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Competitive survey
 

Competitive survey

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    Competitive survey Competitive survey Presentation Transcript

    • For full report contact info@zinnov.com Specialty Retail – Global Market Opportunity for Technology and IT services companies Snippets from Zinnov Report February 2010This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted,or reproduced for distribution outside the organization without prior written approval from Zinnov
    • Agenda For full report contact info@zinnov.com 1 Macroeconomics of Specialty Retail 2 IT Adoption in Specialty Retail 3 Pain Points and Opportunity 4 Competitive Scenario 5 Our Offerings 1
    • The specialty retail segment represents 41 percent of the retail group industry’s value; Automotive and Home Improvements lead the specialty retail segment by 49 percent and 16 percent respectively Retail Sector Split by Industry Vertical Specialty Retail Split by Type of Product Convenience Other Others, 4% Stores 1% Home Furnishing, 7% 6% Drug Computer and Electronics, 10% 5% Department Apparel, 14% Stores 13% Home Specialty Improvement 41% , 16% Mass Merchandising 14% Grocery Automotive, 20% 49% 2Source: Zinnov Interviews, Secondary Research and Analysis
    • Global specialty retail IT market size is pegged to be USD 20.1 billion with 59 percent of it coming from North America Specialty Retail IT Market by Geography (2010E) Discussion Rest of World Latin America 2% • North American specialty retailers lead 5% the way in purchasing the third-party software applications • Europe represents a healthy 27% of the Asia Pacific market and, like North America, is 7% relatively mature in its purchasing behavior • Central American and Asia-Pacific retailers also present exciting sales opportunities and thus are making sophisticated software choices unencumbered, in many cases, by Europe North America massive legacy systems 27% 59% • As vendors develop more effective sales channels, build vast support infrastructures, and complete successful enterprise deployments in these regions, the percentage will increase, albeit slowly Total = USD 20.1 billion 3Source: Zinnov Interviews, Secondary Research and Analysis
    • The Specialty Retail Software market remains primed for growth with an annual CAGR of 7.4 percent; while revenue being equally driven from licensing, custom development and maintenance Global Specialty Retail Software Market Distribution of Retail Sector Software (2006-2011) Revenue (2011E) Market Size (in USD Billion) 4% 32% 33% 9.8 10.4 9.1 7.9 8.5 7.3 31% Total = USD 10.4 billion Application Software Licence (subscription, host, SaaS) 2006 2007 2008 2009 2010 2011E Application Software Maintenance Implememntation/Consulting/Custom Development 4Source: Zinnov Interviews, Secondary Research and Analysis
    • Large companies (>1 Billion) accounts for 44 percent of the market while a sizable chunk of 15 percent comes from SMBs (< 30 Million) Specialty Retail Software Revenue by Customer Company Discussion Size (2011E) 12 • The market for software sold to retailers with $1B or more in annual revenue 10 continues to represent the single largest market for vendors, but the midmarket is gaining ground 8 4.6 • Many vendors are looking to the midmarket, particularly fast-growing 6 retailers with current revenue of $30M to 10.4 $1B, for their next big sales opportunity 2.7 4 • Consistent with other software markets, companies with less than $30M constitute to 15% of the software sales, 1.6 suggesting that smaller retailers are 2 increasingly looking to technology as a 1.6 key enabler to support growth strategies 0 Less than $30M to $250M to $1B or Total $30M 250M $1B More 5Source: Zinnov Interviews, Secondary Research and Analysis
    • Agenda For full report contact info@zinnov.com 1 Macroeconomics of Specialty Retail 2 IT Adoption in Specialty Retail 3 Pain Points and Opportunity 4 Competitive Scenario 5 Our Offerings 6
    • IT provides maximum impact to the business processes of retailers thus enablinggrowth of core operations Processes Solutions Investment Business* Impact Manual Short Term – Low Marginal Methods Long Term - High Manual Methods, Core Machinery and Operations Automation Information Short Term – High Maximum Technology Long Term - Low 7Note: Business processes include planning and management of Workforce, Sourcing, Products, Distribution, Customer Relationships, and Finances
    • Growth of Specialty Retail IT adoption is creating the next wave of demand Distribution of Retail Sector Software Revenue by Application Discussion Segment (2009) 100% • Revenue from this category, which includes corporate financials, human resources, and BI systems, is second 90% only to revenue generated by store and cross-channel Retail operations Enterprise, 30% 80% • Retailers are looking beyond reporting capabilities to applications that synthesize information from a wide variety of systems and analyze performance 70% Agile Supply Network, 8% • Perpetual inventory applications are still more widely 60% On-Shelf used in specialty and apparel retailers Availability, 7% 50% Consumer- • The applications in this market are designed to help Centric retailers deliver the right product, at the right place, at Merchandising, 40% the right time, and for the right price 21% • Merchandise planning and management applications 30% dominate the consumer centric segment Store and 20% • With 85% of buying decisions made at the store shelf, Cross-Channel Operations, retailers are spending aggressively to improve in-store 33% operations 10% • POS software spending continues to represent the majority of store operations software purchases 0% 8Source: Zinnov Interviews, Secondary Research and Analysis
