CRM implementation in retail industry

1. Customer Relationship Management,
Submitted By: Amit Kumar Nayak
Q1: For a retail Industry, what measures would you use to find out how well
a shop is doing. What would this measure indicate for a typical Indian
Kirana shop based on the data you have above.
Retail industry can be evaluated on two Major parameters i.e.
a) Customer satisfaction (irrespective of directly-tangible or indirectly-Intangible)
b) How well the Supply Chain management is managed
Let us discuss the points in detail.
Customer satisfaction:
a) Consumers expect retailers to help them save time, make shopping easier, and treat
them with respect, honesty and fairness.
b) Shoppers should not frustrate with their currents hopping experiences.
c) These problems can have a negative impact on their shopping habits.
d) Consumers are willing to use technology- based features and tools that can address their
frustrations.
e) Need the kind of in store technology to have a positive impact on consumers’ shopping
behaviors.
Supply Chain management:
a) Create Strategy
b) Integrate Technology for Collaboration
c) Operation efficiency-Create uniform Performance Measures
d) Understanding and balance the supply and demand
India lives on Villages and India has traditional pattern of living that is yet to be influenced by
Science & Technology. Kirana Shop In India - owner-manned general stores, paan/beedi shops,
convenience stores, handcart and pavement vendors and employs over four crore persons.
India's retail sector is highly fragmented, with about 11 million outlets operating in the country and
only 4 per cent of them being larger than 500 sq ft in size. Its greatest contribution is that it is
labor-intensive.
A typical kirana shop caters the requirement for all the people who are lower middle class or
above and hence full fill the customer requirement. But the customer’s taste has changed and it’s
getting more demanding day by day. It may not fulfill certain critical requirements like,
• Quality of the product
• Immediate requirement of the customer for updated product.
• Ease customer experience.
Kirana Shops in India is well-managed aspect since being labour intensive. Certain choice of
product like Paan & Beedi has been exclusively shopped. Kirana shop ensures the three key
dimensions of MOP that is Availability, Inventory & Cost. The unscientific & Indian acclimatized
approach on Supply Chain Management & Customer Relation Management is excellent and can
even be assigned as Indian Bench Mark on the two POM Concepts. Kirana shop well integrates
the Demand & Supply and even sources optimally. The reach of Kirana shops location wise made
people across India to meet their day-to-day requirements.
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2. Q2: What do you think will happen in the Indian retail Industry in three to
five years time?
For many people, organized retail only appeared in India with the launch of the “first malls” in
1999. The launch of Ansal’s Plaza in Delhi and Crossroads in Mumbai are hailed as the spark
that led to the explosion of organized retail in the country and transformed the retail landscape in
India. Even highly respected news journals have reported that “only three shopping malls” existed
in India at the end of 2002. However, if one were to define shopping centers or malls as enclosed
shopping spaces, then Mumbai’s Crawford Market (opened in 1869) and Kolkata’s New Market
(1874) surely have the pride of place as the pioneering malls in India. Delhi’s Connaught Place
(opened in 1931) should also defi nitely be considered, with its covered arcades. More recently,
New Delhi’s partially underground Palika Bazar, the mini-malls of the late-1980s on Bangalore’s
Brigade. Road, and shopping centers built by private developers in Ahmedabad and other cities
have all had a role to play in the evolution of organised retail spaces in the country. So, it would
be accurate to view the newer malls are only the most recent offspring of a long lineage of
organized shopping centers.
Organized retailing in India, then, is a child of evolution rather than sudden, revolutionary change,
and we seem to be yet early in the curve. So is all the media attention just hype or is based on
some genuine development in the marketplace?
Let us discuss certain interesting stories of Indian Retail Industry. (Source NDTV Profit)
Retailing to take off in a big way in India: Retailing as an industry makes up more than 10 per
cent of India's GDP. However, despite the size of the industry it remains largely unorganized. All
that is however about to change with many big industrial houses fast recognizing the
opportunities in retailing and getting in it in a big way.
Worldwide retailing is the largest private industry worth nearly $6.6 trillion. In India also, retail
sales make up a good $180 billion. With close to 12 million outlets in the country, India has the
largest outlet density in the world. However, after remaining outside the organised sector for long,
things are changing now.
In Chennai, 20 per cent of branded foods and 20 per cent of durables are already flowing through
the organised sector. The potential for growth is huge. Retailing in India is expected to touch
$300 billion by 2010 with the biggest opportunity seen in clothing and grocery.
