Retail : Making Loyal Customers

Retail is among the oldest business activities known, and today it is one of
the most high growth sectors in India. Over the last few decades, organized
(modern) retail has gained momentum and has transformed retail from a
supply-driven model, where the consumer had to take what he got, to one offering
a choice and catering to demands of the consumer, and in many cases creating a
market too.

The growing economy and disposable incomes of Indians have offered an
opportunity to local and global retailers, who are attempting to attract and
retain the customer with attractive and luring offers, among other things.

In India, maximum shopping takes place around weekends and festive seasons.
This puts tremendous pressure on the IT infrastructure and requires
infrastructure resilience to minimize outages, which may result in adverse
customer experiences. Billing failure during rush hours causes abandoned
shopping carts and irate customers.

The retail industry offers many opportunities for technology intervention as
compared to some other industries. As consumers embrace modern retail formats
and begin to leverage multiple channels to shop, technology will play an
important role in creating an experience for the shopper as well as for the
retailer in creating a competitive edge based on defined focus areas.

The use of effective IT provides efficiency in supply chain, warehousing, and
replenishment from vendors to distribution centers to stores. Ordering and
replenishment systems can help in reducing operational cost, which may translate
into benefiting the consumer by offering lower prices.

Arun Gupta CIO, Shoppers Stop

Retailers are experimenting with blue-casting, self-service kiosks, SMS-based
interactions, digital signage, and self-checkout counters. Thus, the IT
organization has to be agile enough to address the rising expectations, and move
up on the adoption curve.

The Indian retailer has an advantage over many global competitors with no
legacy systems and technologies to manage. Global retailers, however, score high
with their process maturity and knowledge of the customer derived out of many
years of data capture and mining. The future needs are converging as Indian
retailers too are striving to create technology led supply chain efficiencies,
optimizing revenue opportunities, and customer intimacy. Within two-three years,
I believe, the Indian retailers IT sophistication and usage will be at par
with, or better than, the current industry leaders.

One of the biggest stories in the retail industry has been the adoption (or
lack) of RFID tags. The attempt by Wal-Mart to pressurize its suppliers to tag
each item with an RFID label did not provide the enumerated benefits to either
Wal-Mart or vendors.

Most of the recent experiments focus on pallet tagging and warehouse
efficiencies and not on shelf-level replenishment of items. The cost of RFID
tag, in comparison to that of barcode, in India does not provide a viable
business case for larger adoption.

Most retailers seek the loyalty of their customers by offering some kind of
loyalty card or co-branded credit cards, which provide them with spending
patterns. This provides real insights and can be a key differentiator in
retaining and attracting the consumer with focused offers and communication.
Upcoming retailers should focus on few basic principles of technology adoption.
It is assumed that merchandise systems and point of sale (POS) will be the basic
part of the operations. Depending on the size of the warehouse and the number of
SKUs (stock keeping unit), a good supply chain system and replenishment model
will start driving basic operational activities. The efficiency is created with
POS to warehouse to supplier integration with dynamic allocation and
replenishment of stock based on sale data.