India’s organised retail industry, constituting 3 per cent of the total retail, is indeed on a growth path. It has necessitated the development of sophisticated IT solutions to enable more profitability, efficiency and an enriching customer experience. Retailing is the second largest income generator in India after agriculture and constitutes 38 per cent to gross national income. Dynamic Vertical Solutions Pvt Ltd, based in Gurgaon, has already made a mark in the field by providing complete end-to-end solutions for different types of retailers. Atanu Ghose, Technology Head at DVS and an IT veteran with 37 years of experience, who was in Bangalore recently to attend FRO2008 — the Franchise and Retail show — shares some of his perceptions on IT deployment in retail sector with Commodity Online Managing Editor Sreekumar Raghavan.

Q: There is a flurry of activity in retail segment — Wal-Mart set up a Smart Network, an IPTV-based shopper intelligence network spending $10 million, Infosys developed a product called Shopping Trip 360 Platform for more in-store visibility. Why?

A: Global retailing industry is valued at $6.6 trillion. It is the largest private sector industry in the world. But last year there was a shrinkage of $30 billion due to theft, pilferage, damages, unsold items etc. The shrinkage has happened in India also. In merchandising, the important factor is that to know what one sells, how much goods are stocked and sold. Now there are excellent tools available at reasonable prices for even small retailers. Retailers have the habit of placing orders using a thumb rule or based on guesses.

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Q: What are the problems faced on this count?

A: When placing orders for new stock is not based on data, it could lead to overstocking or understocking of products which is now being realised by retailers. Market has become so dynamic and competitive that certain brands are available from multiple outlets. If you want to buy an Arrow shirt and if you don’t get it in a particular shop — you may not go there next time. So reducing customer turnover is an important objective or key area for retailers. Now they are realising that using thumb rule no longer works. In some shops if you ask a particular product they will say it will come next Monday but even if you go there next time it may not be there. If data is not updated online, ontime all this can happen. Technology-driven companies like Wal-Mart have minute information, even to the point, let us say, which truck will reach their warehouse in next 45 minutes. Proper supply chain is essential and customer experience is very critical for retail success. The retailer has to ensure that customer is not required to hang around or take too much time to spot his product. If you are a large retailer, even a one percent saving makes a huge difference. The problem with ordering through phone is that it may not be properly registered or the person concerned might forget about the call 15 minutes later. If you can’t provide the product or service, the customer will go to next shop.

Q: What about large retailers?

A: Even they don’t have up to date information. Very little analysis is being done on sales. Analysis of sales data is very critical for retail and loyalty programmes. Customer profiling is very vital — if you don’t know your customer the result would be unsold items. You establish a store in a middle class or lower middle class locality and stock higher-end goods. Will it sell? So profiling your customer is very important.Q: Isn’t technology cost intensive?

A: Technology is a one-time investment but the return on investment is continuous. For the first three years ROI may not be there but then onwards there is no cost. Many of the large retailers spent crores of rupees on doing up their premises but buy some cheap software at Point of Sale (PoS) for computerised invoicing. I think it is a wrong strategy because it doesn’t help you to find out who your customers are, it doesn’t generate information on stocks and shelf space analysis is very critical. Why do some products move faster while others don’t? Mere PoS computerisation is not going to help in these matters.

Q: If technology is not cost intensive, do you think the problem is with mindset of retailers?

A: True, mindset of the retailer should change. We are in Bangalore today — it supplies technology solutions to the rest of the world. In IT, boundaries are fast vanishing. Whatever technology available in the USA is now available in India also.

Q: What kind of solutions do you have for the tiny, small and medium retailers?

A: Our product LS Retail also has a smaller version called LS Easy Retail mean for mom and pop stores. When these small kiranas become large they can upgrade to LS Retail. It is not that efforts have not been taken to reform local mandis. In Delhi, an effort was made by the state government in association with Microsoft to reform the local mandis. It did not succeed and it will take some more time for such projects to succeed.

Q: What is unique about DVS retailing solutions?

A: DVS was started in May 2006, right now we have fifty clients and installations in over 5,000 stores. When we started the objective was to achieve 1,000 plus stores within a year which we achieved. In terms of our uniqueness, I should say we provide end-to-end solutions to the retailer. Our software for the Point of Sale (PoS), Customer Relationship Management (CRM), merchandising, warehousing all are the same. There is no point of integration as we are providing an integrated product. The points of integration in conventional IT solutions are the joints and they are the weakest links. Therefore, an integrated end-to-end solution is our USP.

Q: Do you have high hopes on reforming India’s retailing operations?

A: Indians are quite innovative. In Jaipur, I was told that vegetable-fruit hawkers who go about selling in their vehicles, were picking up their stock not from the mandis but from nearby Reliance Fresh. So this means economies of scale were working favourably for Reliance as against the local mandis and traders. Offtake of such hawkers rose high so much so that regular customers started complaining that they were not getting any fruits or vegetables as it was bought by street hawkers. Later on, Reliance Fresh started a different outlet for such vendors. The ITC-e-choupal is a very unique model. There the farmers who buy fertilizers and seeds from the e-choupal also sell their produce. No such model exists anywhere in the world. ITC is a forward looking company and is driven by appropriate IT systems.

Q: How do you visualize the future of DVS?

A: We have business presence in Saudi Arabia, Abu Dhabi and Oman. In Dubai, we have implemented solutions for a hyper market owned by the ruling family there. In the USA, we are providing credit rating management services for a furniture retailer. Our software fills loan applications, processes it and get information from credit bureaus — based on that a customer profile is created for the client. Now, this furniture retailer wants to integrate LS Retail solution into the credit rating programe.