Competitive survey

For full report contact info@zinnov.com

Specialty Retail – Global Market Opportunity for
Technology and IT services companies

Snippets from Zinnov Report

February 2010

This 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


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%

2
Source: 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

3

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

4

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

5

Agenda






5 Our Offerings

6

IT provides maximum impact to the business processes of retailers thus enabling
growth 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

7
Note: 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%

8

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 roadmap

Note: The analysis above just takes into account “Breadth“ of functions/processes/sub-processes offshored and not depth
Source: 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 desktops


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 &
Replenishment

Note: Application Development refers to the internally utilized applications by retailers for overall performance enhancement of the operations

Agenda






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 &
Experience


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 high

Agenda






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

16

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 Companies


Case Study: HCL Info-system

Market Share of POS Solutions (2007)
Company Overview: HCL Info system
Share 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
18

Agenda






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 enter
new 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 identifying
1
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 help
2
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 best
3
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 also
provide 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


Thank You

info@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

Competitive survey

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (20)

Featured

Featured (20)

Competitive survey