’s Hot
The Indian retailing, which has topped the charts for being the most favored and attractive destination is yet in its nascent stage. Neither the FMCG retailers are in a position to maintain world class standard, nor one wishes to be an iconoclast. The digitization of the Indian retail sector has captured the minds of retail magnets for quite some time now but has remained the grey area of the Indian story of retail sector. The Indian IT sector is growing at a rate of 31 percent and posted a record revenue of $40 billion in 2006-07. This is indeed a good news but the staggering domestic segment demanded services worth only $8.2 billion. In this study we focus on how e-retail can boost the plans of existing and forthcoming national retail players. We further try to put forth the challenges in computerisation of the organized retail and make an attempt to suggest some prospective solutions.
Traditional retail sector:
Why IT is the need of the hour
The organised retail sector of India will form about 10 percent of the total retailing business in India and is expected to worth US $70 billion by the end of 2010. in the mean time it will grow at a CAGR of around 49.53 percent. But certain speed breakers associated with the primitive form of retailing must be overcome to maintain its tempo.
1. Unorganised retailing in India is ubiquitous and so the communication between the manufacturer and retailer is heavily dependent on the wholesalers, dealers and traders. This is more so because the retailers can’t afford costly investments. So they ultimately have to suffer due to low participation market flow of commodities. Nowadays even the organised business houses are facing the problems related to SCM(Supply Chain Management). The SCM’s huge emphasize on middlemen rather than on the retailers has aggravated the problem. The introduction of EDI (Electronic Data Interface) can deliver QR (Quick Response) and ECR (Efficient Consumer Response) systems to ameliorate the partnership channel and thus shorten the time between the placement of orders and delivery to occur. For eg. the 17 outlets of FoodWorld are linked online with its central manufacturing house at Chennai.
2. The scale and process complexity are also of paramount importance as millions of customers deal with thousands of retail outlets. At the end of the day the total number of transactions is in the order of hundreds of millions. This makes keeping track of the money movement an onerous job. The spread of the planning cycles and huge geographical dispersion makes the task more arduous.
Retail operations:
How does Information Technology help
India has seen a retail boom in the last five years. This has helped the sector grow to a size of Rs. 8,10,000 crores. IT can and has to play a substantial role in this flourishing industry to keep up the vigour as well as to make it globally competitive. It can happen in many ways:
1. Retailing in a large country like India is basically a multi-plant and multi-market activity. It is almost if not actually impossible to handle the diversified operations. Introduction of IT can make things easier and the node can be immensely useful in managing the complexities.
2. Advanced planning and scheduling and inventory management are inevitable to any growing retail sector. Besides, merchandising and seasonality management systems can drastically change the fortune of retail sector in India.
3. To improve penetration and enhance quality of services, data mining and top-class forecasting has no substitutes. Understanding consumer needs and collaborating with suppliers are essential parts of merchandising activities. A logical interpretation of data is fundamentally important to make decision, specially when one is looking forward to establish a new retail chain. These help in modifying revenues and cutting down costs, the two dimensions of an upward-moving profit curve. Data-cleansing and re-architecture also help in making effective decisions.
It is fully justified that all the retail institutions as well as the manufacturer and all distribution centers be linked Online to ensure EDI of the server installed in the market with the EPOS (Electronic Point Of Sale). However the retailers should carefully choose the IT service provider as global researches have shown that global IT expenditure in the retail sector is growing at 13 percent whereas the revenues has grown at a mere rate of 2 percent. The maintenance costs are also quite high owing to the different technology platforms for fragmented point solutions.
