Op­por­tu­ni­ties in the re­tail sec­tor

With the govern­ment open­ing up the re­tail sec­tor for FDI, the op­por­tu­ni­ties for the part­ners will grow ex­po­nen­tially in the com­ing years

CRN - - FRONT PAGE - AMIT SINGH & SONAL DE­SAI

Ac­cord­ing to the In­dia Re­tail Re­port 2013 from the Im­ages Group, the size of the In­dian re­tail in­dus­try, es­ti­mated at $500 bil­lion in 2012, is ex­pected to in­crease to $800 bil­lion by 2015. While 5 per­cent of the mar­ket is ad­dressed by or­ga­nized play­ers, the rest is dom­i­nated by ki­rana stores and de­part­men­tal stores.

The con­cept of shop­ping has un­der­gone a vast change in terms of for­mat and con­sumer buy­ing be­hav­ior due to in­creas­ing pur­chas­ing power and spend­ing. This is trig­ger­ing the pro­lif­er­a­tion of large for­mat re­tail as well as on­line re­tail. Mod­ern re­tail is likely to in­crease from the cur­rent $27 bil­lion to $220 bil­lion by 2020. More­over, ac­cord­ing to For­rester Re­search, e-com­merce rev­enue in In­dia will in­crease by more than five times by 2016 from $1.6 bil­lion in 2012 to $8.8 bil­lion in 2016.

In ad­di­tion, mod­ern re­tail is ex­pect­ing a ma­jor boost as the govern­ment has no­ti­fied 51 per­cent FDI in multi-brand re­tail. Says Amit Bha­tia, Head, Re­tail Busi­ness, NEC In­dia, “The govern­ment re­cently di­luted the manda­tory 30 per­cent lo­cal sourc­ing for multi-brand re­tail­ers and per­mit­ted states to in­clude cities with a pop­u­la­tion of less than one mil­lion for al­low­ing such re­tail­ing. This will at­tract more FDI and hence more IT in­vest­ments.”

Boom­ing IT

IT in­vest­ment in re­tail is pri­mar­ily driven by flour­ish­ing or­ga­nized play­ers. “Mod­ern re­tail­ers spend 5-8 per­cent of their rev­enue on IT. Even un­or­ga­nized play­ers are now spend­ing 0.5-0.8 per­cent,” in­forms Bha­tia.

This amounts to an IT spend of $4.25 bil­lion spread through an es­ti­mated 1.5 crore re­tail­ers across the coun­try. “Re­tail is see­ing con­sol­i­da­tion and there will be fewer play­ers in the mid-to-large re­tail seg­ment. The seg­ment will be mainly driven by multi­na­tion­als, large In­dian re­tail­ers, and e-com­merce sites which are in­vest­ing in IT,” ob­serves San­deep Lodha, Di­rec­tor, Ty­rone Sys­tems.

Adds V Sreeni­vasan, Se­nior VP, ITC In­fotech, “The best part is that even un­or­ga­nized small play­ers are look­ing for IT so­lu­tions be­cause of their need to cut costs and im­prove in­ven­tory man­age­ment. Large play­ers are fo­cused on of­fer­ing a bet­ter ex­pe­ri­ence to con­sumers and iden­ti­fy­ing buy­ing be­hav­ior.”

There are op­por­tu­ni­ties for part­ners in so­lu­tions such as billing and in­ven­tory man­age­ment, e-com­merce, ERP, CRM, an­a­lyt­ics and sur­veil­lance.

Billing and in­ven­tory man­age­ment

Billing so­lu­tions through PoS billing print­ers are the largest com­mod­ity prod­uct line for re­tail shops. “The PoS so­lu­tion is the first step in au­to­ma­tion for a re­tailer. Bar­code scan­ning was the first ma­jor tech­nol­ogy ap­pli­ca­tion adopted by In­dian re­tail­ers. It made cashiers more pro­duc­tive, re­duced the num­ber of er­rors at the reg­is­ter, and made in­ven­tory and buy­ing trends more vis­i­ble and ac­cu­rate,” says PB Ganesh Ku­mar, Head, Sales & Mar­ket­ing, Chen­nai, TVSE.

