Is Retail Hot for IT?
By Aarti Shah
Mumbai, Mar 19, 2008

The sudden growth in the retail sector has taken everyone by surprise. In a bid to outdo the competition, players in the retail sector have issued a clarion call for new IT solutions that will help them in converting into world-class organizations According to IT vendors, new entrants in the retail sector have already started investing on building their basic IT infrastructure. Though no estimates are available about the IT market size in retail, vendors believe that the market would be pretty big, running into hundreds of millions of dollars. There are several IT solutions used by the retail sector. Some basic ones among these are billing, customer loyalty management, BI, e-commerce, and theft detectors.

Let us take a brief look at how these solutions are useful in the retail sector:

* Billing: Billing solutions are much sought after by retail organizations. With a large number of transactions being carried out in a single day and throughout the week, keeping track of these becomes a nightmare without a systematic approach. Most of the bigger retail organizations have a datacenter where the transaction data is stored. So if a transaction takes place at a particular outlet, the data is immediately transmitted to the datacenter where it is tagged and stored in a secure environment. This, of course requires a robust communication network, which is quick and secure. All of this is at the back end and is hardly apparent to the customer, but it is an important part of the organization nevertheless.

* Customer Loyalty Management: The customer is king and no one knows it better than a retailer. For customers to keep coming back, quality service is needed. Giving the customer prompt service is a surefire way of getting in his/her good books. Retailers can capture their customer's detail personal information. They can also offer promotions easily and make sure that these promotional offers reach their customers.

* Business Intelligence: The top reason for retailers implementing BI systems is to allow them to quickly react to changes in customer demand. BI improves business by collecting and analysing data from various systems (financial, point of sale, inventory, distributors, and customer relationship management systems) in various formats. It helps managers to design marketing campaigns for specific products by identifying opportunities. Separate solution are used for business strategy planning, location wise analysis, quick response to market instability, cash flow management and to merge data from varied internal as well as external sources.

* Theft Detectors: By using Radio-frequency identification (RFID) solutions, shop owners can better manage their stocks, while also controlling shop-lifting and theft. As the items are scanned and put in customer's cart, the computer offers information about each product and suggests complementary items. The computer keeps a list of the items in the cart with a running total so the customers know exactly how much they are spending. When they are done shopping, customers can proceed to a self-checkout stand or to a cashier. Because their items are already totaled and bagged, the wait time is minimal.

* E-Commerce: Retail e-commerce is evolving to encompass a wide variety of goods and services. If retailers have online stores, they can attract wider variety of customers. The overall online retail environment in India is still very small. Broadly speaking, Indian consumers are not more into shopping online.

"A main challenge faced by the retail sector is to figure out the business requirements (pain points) and then come up with a solution. There is no point in implementing RFID when you don't have good billing mechanism/inventory management system. Shopkeepers should have a system where you have a clear idea of how many goods are coming in, how many are going out and how many are stored in the stores, implementing RFID will not help" says Shankar Krishnamoorthy, CTO of Aspire Systems (INDIA).

Another challenge is the size and complexity of the IT solution. Whether it is a small shop or big shop, retailers' and all other stores need similar solutions. So, affordability and implementation are one more crucial challenge in retail sector. "The primary challenge faced by retailers in managing their IT is attrition and scalability of resources. With massive growth in the retail sector, even for the most seasoned retailers keeping pace with business expansion is one of the major challenges" states Arun Gupta CTO of Shoppers Stop.

Is the retail sector waking up to the benefits of IT? Yes. IT is one way to bring in competence into the business. In the current scenario, where we need all the information on our finger-tips, the only way to manage the operations on multi-store basis is to go with IT. The other factors which are favoring are: lower cost of computers, internet connectivity, availability of talent to develop IT solutions, etc.

According to Krishnamoorthy Microsoft, IBM, HCL, etc. are top suppliers for several hardware and software solutions focused on the retail sector. There are several solution providers who can customize these solutions to fit the needs of an individual franchise.

"IT helps retailers in availability and maintaining stocks in time. The foremost thing is it controls the entire work through single Windows systems. In short, without IT the retail sector won't be able to expand" says Ram Kumar, executive director of Gemini Communications.


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