Poised to ride the new wave are names like RPG's Spencer the oldest retailing brand in India,
Foodworld, India's first organised grocery retailing chain, Music world India's largest music chain,
Health and Glow, a beauty chain, and the Great Wholesale Club, a new warehouse club initiative.
Shoppers' Stop the largest apparel retail chain is also planning to be the first Indian chain to go
global and a listing in two years time. B S Nagesh, MD Shoppers Stop remarked, quot;Our plan to go
global includes global sourcing and setting up in neighbouring countries.quot;
However, while Indians think of going global, many foreign majors are waiting in the wings for the
government to allow FDI into this sector. Among them are Tesco, Kingfisher, Metro, Carrefour
Ahold and Selfridges, which has signed a deal with Shoppers Stop. Vittorio Raddice MD
Selfridges, UK said, quot;Though Indian market is very rudimentary the potential is tremendous.quot;
The future is in retailing according to a CII-McKinsey study. The study predicts which sector
is likely to grow to $300 billion by 2010 in India. Also according to the study if certain measures
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3. like supply chain constraints are eased, real estate markets are organized and tax structures
rationalized, then retailing in the country had the potential of reaching $450 to 500 billion by 2010.
CII and McKinsey have also asked the government to give industry status to retailing and allow
100 per cent foreign direct investment in the sector.
Bangalore now seems to be the preferred choice with retail companies when it comes to
setting up flagship stores.
Not just any but their largest with the biggest names in the industry like Tommy Hilfiger and
Adidas choosing the city over many others.
quot;Unlike most parts of India where real estate has become just prohibitive that's going to squeeze
the upcoming retail trend in India. In Bangalore it is still at very realistic level and because the city
is developing new centres for retail. It is not the same 500mts of high street,quot; said Darshan
Mehta, President, Arvind Brands.
Arrow is all set to unveil 4000 sqft store, Lee is to open 5,800 sq feet store and Nautica has
opened a 6,800 sq feet store mall in the city.
Wrangler has decided to have a 3,000 sqft store and Levi's has 9,000 sq feet store in Bangalore,
which is the second largest in world.
Dockers is set to launch largest store in world in Bangalore. Adidas SPC is largest in Asia at
9,000 sq feet.
Purchasing power of consumers with lots of young people and a strong demand combined with a
brand consciousness make it a good bet.
Bangalore seems to be fast emerging as India's answer to New York and Los Angles and could
probably have something to do with the fact that property prices in Bangalore are not as high as
that of some other metros.
While giving retail companies access to a large base of young, affluent and cosmopolitan
consumers and going by the footfalls in some of these outlets the consumers seem to be enjoying
the attention
The first small steps for organised retailing of kids' clothes in India have already set in.
Brands like Italy's Monnalisa, Disney and Mother Care are now consider the pampered kids of
well-heeled parents as a great market.
The Kidswear market is estimated at Rs 13,085 crore that’s about 15 per cent of the total apparel
market.
The good news is that almost 30 per cent of Indians are below 15 years of age and with
consumer spending growing rapidly, parents are willing to splurge on kids.
It's not only domestic players but also international brands, which are seriously looking, to invest
in the segment.
Brands in India
• Walt Disney entered the market in September 2006
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4. • Disney plans to open 50 stores across key cities by 2008
• Shoppers Stop opened the fifth Mothercare store in May 2006
• Mothercare plans to open 40 stores in key cities by 2009
• Raymond has launched a second exclusive 'zapp' store for kids
• Hucke and Novotex are planning to launch Whoopi children's wear brand
• Kads fashion has brought in Monnalisa
Kads Fashion and Monnalisa think that Indian parents are ready to splurge on their kids.
Compared to any other segmant in the garment retail industry, childrens wear seems is on a roll
Fast moving consumer products are depending on their packaging to sell and pip the
rising competition in retail.
Cashing in on such demand is Thane-based paper products. It is in talks with large players like
Reliance and Bharti. And to meet that demand, it's scaling up by 30 per cent.
India's largest packaging product is cartons and cardboards. Annual demand for paperboard
packaging has been rising consistently and is expected to rise to 3 million tonnes at the end of
the year as against about 1.78 million tonnes in 2002 and about 1.35 million tonnes in 1998.
The packaging sector in India is growing by 15 per cent with the entry of new local and
multinational food, beverage and cosmetics products.
Essel Propack is on a $25 million expansion drive in USA. Not just in plastics and board but even
for cans, firms like Hindustan Tin Work, in a tie up with Rexam for beer cans sees an immediate
boost of 10 per cent to the top line.
