When it comes to retail management, data analytics and artificial intelligence play a key role in today’s business dynamics. But how to prolong its needs ahead of time? Ahead of the development of newer and more powerful emerging technology? Vision.
It is important to start with a thought about a much researched but little understood topic-the human anatomy. Without getting into the biological and philosophical intricacies, it may suffice for us to note a simple point- each human body part is built as per the standard of the whole body, in complete synergy with the other parts, holistically in tune with the vision of the creator.
When design and execution that is in tune with vision, it ensures a desirable and successful outcome, a similar phenomenon like the function of the human body. It’s a simple fact with hitherto unexplored ramifications, that the sources of success are the sources of failure too.
Would McDonald survive in the hinterland of Assam? No way, even if you have the worlds’ best supply chain strategy and the most wonderful operation at your disposal. People lack the necessary economy, taste and culture that typically ensure the success of such a food joint.
For long enough, in almost every business domain, budding entrepreneurs, as well as experienced business persons, have depended on management consultants to provide them with the necessary strategic vision and business expertise. The consequences have been quite amusing – experts have doled out solutions at the operational level, with no two solutions ever being similar. While every business problem may be solved in many different ways, there can be little doubt about the fact that all successful solutions follow necessarily the same roadmap- a rational vision, careful and detailed planning and controlled execution of the same. Moreover, there has been little or no transparency as to how the inferences have been reached and certainly no guarantee of success. Hardly anyone has ever talked about what constitutes the bedrock of success-the vision, and everyone has gone one step below at the strategic level. Surprisingly, no one consultant has ever told the entrepreneur that the business is not for him/her. Retail has been no exception to this.
Let’s define vision, which has been mistaken for an extended long wish. A typical retail vision by someone would be – ‘I want to start a garment retail chain with 2 crores and would like to grow to 10 crores by the end of 3rd year’. Not really the right thing, is it?
Yet, it is the right thing to say but not really the vision we need to take us into the orbit. Having stated the wish, it makes sense to take time to compose the following vision.
‘We would like to be a key player in the branded garment retail market, the estimated size of which is 100 crores per annum as per the most recent xyz survey. We would operate in the premium segment of the market (which is approximately 60 crores per annum and we would like to be 15% player by the end of the second year) and offer assortment rather than variety. Our business would generate high profit instead of high turnover by catering to status conscious, affluent upper middle class and upper class customers in the age group of 25-45, whom we would offer personalized service. Our stores would be located at the premium shopping areas to give us high visibility but we would be a business with high drawing powers.’
Now we are talking the real vision. And this is what is going to drive the whole business strategy and the implementations – the concept of variety, assortment, high profit, high turnover, high drawing power etc. and the meaningful interpretations of the same.
So there is something that sits on top of strategy also – for all business domains, it is the domain knowledge of what should be done and what should not. When you know what should be done, you can decide how to do it best.
That is the retail software vision that we have in mind. It would look at the business of retail in the following way:
Top-tier retail knowledge module: It helps the business owner to formulate a cutting-edge retail vision by providing him with business-specific template-driven knowledge. The CEO typically goes through an automated environment configuration session and the system suggests the best possible vision under the given set of constraints. This tier would focus on the retail knowledge base, market information integration, case studies, innovation and competitive advantage. Some of the things that this module would help the CEO to do the following:
- Identify market opportunities,
- Determine market positions and
- Develop a formal marketing plan implement the plan.
Middle-tier retail strategy module: This comes in two parts, one drawing input from the top-tier outlining the strategic framework. The other part would be more closely aligned with the operational module. This part would draw the information from the operational module and compute some critical business metrics and would compare it with the framework part to make sure the business is running in the right direction. Typical strategic components would be CRM, VRM, SCM, planning and OTB, assortment management and retail profit accelerator modules.
Bottom-tier module: This is the flesh and bone module for the retail business, consisting of basic transactional elements like POS, inventory and distribution management, purchase and merchandising, financials and HR.
Typically, the bottom-tier is everyone’s business. While the business managers need to focus on the strategic module, top management has to focus on the strategy metrics and to make sure that the vision always remains aligned to the market reality.
Finally, the retail solution needs to be integrated with planograms, visual merchandising software, messaging frameworks including SMS technology and data analysis and warehousing solutions.
By Dr Raul V. Rodriguez, Dean, Woxsen School of Business, Woxsen University