Mov­ing ahead, NEC iden­ti­fies a trend to­ward NFC-en­abled mo­bile PoS so­lu­tions. Bha­tia ex­pects mo­bile PoS to cap­ture the mar­ket in the next

“The best part is that even un­or­ga­nized small re­tail­ers are look­ing for IT so­lu­tions be­cause of their need to cut costs and im­prove in­ven­tory man­age­ment” V SREENI­VASAN Se­nior VP, ITC In­fotech

cou­ple of years as the trans­ac­tion can be done through NFC-en­abled smart­phones. “These so­lu­tions en­able re­tail­ers to man­age queues dur­ing peak hours be­cause re­tail­ers can add more ter­mi­nals as needed. It has been ob­served that about 40 per­cent of cus­tomers pur­chase less than 10 items at a time. Mo­bile PoS so­lu­tions are ideal for these small trans­ac­tions.”

NEC has in­stalled this so­lu­tion at PVR Cin­e­mas and two large re­tail chains. “As most cus­tomers now carry smart­phones this so­lu­tion can de­crease the trans­ac­tion time by upto 80 per­cent. This is what is at­tract­ing re­tail­ers the most,” adds Bha­tia.

PoS so­lu­tions are also eas­ing in­ven­tory man­age­ment is­sues for re­tail­ers. “In a new trend, small-time re­tail­ers are open­ing su­per stores which are nor­mally 400 sq ft. We have sold in­te­grated billing and in­ven­tory man­age­ment so­lu­tions to about 25 such re­tail­ers in the last one and half year. The trend is now catch­ing across Gu­jarat,” says Sunil Bhavsar, Di­rec­tor, Parth Sys­tems, Ahmed­abad.

E-com­merce

E-com­merce adop­tion is grow­ing at a rapid pace with even small re­tail­ers keen to pro­vide on­line shop­ping con­ve­nience to their cus­tomers. “More than just e-com­merce, the re­tail in­dus­try is look­ing at adopt­ing dig­i­tal com­merce which spans on­line, mo­bile and so­cial chan­nels. We ex­pect this trend to grow over the next five

“As most cus­tomers now carry smart­phones, NFC-based PoS so­lu­tions can de­crease the trans­ac­tion time by upto 80 per­cent. This is at­tract­ing re­tail­ers” AMIT BHA­TIA Head, Re­tail Busi­ness, NEC In­dia

years,” states Sreeni­vasan.

“Right now the large op­por­tu­ni­ties are in de­vel­op­ing por­tals for re­tail­ers who are com­ing into e-com­merce. Re­liance and Life­style are two big names which are start­ing their own por­tals,” in­forms Vipul Dutta, CEO, Fu­ture­soft So­lu­tions, Delhi.

More than a plat­form to sell, re­tail­ers are iden­ti­fy­ing e-com­merce por­tals as a means to ex­pand vis­i­bil­ity and reach. “While most of the large play­ers are es­tab­lish­ing their own por­tals, many small play­ers are ren­der­ing their prod­ucts through large on­line mar­ket­places like Flip­kart and Snapdeal,” says Bha­tia.

Many ven­dors are of­fer­ing cloud-based e-com­merce plat­forms to re­tail­ers. “Cloud-based plat­forms give scal­a­bil­ity and the opex model which are at­tract­ing re­tail­ers. Even small re­tail­ers are opt­ing for e-com­merce plat­forms. We have over 20 na­tional re­tail­ers, 200 lo­cal re­tail­ers and 1,00,000 con­sumers on Klisma, our cloud­based e-com­merce plat­form. The plat­form can also be used as a cus­tomer man­age­ment so­lu­tion by mall own­ers,” says Ajay Ag­gar­wal, Chief Cus­tomer Ex­pe­ri­ence Of­fi­cer, Klisma.

More­over, part­ners are see­ing op­por­tu­ni­ties in the back­end IT in­fra­struc­ture up­grade re­quire­ments of the e-com­merce plans of re­tail­ers. “Ev­ery large re­tailer wants an on­line pres­ence and is spend­ing heav­ily on the back­end as well,” says Lodha.