If the FMCG sector leads, how can the packaging industry be far behind? But now, while the
focus is on growth, it's also on diversifying from subsistence manufacturing to better technology
from Germany and Switzerland and higher value products.
Pantaloon Retail (India) Ltd said today it was looking at a turnover of Rs 1000 crore from
its chain of shops in two years from now.
quot;We believe that in retail business once critical mass is achieved, multiplier effect takes place and
in our organisation we believe that multiplier effect has started,quot; Pantaloon Managing Director and
CEO Kishore Biyani said.
quot;In two years time from now we are looking at a lot of stores and Rs 1000 crore business from Rs
450 crore during the last fiscal and are adding up new products category for this. In one single
store, we are looking at a business of Rs 100 crore,quot; Biyani said.
The company was also going to add two million square feet by June 2005 in various parts of the
country, he said, adding, quot;We are not only going to look at square feet but at collaborative model
as well to grow.quot;
He was speaking at a seminar on Role of Services and Allied Sectors in the Resurgence of the
East organised by Bengal Chamber of Commerce and Industry.
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5. Quoting some international studies, Biyani said retail was the biggest industry in the world with
sales of about $7.7 trillion, while India's share in organised retail was only two per cent. (PTI)
So I can conclude this discussion by seeing the brighter part of ongoing development in Indian
retail industry. There are over 4000 super markets in China, over 200 departmental stores and 40
hyper stores. If this is any indication Indian retailing is in for very exciting times ahead.
Q3: If the Kirana shops are to do well, what should be the CRM strategies,
they can or need to adopt.
Analysis:
Wal-Mart,anyone? The threat of the giant retailer moving into India and destroying the domestic
retail biz (worth Rs 350 billion and growing at 30 per cent annually) has been sounded often
enough, but no one seems overly bothered yet, at least on the face of it.
All those who expect big retailers like Wal-Mart to come in and devour small kirana shops should
pause and think.
Can Big Retail really do that?
Just look at what the average kirana store offers the average Indian household.
1. First it is just a stone’s throw away. So anytime the family needs something, it is easy
to just stroll over and get it, even if it is as paltry as a loaf of bread.
2. Secondly, there is the trust about all the items being fresh and reasonably priced at
the friendly neighborhood kirana walla.
3. Thirdly, there is free home delivery, usually on a bicycle, for the regular monthly
supplies, colloquially called “ration”.
4. Fourthly and most importantly, there is credit. Since the shopkeeper knows the
families in the vicinity well enough, he can actually extend credit based only on the
jottings made in a tiny pocket-sized plastic-covered notebook.
A vast majority of middle class India still shops from one of the millions of tiny kirana stores for
precisely these reasons. And there is no way Wal-Mart or even the local big retailers like Food-
world, Big Bazaar or Reliance can lure away a chunk of the middle class big enough to make the
kirana store go out of business for at least another few decades.
Strategy:
I believe this should be the strategy by the Kirana shop to go further to catch up the on going
trend,
• Know the market.
• Do the Customer Segmentation.
• Know the cultural Diversity.
• Do the market Segmentation.
Let’s take an inside to these points and how it’s applicable to Indian context and what are the key
questions need to answer.
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6. How are prices displayed in your store?
There are various options for displaying prices, depending on the pricing philosophy (such as a
prestige image versus discounting):
• Exterior store windows can show prices for selected sale items and/or highlight a store's
orientation (quot;Service that is a cut above the restquot; or quot;The best brands at the best pricesquot;). A
small firm can compete by featuring selected sale items; but these prices must be promoted
to shoppers so that they are aware of the good values at local stores.
• Interior store displays can emphasize or de-emphasize prices.
To emphasize prices, a retailer can use large in-store signs that show prices of given
o
items, promote a particular color price tag to indicate particularly good bargains,
leave items in cartons, and have plain displays (such as dump bins) and fixtures.
To de-emphasize prices, a retailer can use only small price tags that are attached
o
directly to merchandise or have salespeople responsible for communicating prices
(as done in upscale apparel stores and jewelry stores); there would be no overt
references to prices in the store and the atmosphere would be stylish.
What payment method(s) do you accept?
Many large stores/shops and nonfood chains were the most apt to accept credit cards. They saw
the value of them and got good terms from issuers. Many chains developed their own cards to
stimulate more customer loyalty. The one holdout was the supermarket, where the low margins
made the costs of credit cards undesirable. Today, things have changed; and all types of retailers
(big and small, general merchandise and food stores, etc.) now carry credit cards. Why? Issuers
have lowered fees, credit cards are widely advertised and easier for retailers/shoppers to
process, and more consumers than ever before actively use credit/debit cards and consider if
given cards are accepted prior to entering stores (hence, the success of the Visa campaign
against American Express).
