Retail expansion demands IT technology

The present activities on the retail front and the initiatives in the pipeline

Microsoft is actually working towards two key components, ERP and CRM. But now we’re looking forward to how we can integrate these two components on mobile devices or any communication or collaboration tools, which are relevant to retailers.  We’re developing “connected experience for retail”, which is our primary vision for retail industry.  It is to connect with the consumers in rich and powerful way, provide enhanced capabilities to retailers that they need, which will translate into delivering better proposition for the consumers. Retail is a people intensive industry and connecting people is one key pillar. The second key pillar is connecting insights, maintaining the visibility across the supply chain. A retail chain has a warehouse, distribution centre, so managing labour, product inventory and all other related stuff has to be tracked down and the retailer should have the insight into all these activities. Modern retail works on real time, so before out of stock situation, it requires alert, which this modern technology provides. The third pillar is the connected CRM.   It is one facet which can make service more personalised using the data that the retailer holds. Suppose, as you walk in the store you face a mirror like screen and once you hold the mobile phone or smart card it informs about your preferences and likings. Microsoft has developed a Kinect based on Xbox technology which can recognise body movement. It has the probable application for retail.  Also, apart from such innovativeness we are working on end-to-end solutions including POS applications, store management, pricing, inventory, finance and processing. We are investing heavily on research and development so that retailers can do things at different points of time using different channels.  We need to provide roadmap for solutions according to the consumers’ preferences. To integrate all these in retail business we’re working with the partners. In retail there’s a multichannel expansion through stores, catalogues and call centres. We are working with a US-based partner to develop an application, clientelling, on mobile device.

Training programme

We train basics to the partners who are new to retail. We also run technology training online. After this training programme one needs to go a few more steps to be certified. This is important in terms of equipping them to sell and support the products. We also provide class-room based training programmes to see that the customer gets the value of the investment. Such training programmes are critical components for the value chain.

Integrated solutions

The retail chain with 10-20 stores has to be technically upgraded to cut down the cost of inventory and labour, given that there is a constant pressure on the profit margin. At the same time, capturing the consumer data to run loyalty programmes, marketing campaigns and other CRM activities are equally important. Also, customer engagement tools like kiosks and websites are playing important role in this market place. The small retail customers with 5-10 stores and who have an aspiration of having 40-50 stores are adopting technology in the form of integrated back-end solutions.

Microsoft has the integrated solutions but the demands of one retailer are different from another. Say, Odyssey has different requirements which is in books & gifts category, whereas Lilliput is in kids’ wear retailing, so they have different needs. Here, the partner steps in and customise the solutions to address their demands and make successful implementation. We have Navision for low-end retailers and Dynamics AX for mid-sized and large retailers. Our CRM services are available on cloud computing.

The transformation - demand is rising

There’s a significant shift of the retailers from being unorganised to organised. A retail chain like Season’s Furnishings with three-four outlets is seeking technology as a differentiator.  Also, there is a huge amount of interest shown by the global players like Carrefour and Wal Mart which will be lending different perspective to the Indian retail scene. Another change is that 60- 70 per cent of retailers are expanding their footprints across the country. So they need back-end support.

Three-four years back these retailers were happy to have POS in their stores but now the situation is different. Loot, the discount chain, requires back-end solutions since it is growing amazingly. To have better profit margin they require right price at right time, hence it is essential.  

There are evidently two pressure points  - one is consumers demanding for more products and services, and there are these big retailers who are going for partnerships and laying out plan for expansion. So, in this situation even small retailers are responding to these pressure points by adopting technology.  From just POS, they’re now thinking about inventory management. The level of competition has risen, so in this way they are trying to capturer and retain the customers.

Encouraging SMEs

We’re in talks with organisations like SIDBI and HDFC for financing SMEs but the fundamental challenge is the software as mortgage, which is intangible. Our partners are tying up with the banks to provide financing options. Also, in case of cloud computing or hosted model, a customer can pay and go unlike upfront payment.

International practices

In future we’ll see extension of these services, especially in CRM for more enhanced customer connectivity. Even CRM is helping out to calculate ROI. When Dynamics’ CRM system is sending out an outbound campaign, on the basis of the responses it receives, the system can convert these to opportunities in terms of evaluating the impact on revenue. The concept stores with unique offerings are running on technology. The US and West have advanced a lot in back-end operations. There, the operation is more complex which also includes global sourcing. They’re focusing more on online profitability. A shining example is Tesco which makes billion during Christmas, selling grocery items.

Retailers need to see best practices. They learn from the mistakes, but with the help of technology they can leapfrog this learning curve. There’s a huge opportunity.