Consolidating retail leadership

Rakesh Biyani, Director, Pantaloon Retail (India) Limited (PRIL), explains to Kumar Dawada the complexities of the retail business and how BI and IT have helped the company embark on an expansion plan while consolidating its position as a leading Indian retailer.

“Rewrite the rules, but retain the values.”
– Kishore Biyani, Founder & MD, Pantaloon

India is a very complex retail market. This is not only because of geographical, cultural and language diversity. Though India is one country, from a business perspective it is divided by tax boundaries. Business management becomes extremely complicated because of different levels of taxation and the manner of their calculation. In some places, they even vary from city to city.

The retail market is not only complex but also peculiar. A successful retailer must have not only the right products at the right place and the right time but also the right price. In addition, the number of products managed in retail is unusually high. A leading retail chain manages around 4,00,000 products.

IT is a very important support tool for a successful retail business. Without a comprehensive IT policy, it is not possible to properly run a retail business of such magnitude at all. The sheer volume of information routinely dealt with by the retail sector makes it highly dependent on IT.

IT FOR CONSOLIDATION

PRIL’s major objective is to retain the number one retailer company spot, and it is going through an aggressive expansion campaign to achieve that. Having an extensive IT policy helps the organisation in putting bits of information together and allows the decision-maker to get the whole picture. It also helps evaluate all decisions taken so far.

In 2005, PRIL selected SAP as a key technology partner and implemented SAP retail. It is also in the process of implementing SAP Apparel and Footwear Skills (AFS). The idea is to have the best technology available at the front-end retail store. This facilitates faster checkouts and there is timely as well as correct recording of client information. For this purpose, barcodes have been used. Even credit card magnetic swap readers are used to capture correct information into the database.

There is a recent tie-up with HDFC Bank for integrated points of sale. All these aspects are designed to make transactions faster and more accurate.

EMPHASIS ON A PROPER IT IMPLEMENTATION

Since a basic objective is to continuously make data available to users and customers, proper IT implementation and superior IT infrastructure ensure that in spite of getting minimum details, the right information is captured.

The best information is provided to everyone from the back office staff as well as the head office managers. The entire information flow must work seamlessly. A retail business works on a network environment because the stores are connected to one another as well as to the supplier sites. This is because in the retail business quick response is the key to success. Proper IT implementation also ensures that investment in retail is reduced substantially.

CONSIDERING NEW TECHNOLOGIES

While deciding to implement a new technology, major factors considered are scalability and user adaptability. This is because the most important thing in retail business is customer friendliness. Ultimately, the business is all about providing service to the end customer. The customer in the store is the prima facie reason why a retail business opts for a particular technology.

A CIO'S ROLE

The CIO plays a crucial role in the retail business. He is involved in strategic business meetings as well. His main role is to first ensure that the existing system is working adequately and smoothly. Continuous development, improvisation and innovation on existing systems come next. The data warehouses created as well as the data collected by the counter sales must be accurate, so that the BI (Business Intelligence) solutions are in a position to provide insights into customer behaviour and buying patterns.

The CIO should also be able to evolve new algorithms to ensure that timely stock replenishments are made to increase sales. He must also ensure that proper security features are in place to reduce retail shrinkage, which includes shoplifting, supplier fraud and administrative errors. These implementations are critical for profitability because retail business operates on a very limited profit margin. With the dependence of retail business on IT in mind, around one to one and a half percent of overall sales is reinvested in IT.

THE ROI FACTOR

Though RoI on IT implementations is not the easiest thing to measure, it can be judged from the quality of information that is available for better decision-making. This helps improve the bottom-line and sales. It also helps in finding other avenues for expansion and improving profitability.

With the support of good IT systems, it is possible to create proper benchmarks which can measure efficiencies in the IT implementations and systems. The achievements of the benchmarks reflect positively on IT and business processes, and eventually on sales and profitability.

MEETING GLOBAL CHALLENGES

The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart and Carrefour because unlike them, they have a better understanding of the Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his customer.

The Indian customer is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail outlet has to be localised. The customer should feel that it is a part of his culture, his perceived values, and does not try to impose alien values or concepts on him. Indian customer is not keen to buy something just because it is sold by an international company. Ultimately, it boils down to how much localisation and adaptation the company is willing to do for India. Other than tremendous money power, global companies have nothing extra or special that the Indian retail business does not have.

We live in exciting times. Only two percent of India’s retail market is organised. The future shows tremendous potential for growth in the retail sector. Almost all large companies worldwide are looking to establish a base or stake in the Indian market. In this scenario, the Indian retail sector itself must seize the initiative to realise the dreams of contributing to a prosperous and booming economy. The focus should be on the Indian horizon before looking for retail opportunities in other countries because India itself is a big retail market.

FUTURE TRENDS

In the near future India will see a phenomenal growth of shopping malls and speciality retail stores. The speciality stores will cater for home, electronics, furniture, watches, sunglasses and assorted items. There will be more fashion stores for youth. Speciality retail stores and malls are the future of Indian retail market.

kumard@networkmagazineindia.com