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.  Continued...