    • Packaged Application Services sub processes Packaged Traditional Adoption Application Services Recent Adoption Strategy & IT Roadmap Business Process Re- Package Solutions Sustenance Services Consulting engineering Services  IT transformation and  Project management  Package Selection  Product Support optimization roadmap and  Re-engineering  Package  Enhancement technical architecture process Implementation  Maintenance  Performing readiness  Customization  Risk Management assessments  Version Upgrades  Determining infrastructure maturity levels  Recommending appropriate capabilities  Providing necessary skills to successfully execute transformation roadmapNote: The analysis above just takes into account “Breadth“ of functions/processes/sub-processes offshored and not depthSource: Zinnov Interviews, Secondary Research and Analysis 9
    • IT Infrastructure functions sub processes IT Infrastructure Traditional Adoption Operations Recent Adoption Information Application Network Server Desktop Security Services Infrastructure  Peering  Installing and  Applications running on the  Management of  Personal firewall  Gatekeeper configuring operating server network devices  Application access setup  Firewall Intrusion system  User account management (Routers / switches)  Running onsite and  Installation and upgrade  Fault monitoring and  Clean up of file systems  Network policy remote help desks to of antivirus software management  Automated schema analysis Enforcement cater to desktop and  Deployment and  Job scheduling/  Fine tuning  Monitoring of network server issues monitoring traffic in LAN  Remote Support upgrade of anti-virus  Database creation and software on user  Performance monitoring maintenance  Monitor VLAN  Backup desktops  Service pack installation  Partition maintenance  Monitor of network  Supporting users on  Security Policies  Disk / swap/ backup servers desktop applications  Database/ application  Remote Access space management packaging and realizing  Bandwidth management  Creation of policy of  PKI (Banking core)  Domain policies and  Performance tuning  Management of User software deployment on security management access to network user desktopsNote: The analysis above just takes into account “Breadth“ of functions/processes/sub-processes offshored and not depthSource: Zinnov Interviews, Secondary Research and Analysis 10
    • Application Development & Maintenance sub processes Application Development & Traditional Adoption Maintenance Recent Adoption Enterprise Optimization Store Execution Performance Data Management Collaboration Solutions Solution Management  Insights across  Data Analytics  Forecast – Sales  Point of Sales to Point  Inventory (Over-stock, functions – Scientific Analysis B of Convergence Under-stock) usiness Intelligence  Data Visibility –  GrossSMargin Return  Demand Driven – Pull  Relationship CM Optimization on Space Strategy Management  Benchmarks  Data Synchronization  RFID  Price Optimization  Responsiveness  RFID  Optimize Assortment  Store-Space Plans  Price Optimization  Collaborative Planning, Forecasting & ReplenishmentNote: Application Development refers to the internally utilized applications by retailers for overall performance enhancement of the operationsNote: The analysis above just takes into account “Breadth“ of functions/processes/sub-processes offshored and not depthSource: Zinnov Interviews, Secondary Research and Analysis 11
    • Agenda For full report contact info@zinnov.com 1 Macroeconomics of Specialty Retail 2 IT Adoption in Specialty Retail 3 Pain Points and Opportunity 4 Competitive Scenario 5 Our Offerings 12
    • There are certain parameters which Retailers evaluate while opting for automation of their store processes Cost of the Project Technological Advancement Brand Value in the Industry IT Adoption – Key Criterion Ability to integrate with Implementation Time Retailer’s front-end Management Expertise & ExperienceSource: Zinnov Interviews, Secondary Research and Analysis 13
