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Issue of May 2005 
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The big picture

I can’t imagine Spencer retailing without IT

FoodWorld went all the way and deployed a BI solution rather than analytical CRM. K Radhakrishnan, Vice-president, FoodWorld Supermarkets, talks to Deepali Gupta about IT and its importance to the company.

Executive Summary

BI in FoodWorld

Is CRM the only way to ensure analytical capabilities in your enterprise? Here we take a look at FoodWorld which decided to take the BI route

Power pill

Analytical CRM is not always the ideal solution if you don’t need customer specific analysis.

Do you have a Customer Relation Management system in place?

FoodWorld does not have a CRM because we don’t track discrete customer data. We don’t have a loyalty programme. You need discrete data only if you have a loyalty programme. We don’t actually need to target age groups or specific people. Not that it is not important, but at this point in time, it’s just not required, because it is not so difficult to guess that wrinkle-free creams will not be used by 18-year-olds, and also that the Frito Lays Chaat Street range of potato chips will most probably be consumed by youngsters. So if I see an 80-year old buying it, I don’t need to start aiming the product at that group.

Setting up a loyalty programme is not easy. I can’t initiate a loyalty programme when I am still dealing with availability, and 30 percent of the time it is out of stock. A loyalty programme can only work when all else is in place. You don’t do a drive like that because you want to make money on some small-time tie-up or for cosmetic reasons.

Besides, there is also surrogate information. We do market research, and the FMCG companies do research too. When the product line is created, the manufacturers themselves align it to people.

What is the kind of data requirement that led to an investment in a data warehouse for FoodWorld?

The category data is good enough. I don’t need to know the person who has bought to see what customers have bought. I see movement in category data. Thanks to this solution the composition in our stores is different from the composition of other stores in the market. For example, the second-largest selling biscuit in my store is Jim-Jam, and it will never feature among Britannia’s top 20 biscuits. The largest-selling detergent is Surf ExcelMatic, yet it will never feature as one of HLL’s top products. So I know by category how a product moves, I know the elasticity and how the promotions work—which is enough at one level.

For that, we capture data at the source. There are two kinds of data. One is that which comes from the suppliers, and the other at the sales counter. So we track goods we take in and goods we give out. The data is stored in our Oracle database and MicroStrategy data warehouse.

How do you come up with sales promotions?

We look at the data. Take ketchup, for example. I have a monthly calendar. At one time, if I want to push a large quantity of it, I get promotions done on the one-kilogram bottle. Now nobody will buy two big bottles, but they may buy two bottles of 500 grams each, so I do what is called multi-packaging.

There are many promotions we do, which are IT-enabled, based on data—hour-wise, store-wise and so on. For that, my system should be able to throw up all my KPIs (Key Performance Indicators) two days before it actually happens, instead of waiting for the month-end. I need the capability to drill the information and find which store, hour or day against which product is the sale happening.

How important is IT to the retail business of FoodWorld? How extensively do you use the data warehousing system, and are you worried about system upgrades?

I can’t imagine Spencer retailing without IT. I am brain-dead without IT. I can’t receive the product, sell or even analyse it. However, we use little of business intelligence and what we do use, we have put in place over the last year and a half. I am not sure I am concerned about obsolescence when I am using about 3.5 percent of the system. An older version is not a problem as long as it fulfils the requirement.

The reason for the underused IT infrastructure partly is due to the lack of people. You need to cull out a separate section (what is defined as an analytics department), and we are working on that.

How do the Global Data Synchronisation Services help you?

As a system, it is a platform for FMCG companies to push updated product information to retailers such as us. It is the first service of its kind in India, so we can only talk speculatively, referring to what foreign companies have seen.

The first thing is if I were to remove data misalignment, my availability will go up. Out-of-stock situations may go down, which means greater availability for customers. Stocks may be lower, which means I have to keep less stock, but the sales remain the same. As a retailer, I will make more money that way. The biggest advantage is the alignment of my master with that of the FMCG company.

Deepali Gupta can be reached at

deepali@networkmagazineindia.com

 
     
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