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Gear up for Competition in Retail – an article in images retail technology directory – India – 2011


Indian retailers need to undergo a paradigm shift to align to the current economic reality, escalating capital investments in inventory and increased customer service demands. Such a shift can come …

Indian retailers need to undergo a paradigm shift to align to the current economic reality, escalating capital investments in inventory and increased customer service demands. Such a shift can come only when retailers embrace a fully integrated enterprise-wide application set.

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  • 1. 2011 GEAR UP FOR COMPETITION By Manish Chaturvedi, vice president – Indirect Sales, CitiXsys Technologies Indian retailers need to undergo a paradigm shift to align to the current economic reality, escalating capital investments in inventory and increased customer service demands. Such a shift can come only when retailers embrace a fully integrated enterprise-wide application set.22
  • 2. section:1 | overviewsF oreign direct investment (FDI) in multi-brand retail in India seems to be imminent and there has been a lot that has been discussed, written and debated on this topic. While most discussions and debates are around the pros and cons of it, what is pertinent is how a retailer should gear up for competition. Statistically, retail – one of the fasted growing industriesin India – contributes over 10 per cent to GDP growth. Thisseemingly small percentage translates to several hundredbillion dollars. Comprising a sunrise industry, retail anddistribution companies are one of the most complex,competitive and price sensitive.THE CHALLENGERetailers have to manage enormously complex businessprocesses that affect the entire lifecycles of the products they dead inventory, which will have to be disposed off at reducedsell. margins through forced promotions and sales. On the other Apparel retailers have to keep up with the ever-changing hand, an under-stock situation can lead to lost sales.trends of the fashion world. Sourcing in-vogue styles onto the Retailers in speciality categories face an arduous challengeshop floor before the in-season trend passes, and maintaining of keeping pace with competition from the larger mass marketappropriate stock levels for the latest styles, is also a challenge retail counterparts, who offer a wider selection at extremelyfor retailers. Similarly, the fall-winter collection should give way competitive prices – competition that will only intensify withto the spring-summer collection in time to maximise margins. big-box retailers setting up multi-brand operations in India. Food retailers must acquire fresh perishable items from As if these challenges weren’t big enough, having anlocal suppliers and make them available to customers in store accurate view of inventory across stores, delayed shipments,within hours to maintain the highest quality and freshness security requirements to manage the rise in theft, the pressurecustomers come to expect. to earn customer loyalty to increase repeat sales, improved in- Retailers live in a constant dilemma of maintaining optimal store shopping experiences and many more such priorities areinventory levels. An overstocked situation will lead to future all challenges that can give a retailer sleepless nights. 23
  • 3. 2011 Purchase and Sales Pricing, orders, warehouse policies & policies, user roles promotions Headquarter In-store transactional data Inventory and shipment status, stock movement Retail Store Warehouse Replenishment and order Inventory and fulfillment shipment status, requests stock movement Direct customer deliveries Deployment Landscape for the New Age Retailer Figure: An Ideal Application Landscape As retailers aim to cope with such pressures, they often retailers have invested in inventory management applications.struggle with how best to prioritise – should one concentrate Though such applications increase the visibility of inventory,on reducing Cost of Goods Sold (COGS) by sourcing goods in isolation they do not provide a complete solution. Disparatefrom price-competitive suppliers, or on optimising distribution systems within an organisation often leave key decision-makersfunctions of the business, or simply investing in expanding the struggling to piece together the information necessary for moreretail chain to increase market share by reaching out to more informed decision-making.potential consumers through multichannel retailing. With multichannel retailing growing in popularity, retailers, in To improve on the process of ensuring sufficient product an effort to increase revenues and gain new customers, turn toavailability when and where it is most needed, which will alternative channels of marketing their products and services.minimise working capital and inventory holding costs, most Retailers find themselves managing stock replenishment from traditional brick & mortar stores as well as order fulfillment from other channels such as mail order catalogues and online shopping. All of which place an increased demand on the distribution centre to effectively and efficiently manage the distribution of goods to customers. For a retailer to succeed in today’s market, it is becoming obvious from the current consumer behaviour to retain customer loyalty. Retailers must improve a shoppers experience by making available options for more convenient shopping. Retailers must also extend incentives beyond promotional discounts. An integrated points and rewards management application, which entices customers to come back, is one such option that retailers must seriously consider. The other options include online shopping, shopping via mobile devices and the flexibility to either pay-and-pickup or pay-and- get-delivered. 24