“While smaller play­ers rely on Tally, large play­ers are adopt­ing full-fledged ERPs. Aver­age deal size ranges from ` 20 lakh to ` 40 lakh” DEVESH AG­GAR­WAL CEO, Com­pu­soft

Plan­ning & an­a­lyt­ics

IT part­ners are see­ing many re­tail­ers mov­ing from home-grown legacy ERP to stan­dard­ized full-fledged or mini-ERPs. “As more re­tail stores are open­ing there isn’t much dif­fer­ence in their prod­uct po­si­tion­ing, hence the fo­cus is on cre­at­ing cus­tomer loy­alty, un­der­stand­ing the cus­tomer, and of­fer­ing tar­geted schemes,” says Samik Roy, Di­rec­tor and Coun­try Head, Dy­nam­ics, Mi­crosoft In­dia.

Ac­cord­ing to Devesh Ag­gar­wal, CEO, Com­pu­soft, Mum­bai, “While the smaller play­ers are re­ly­ing on fi­nan­cial man­age­ment so­lu­tions such as Tally, large play­ers are adopt­ing full-fledged ERPs to gain in­sight into their in­ven­tory and sup­ply chain. The aver­age deal size ranges from ` 20 lakh to ` 30 lakh.”

Be­sides ERP, cus­tomers are opt­ing for CRM and an­a­lyt­ics to of­fer a bet­ter cus­tomer ex­pe­ri­ence.

“De­mand for big data and an­a­lyt­ics is in­creas­ing,” says Lodha. “Re­tail­ers want to know what cus­tomers are buy­ing, how fre­quently they are buy­ing, their age and gen­der. This in­for­ma­tion forms the ba­sis of var­i­ous schemes that they in­tro­duce to tar­get loyal cus­tomers.”

Pune-based Mo­bien Tech­nolo­gies has de­vel­oped a mo­bile ap­pli­ca­tion named Dis­tri­bu­tion Net­work­ing Au­to­ma­tion, and in the last six months has sold it to large cus­tomers in­clud­ing Hi­malaya SKL, Kriti In­dus­tries and Birla Cel­lu­lose which are heav­ily de­pen­dent on their dis­tri­bu­tion and re­tail part­ners. “It pro­vides the re­tailer

“While sur­veil­lance has been around in re­tail, re­tail­ers are now adopt­ing IP to an­a­lyze cus­tomer be­hav­ior and foot­falls, and com­pare re­sults with ac­tual sales” GUN­JAN SHAH Di­rec­tor, In­sight Busi­ness Ma­chines

an in­ter­ac­tive plat­form to in­crease cross-sell­ing,” ex­plains Ajit Gokhale, CEO, Mo­bien. “While sur­veil­lance has been around in re­tail for a long time, re­tail­ers are now adopt­ing IP to an­a­lyze cus­tomer be­hav­ior and foot­falls, and then com­pare the re­sults with ac­tual sales,” says Gun­jan Shah, Di­rec­tor, In­sight Busi­ness Ma­chines, Mum­bai.

Be­sides an­a­lyt­i­cal data, IP sur­veil­lance has be­come im­por­tant due to the in­creas­ing in­ci­dence of shop-lift­ing. “While sur­veil­lance has be­come manda­tory for re­tail­ers in most states, the de­mand for IP-based so­lu­tions is in­creas­ing due to their sharp im­ages and an­a­lyt­ics,” adds Shah.

See­ing the op­por­tu­ni­ties, part­ners are now adding sur­veil­lance to their port­fo­lio. “Till a year ago we were not of­fer­ing sur­veil­lance so­lu­tions, and as a re­sult we lost many large re­tail cus­tomers,” shares Vimesh Avlani, CEO, Graftron­ics, Mum­bai. “But now we of­fer a com­plete so­lu­tion com­pris­ing IP cam­eras, net­work­ing, MPLS and VPN cir­cuits.”

Re­tail­ers are also adopt­ing sig­nage so­lu­tions to dis­sem­i­nate schemes and pro­mo­tional of­fers to cus­tomers. “Dig­i­tal sig­nages are nor­mally de­ployed in large stores which are 1,000 sq ft up­ward. Larger re­tail­ers are adopt­ing ma­ture dig­i­tal sig­nage so­lu­tions with cen­tral­ized data con­trol and in­ter­ac­tive cus­tomer feed­back so­lu­tions,” says Bhavsar.

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