Tech drives Retail

The rules of retail have changed irrevocably. Over the last few years, the retail sector has initiated a major transformative journey and it is focused on expanding multi-channel store capabilities.

It wasn’t so long ago that chief executives of retail chains would have left the responsibility of suitable IT solutions to the experts, but that is not the case anymore. And, whether it is a mid-sized or a leading retail chain, CTOs in retail organisations work in close co-ordination with other department heads and allied officials to determine an optimum strategy relating to merchandising, supply chain and inventory, coupled with taking the shopping experience to a new level, in tune with the evolving needs of the consumer.

It is no surprise that technology is no longer viewed as an “obligatory” expenditure, but as a key enabler of change, as well as business opportunities.

This development comes at a time when the domestic retail industry is forecast to grow 30-35 per cent over the next few years to reach an estimated $ 550 billion in annual sales, coupled with competition expected to grow manifold with the government actively wooing foreign players in the multi-brand sector.

Clearly, there is no straight forward answer to this rather complex operating environment and it is almost like a ‘jigsaw puzzle’. And, akin to other industries, retailers and suppliers have to work together to achieve the desired results.

To help retailers, Microsoft, the global icon in the technology sector, offers an array of solutions via its Microsoft Dynamics and it includes those related to point of sale (POS), merchandising, supply chain and multi-channel management, amongst other aspects.

“Multi-faceted customer engagement is a key factor for success in the retail sector,” said Samik Roy, Director and Business Head, Microsoft Dynamics (Applications) Business, Microsoft Corporation (India).

Merchandising strategy

It’s no easy task for retailers with consumers thinking twice before making a purchase in stores these days, coupled with the sale season being extended on different occasions, and the resulting challenge for store managers to decide an appropriate merchandising strategy. Clearly, no retailer would want to experience a ‘stock out’ during his day-to-day operations and at the same time optimising inventory and allied costs is a key strategic focus.

Retailer also highlight that with footfall patterns becoming increasingly irregular, higher during promotional seasons and vice-versa during other times, it also complicates the strategy to be employed by store managers to make their outlets visually appealing and ‘inviting’ to potential shoppers.

And, in this ‘dynamic’ operating environment, whether it is a traditional brick and mortar store or a modern chain in several locations across the country or an online store, the role of technology is increasingly playing a key role. As part of this strategy, partners in the supply chain would need to be linked via IT and allied systems, coupled with greater insight on purchase patterns.

 For instance, Bombay Dyeing via its ‘Project Disha’ utilised Microsoft Dynamics for Retail to gain greater insights related to its inventory across its distribution network, as well as stock management at its outlets, consumer behavior analysis and it facilitating vastly improved management decision making.

Omni-channel retail

Retailers are increasingly shifting to the omni-channel network, but the resulting challenges of suitably integrating and optimising operations across different formats still remains a ‘grey’ area. Apart from that, Internet connectivity in smaller towns across the country poses its own challenges for generating business online and via smartphones, coupled with a rising operational cost structure at traditional outlets is a cause of concern for the broader retail sector.

In addition, retailers are still struggling to effectively deal with product returns in this multi-format operating structure, along with ensuring their front-end and allied staff are suitably trained.

And, to effectively leverage the emerging opportunities in this format, SSIPL Retail, a leading chain for sports and lifestyle brands, deployed Microsoft Dynamics for connecting its 250 store network, along with boosting its online presence. This solution also enabled the head office of this retailer to get real-time data on its operations. Adds, Roy of Microsoft Corporation (India), “Organisations are increasingly adopting end-to-end solutions for optimising operations, as well as improving return on investments.”

SUPPLY CHAIN CONCERNS  

The inefficiencies in logistics and supply chain results in this overhead accounting for nearly 20 per cent of the total product cost, nearly four times the global cost. Consumer-based brands and retailers repeatedly highlight that logistical constraints results in broadly higher inventory levels maintained in the distribution system, and the resulting pressure on operating margins.

And, once again, the role of technology in improving efficiencies is highlighted by senior members of retailers, in a bid to enable modern organised chains to move towards the global model of replenishment-based operating system. 

Agrees, a senior official from a leading Europe-based fashion house with a large presence in the local market, “The supply chain should move to replenishment-based system, given evolving consumer needs and shorter product life cycles.”

Clearly, no retailer can afford to ignore the role of IT in their operations, in a bid to remain competitive.