    • Managing sales, Inventory and Payments are some of the major pain points for specialty retailer Inventory Sales Sourcing Managing Recording Transacting Receiving Payments • Requires manual • Reorder levels are • Most of the • Retail stores with • Sale of goods is coordination with determined on the recording even for multiple transaction maintained in several wholesalers basis of past retail stores using a points and not using a paperback journals and and distributors experience POS merchant POS merchant solution manually tracked solution is done by generally take a lot of Customer Pain • Time consuming • Demand forecasting • Informal credit creates manual time for check in and Points exercise is done manually a cash flow problem check out • Recovery of informal credit is a time consuming • Suppliers provide the • Most Indian retail • Manual methods such • Transaction are • Cash based payments materials to retail owners manage as using bunch of currently done is the prevalent way outlets at the inventory manually loose paper and a pen manually, i.e. for of paying to the doorstep every article the retailer. • There are software retailer has to turn Current • Retail owner which provide • There is lot of pricing the packaged good Methods communicates with inventory negotiations that also then read the price the supplier on a management happens at this time and then write it of regular basis over function which further delays the paper mobile/telephone to the process • Inventory details are order the materials manually entered in most cases Potential to Solve Low Very highSource: Zinnov Interviews, Secondary Research and Analysis 14
    • Agenda For full report contact info@zinnov.com 1 Macroeconomics of Specialty Retail 2 IT Adoption in Specialty Retail 3 Pain Points and Opportunity 4 Competitive Scenario 5 Our Offerings 15
    • All major Software product companies are present in the Specialty retail market Companies Activities  IBM provides POS Systems, Peripheral, Self-Services , softwares and IBM Sure POS Express for SMB , which are available to credit-qualified customers only. IBM  ShawMan POS , RetailMagik, Adrenalin are the most popular products built on IBM Express  Next line products are Self Checkout Systems, IBM AnyPlace Kiosk and IBM AnyPlace  3i Infotech, Infor , SAP and Symbol are the major partners  In 2006, SAP had established an CoE( center of Excellence ) for Retail in Mumbai. Sun Microsystems, Seal InfoTech Intrax and E-Solutions are the key partner for Retail POS solution SAP  Key Indian retailers like Reliance, Pantaloons, RPG (Spencers), Trent, Hariyali Kissan Bazaar, Godrej, ITC-IBD, Barista and Vishal Megamart are few of the SAP customers in the Indian retail space.  Microsoft Dynamics Retail Management System (RMS) offers small and mid-market retailers a complete point-of-sale (POS) solution The four Microsoft Dynamics products for business management and ERP are: (a) Microsoft Dynamics AX, (b) Microsoft Dynamics GP, (c) Microsoft Dynamics (New) and (d) Microsoft Dynamics SL. Microsoft  LS Retail, HCL, Calsoft, Ignify and Dynamic Vertical Solutions are the key partners in India to provide Dynamics Solutions in ERP and Retail space  In 2006, Sage Released Accpac ePOS 5.3 , which is a comprehensive web based POS solution for fast-paced, high- volume, multi-site retail operations. for small and mid-sized retailers in India Sage  KLG Systel, Sage arm offer e-PoS solution at Rs s3.50 lakh for a single store set up  Panasonic has announced the launch of three new laser multifunctional devices in India. I2 , Accelfrontline and Alibaba are the major Sales and Support vendor for Panasonic India Others  Epson is No. 2 in terms of market share for the overall printer market in India with a 19 percent market share as per IDC reports. Purple Infotech is the national sales Distributor for it’s POS Solution 16Source: Zinnov Interviews, Secondary Research and Analysis
    • Largely hardware manufacturers have dominated the specialty retail market Illustrative Multinational companies MNCs Service Providers Service providers Hardware/Software providers Hardware and Software Providers Local software companies Local POS software CompaniesSource: Zinnov Interviews, Secondary Research and Analysis
    • Case Study: HCL Info-system Market Share of POS Solutions (2007) Company Overview: HCL Info systemShare of Total(%) 142,857 Others • Total Company Overview: • POS Business Overview: – Total Revenue: USD 2.7 Billion – Total Revenue: USD 50 Includes software solution providers Million - large Indian companies such as Polaris, and small regional companies – Total FTE’s: 47,000 – Total POS customers: 40 such as Marg Compusoft. • 5,000 in India ~ 300K • 400 Chains Software are focused towards – Geographic Presence • 70K small stores Grocery Stores, Pharmacies, Apparel & • 17 countries • 6 for every 10 organized Footwear, Consumer Durables, Books & Music Stores, Gifts & Accessories • 170 cities in India with 360 retailers are HCL services centers customers – Distribution Network • Distributors: 100 • Dealers: 200 • Products • Electronic cash register ( USD 450) • Touch Screen Systems (USD 750) 60 • Bundled POS* (USD 1,250) • Partner ships • Printer • Bar Code Scanner • Laser Scanner • Clients**(1) Primarily an established PC, printers and related hardware manufacturers 18Source: Zinnov Interviews, Secondary Research and Analysis
    • Agenda For full report contact info@zinnov.com 1 Macroeconomics of Specialty Retail 2 IT Adoption in Specialty Retail 3 Pain Points and Opportunity 4 Competitive Scenario 5 Our Offerings 19
