IT Makes Customer King

The organized retail sector still accounts for less than 5% of the $180 bn

retail market in India, since, typically, a large section of the population

still prefers the local kirana shops to branded departmental stores. However, as

the shopping mall phenomenon sweeps across the metros and even the SEC B and SEC

C cities, it seems that organized retail boom has finally arrived. According to

CII, retail has been the largest private industry in the world with total sales

of $6.6 tn, ahead of financial services ($5.1 tn) and engineering ($3.2 tn).

Organized retail sector calls for extensive IT usage-in fact, globally,

large retailers like Wal-Mart or Marks & Spencer, constitute some of IT's

largest and flagship users. That IT has made much lesser penetration into the

Indian retail sector has less to do with the players not being IT savvy and more

with the fact that organized retail in India is still a largely urban

phenomenon, and that too restricted to a moderately high income group. A look at

some of the heaviest IT users among retailers proves this point.

Most of the biggest supermarket chains, where several brands are congregated

under one roof, are some of IT's prolific users. These would include not only

the usual suspects like Shoppers Stop, Pantaloons, Crossroads, Big Bazaar, Trent

and Globus but even smaller players like Indian Silk House, that are confined to

one or two cities. Other than the big superstore chains, even individual brands

have their own network of showrooms across the country and managing that would

require extensive automation. Titan and Raymonds would perhaps be the biggest IT

success stories in this category, though MNCs like Nike, Reebok, Levis, Adidas

and Benetton are not far behind. The other key section of retailers to have

embraced IT is food & beverage-even local players like Nirula's, Wimpys

and Shiv Sagars have now gone for IT adoption.

Use of technology in the retail industry spans a very wide spectrum-from

the store front-end in the form of Point of Sales (PoS) terminals and barcode

readers all the way to the back-end ERP systems. Then there are SCM tools for

constraints-based supply chain planning and forecasting, CRM tools to analyze

customer behavior as well as business intelligence tools to analyze business

performance and productivity from various perspectives. Another contentious area

of IT usage for retailers is barcode. While some retailers have already gone for

barcodes, many are still hesitant since unification of barcode standards have

not yet happened and the government is yet to make necessary legislations.

A simple story would illustrate how important CRM application can be for

retailers. A few years back, Wal-Mart, in the US, noted that sales of beer

showed a sudden increase every Saturday afternoon. A close investigation showed

that Saturday being a half-working day, many young fathers were coming to

purchase baby nappies and while doing so also buying beer for the weekend.

Wal-Mart's next step was to place the beer crates next to the nappies's

section and sales increased even further.