Tech for next phase

The time has come for the Indian retailers to take a leap towards the next generation tech environment.

The organised retail sector in India stands at crossroads today. Growing urbanisation and a robust economy have helped the sector grow significantly in the last few years. The next phase of growth, as expected, will be harder to come by and may lead to market consolidation.

Price and the ease of shopping have also contributed to this growth. While cost will continue to be a differentiator, retailers need to provide superior experience to consumers. As the competition grows, customers would become more demanding and expect higher value in each transaction.

Most retail companies in India have established a technology set up that is able to run their day‑to‑day business. However, the adoption of technology must beef up to support the growth of their businesses. In the current market dynamics, there are several areas in retail that will see significant use of technology.

Customised service for better profitability

Today, customers have a plethora of options. They can decide what they want, how they want, and when they want. It is becoming increasingly important for retailers to listen to customers, understand their needs, and deliver it with the highest levels of service quality.

Analytics will play an important role for companies to create a customer centric retail experience. Using advance and predictive analytics techniques, retailers can better understand customer preferences, track behavioural changes and identify trends. An analysis of purchasing trends, demographics and other behavioural data helps companies determine individual customer’s likely future purchases.

It can also help anticipate demand for specific merchandise to tailor store-level assortments, optimise inventory and personalise store and channel experiences to suit local needs. By satisfying consumers demand for personalised interactions, it helps companies improve the sales and profitability.

While the adoption of analytics for enabling customer experience is relatively slow in India, it has picked up significantly in developed nations. PETCO, a privately held specialty retailer with more than 1,000 stores in the US, for example, is at the forefront of applying personalisation to improve the shopping experience and increase return on investment. The company has used advanced analytics for over five years to capture detailed product and visitor data that provides an insight into buying behaviour. That data has helped PETCO marketers personalise many customer interactions and offer customised products and services.

Efficient SCM for loss control

The retail supply chain in India is not very efficient yet, resulting in huge losses for companies. Retailers, especially in the food products segment, are trying to source produce from the farmers directly, to ensure better quality and reduce costs. It is important for Indian retailers to build an intelligent supply chain, with planning and execution solutions across the extended enterprise that can enable them to anticipate, control and react to demand and supply volatility within the supply chain.

True Value, one of the world’s largest retailer-owned hardware cooperatives, serving 54 countries with more than 5,000 stores and 12 regional distribution centres, established a supply chain that helped them improve the efficiency and productivity of the entire organisation. It included tools to improve the collection of order lifecycle information by tying data from internal procurement, warehouse, and transportation systems together with external data from their freight forwarder, broker and carriers.

The system has helped True Value reduce their lead time variability by optimising their procurement, transport, and warehouse processes and personnel. The supply chain solution enables the company to reduce out of stocks and optimise inventory in their stores without increasing costs, thereby keeping lost sales to a minimum.

Leveraging social business mediums

The internet penetration is on the rise in India. While the growth of broadband is not as fast as expected, the use of mobile internet has witnessed a tremendous surge. More and more people are using internet and e-commerce as their preferred medium for shopping. With the emergence of social media, consumers are relying on the experiences of other consumers for their shopping decisions.

They leverage the real-time connectivity of the internet and actively discuss brands, products and their shopping experiences on various websites. For a competitive advantage, it is increasingly crucial for retailers to monitor and analyse these dialogues to make better decisions about their merchandise, stores, service and promotions.

Today, tools are available that enable retailers to automatically collect consumer generated content from the internet and other sources of unstructured data. It can help them measure customer sentiment and analyse perceptions about their brand, their competitors and general product and shopping trends. We will, therefore, see a lot more adoption of social media monitoring and analytics solutions in India in the near future.

The advent of the internet is also helping put customers – being empowered by technology, transparency, and an abundance of information – at the centre of action. Customers now want a consistent experience across all channels and touch points. Retail companies globally are fast adapting to this change and building business processes that help them buy, market, sell, and service their products in a customer-centric manner. India is also expected to see the emergence of this smarter system of commerce in the near future.

In the initial days of organised retail in India, technology was used primarily for infrastructure development. While most retailers have automated their back-end process, it was often done in an unplanned and reactive manner. As the sector is poised for the next level of growth, the role of technology will be more of a business enabler, helping retailers infuse intelligence and efficiency in the system, create better shopping experience, and drive overall growth. Retailers, therefore, need to re-look at their technology landscape and align and scale it to their business needs and growth vision.       

The author is Vice President, Distribution Sector,

IBM India/South Asia