In choosing whether to accept credit/debit cards, a shopkeeper should consider:
• Are prices of individual items high?
• Is the total customer bill (the sum of the individual items bought on one shopping trip)
high?
• Am I interested in increasing the impulse purchases shoppers make?
• Do competitors accept credit/debit cards?
If the answer to any of these questions is yes, credit/debit cards should be accepted.
Do you understand both of these terms: Elastic demand? Inelastic demand?
With elastic demand, shoppers perceive retailers in the same category (such as gas stations,
supermarkets, or pharmacies) to be rather similar. These retailers must always be sure that their
prices are competitive or they will lose business.
With inelastic demand, shoppers perceive retailers in the same category to be dissimilar, due to
their locations, product assortments, customer service, etc. These retailers can set premium
prices since their unique characteristics encourage many customers to be store loyal.
What do you think about everyday low pricing?
This approach has enabled Wal-Mart to maintain a discounter image, attract a steady stream of
price-conscious shoppers, reduce advertising expenditures, and run less frequent sales.
However, for the typical shopkeeper, the better phrase is really quot;everyday fair pricing.quot; This
means that each shopkeeper must strive to set its REGULAR PRICES in a way that appeals to
the chosen customer market and that fairly reflects the merchandise, customer service,
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7. ambience, etc. offered by that shopkeeper. From the customer's vantage point, prices must be
perceived as fair - every day. We hope that as you think more about the way you set prices (and
that you do so at least once or twice a year), you will peruse our series on this topic and see the
quot;big picturequot; of pricing.
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8. Q4: If you were running one of the retail chains, what strategy would you adopt to
win the Market Place?
Strategy--->Adopt
MAKE EVERY INTERACTION A POSITIVE ONE
In today’s retail industry, the customer is in control like never before. So it’s important to have the
following:
• Customer engagement support: Develop accurate segmentation strategies for targeted,
personalized marketing programs. Gather market input to support product, pricing, placement,
and promotion decisions. Analyze customer data from your point-of-sale devices, loyalty card
programs, third party research firms, and other sources. Tailor promotions, assortments, and
Plano grams to current customer trends.
• Business transaction support: Empower employees to anticipate and meet customer
demands. Provide a consistent view of customer information at every point of contact. Provide
preferred customers with preferred treatment. Encourage cross-selling and up-selling activity
based on customer histories.
• Fulfillment support: Execute orders efficiently through direct links to your supply chain
management solution. Engage in collaborative forecasting with vendors and distributors. Track
inventory levels to reduce out-of-stocks. Ensure timely delivery of all items.
• Customer service support: Enhance the efficiency and professionalism of your customer-
interaction center Call center/ Customer service counter. Resolve claims, complaints, and returns
quickly and efficiently. Allow for easy escalation of service issues to field service or product
manufacturers. Offer convenient customer self-service options over the Web.
• Manage the customer life cycle: Build an intimate profile of each customer and provide
personalized service at every stage in the relationship. Recognize customers whenever they
contact you, via any channel they choose.
• Mine your knowledge base: Gain new analytical insights through Business Intelligence and
turn your sales and marketing strategy into action. Understand market trends, customer
demographics, and individual customer behavior. Utilize effective data-mining tools to derive
insights from multiple data sets to anticipate customer needs.
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9. • Gain leading-edge capabilities: Provide your business partners with access to the latest
customer information. Leverage the Internet as a communications tool while maintaining a single
voice to all customers. Drive collaborative processes with key manufacturers to improve your
margins.
• Build consumer trust: Match your products and promotional programs more closely to the
needs of today’s buyer. Build trust through superior service; smooth handling of returns and
exchanges, and consistent messaging.
• Collaborate with partners: Use online collaboration tools to work more closely with vendors,
wholesalers, distributors, consultants, and other partners.
• Go Techy/Mobile: Keep track of key customer data wherever you go, using any Web-enabled
laptop, personal digital assistant, or cell phone.
• Build your brand: Protect and increase the value of your brand through stronger awareness,
greater market share, and increased customer loyalty.
• Control Costs: Track the many variables of your sales, marketing, and promotional programs,
for improved cost control. Reduce service costs through more efficient management and
reporting of customer-related data.
Strategy---> Implementation
Fully integrated CRM solution on the market today, like mySAP CRM, Oracle CRM and Siebel etc
can provides unparalleled control over the details of the customer interaction strategy to get the
maximum result out of it.
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