    • In the past 7 years, Zinnov has provided globalization advisory services to over 150+clients across geographies Consulting Focus Areas Globalization Market Expansion Human Capital Advisory Globalization Strategy Opportunity Assessment Global Talent pool Analysis Operations Setup Global Market Insights Workforce planning Benchmarking Go-To-Market Strategy Compensation and Benefits Product Ideation/ Operations Optimization Flexible Work force Tool Localization
    • Our Market Expansion portfolio is a combination of services that help clients enternew domains and expand in the existing markets Market Expansion Framework 1 Opportunity Assessment Customer Insights 2 • It includes complete business analysis of the • It includes understanding the methods adopted by viability of prospective markets or opportunity customers to solve their problems. Zinnov further for new products in existing markets. analyze the gap between customer needs and market offerings. • It is a combination of analyzing existing market landscape and potential • Understanding of customer pain points opportunity in addressable market. assists our clients in designing their product strategy. 3 Peer Group Analysis Channel Strategy 4 • It includes analyzing industry best • It includes design, development and practices thereby providing guidelines on execution of a strong distribution model for innovative strategies for the way forward. our client to help them reaching out to end customers. • Our clients acquire a competitive edge by gaining market insights and information • It assists our clients in penetrating the market about key focus areas. with their product offerings at a fast pace and at economical cost. 5 6 Business Model Risk Mitigation 7 8 Price Planning Organization Structure 21
    • Opportunity We assess opportunities by analyzing market landscape and identifying1 Assessment addressable segments Assessing the “Demand side” Assessing the “Supply side” 1 2 3 1 2 3 Evaluation of Assessment Projection of Identification Revenue Analyzing Industry of spending future spend of market distribution market verticals pattern players maturity •Telecom •Company 1 •By Geography •Introduction 110 •Spending by top 10 •IT •Company 2 •By Product •Growth market 110 leaders •BFSI 110 •Company 3 •By Vertical •Maturity Macroeconomic Analysis Drivers & Constraints Target Market Analysis Competitive Landscape – Growth of economy – Demand for products – Trends in the market – Price point analysis – New Entrants – Constraints for – Pain Area analysis – Market Penetration – – Infrastructure analysis Government policies + products – Current scenario + – – Location analysis IT spending + – – SWOT analysis Portfolio mapping – Vertical wise analysis – Future Scenario – Channel Strategy – Sales Strategy – Gap Analysis – Profitability analysis – Clientele analysis – Growth Plans 22
    • Customer Our exploratory methodology for various customer segments help2 Insights generate vital insights Key Steps Detailed Description Focus Group • We conduct focus group discussions with customers to generate insights about existing methods for solving their problems. It assists us Discussions in building hypothesis and to further evaluate gap in existing product offerings. Design evaluation • We conduct exploratory studies to understand the mental, physical and price barriers for customers to design evaluation framework. It is framework designed to evaluate the unmet needs and pain points of customers. Customer • We segment the customers on various demographic cuts based on preliminary insights from focus group discussions such as educational Segmentation qualification, IT literacy, age group, etc In-depth Interviews • We conduct in-depth interviews and follow-me-home discussions with customers across the various segments to generate in depths insights / Follow me home on their unmet needs and pain points. 23
    • Peer Group We analyze the peer group from a high level and then deep dive into best3 Analysis practices demonstrated by leaders Objective Key Parameters High Level analysis parameters Financial performance Product/service portfolio Market Share analysis Business model Key customers Geographical presence In-depth analysis parameters Innovation Quality Segmentation Portfolio Distribution Analysis network Customer Performance perception analysis 24
    • As a final part of the business plan, Zinnov helps define the company vision and alsoprovide support in strategic mergers and acquisition Vision Dashboard Zinnov defines a dashboard on A 5 year visual of how Client’s which Client can identify key India positioning will look post companies for M&A purposes entry Success Trends Parameters Parameters on which success Zinnov identifies trends that will be measured market is likely to pick up over next 5 years 25
    • For full report contact info@zinnov.com Thank Youinfo@zinnov.com @zinnov www.zinnov.com 69 "Prathiba Complex", 4th A 575 N. Pastoria Ave 21, Waterway Ave, Cross, Koramangala Ind. Layout, Suite J Suite 300 5th Block, Koramangala Sunnyvale The Woodlands Bangalore – 560095 CA – 94085 TX – 77380 Phone: +91-80-41127925/6 Phone: +1-408-716-8432 Phone: +1-281-362-2773