  • 4. section:1 | overviewsWHAT NEEDS TO BE DONE? critical pieces of information that should be made available toTo meet these challenges, retail organisations have to be the decision-makers in the quickest possible to constantly innovate and deliver improvements to their While most of the large-scale retail chains havebusiness processes. established processes, it is the small and medium retailer – be it a speciality retail chain or a complex multi-storeRETAIL INNOVATION TAKES MANY FORMS environment – who struggle to piece together increasingFirst, set up and streamline inventory management and supply amounts of information from different processes via disparatechain processes, which should be reviewed regularly. Constant communication channels to make an informed, effectiveimprovements will ensure businesses keep pace with customer decision with pressures from upper management to increasedemand and enable expansion with an emphasis on keeping revenue.costs down. CitiXsys Technologies, a leading provider of retail, Next, there is the automation of these processes by warehousing and distribution applications, and SAP havedeploying packaged applications that seamlessly integrate been working together to make this a reality. With the backendfinancial, sales and retail functions. The integrated solution Enterprise Application provided by SAP, CitiXsys offers anhas to be robust enough to not only cater to immediate needs, application suite to retailers to effectively and better managebut also be scalable to enable a retail organisation to grow. their business operations.The in-store processes need to be continually refined toensure retailers maximise such efficiencies without sacrificingcustomer experience. And finally, there has to be a budget and scope toincorporate latest trends in retail to offer better in-storeshopping experience. These trends are not just limited to achic showroom, but extend way beyond the bricks & mortarstore, right into the comfortable confines of the customer’shome.HOW DO YOU DO IT?In order to optimise business processes for the retail andwarehousing operations, a detailed view of the inventorythroughout the chain is required. Furthermore, fluctuations indemand, speed of replenishment, effective movement of goodsfrom the warehouse/distribution centre to their respectivedestinations – be it the retail store or the end consumer – are CitiXsys offers to its customers the power of a SAP-powered business management suite encompassing financials, Webstore warehousing & distribution, and retail. The application set is scalable and stackable to suit the growing demands of today’s Mobile Analytics retailers. iVend Retail – a complete retail management application implemented throughout the entire landscape – allows for retail, warehousing & distribution to work in tandem. The retail processes which require high levels of coordination between Point of Sale Warehousing & Distribution the planning process at the head office and its execution process at retail stores are best achieved by implementing a seamlessly integrated Retail Management Solution on top of Customer Loyalty an industry standard Enterprise Resources Planning (ERP)Figure: iVend Retail - A Complete Retail Offering solution from SAP. 25
  • 5. 2011 The retail processes at thehead office not only become morestreamlined, but also allow suchindustry best practices to influenceand, hence, accelerate the growthpath for the retail chain. The merchandising divisioncan now carry out processeswhere operations receive completevisibility of stock across the retailchain and can effectively pushstock, rather than relying solely onstore requisitions. Additionally, themerchandising department can raisepurchase orders in time to avoidstock-out situations. With comprehensive pricing andpromotions management, the headoffice can run targeted campaignsfor specific stores, with period and redeem loyalty points across the entire network of stores. Multiple gift card set-ups and up-sell/cross-sell ensure the customer does not leave the store empty handed. Information availability, and hence the decision-making, is further improved with numerous reports and enquiries in different categories of business operations including sales, collections, inventory and fulfillment which can be exported to office Excel and Word. To conclude, despite constraints on additional spending, retailers are compelled to think beyond the traditional operating models and adopt new ways to increase operational efficiencies and maintain competitive advantages.volume discounts. Promotions can also be based around buy- The enterprise, the warehouse and the retail processes havesome-get-some, sale totals and happy hour. to work in a far more integrated and harmonious fashion. The integrated loyalty management module can achieve Retailers need to undergo a paradigm shift to align to thean improvement in customer retention. It enables the set-up current economic reality, escalating capital investments inand management of multiple loyalty schemes that allows the inventory and increased customer service demands. Such aassigning of points on customer purchases. With the added paradigm shift can come only when the retailers embrace aability to define ageing criteria for loyalty points, customers can fully integrated enterprise-wide application set. 26