Do you know
that buyers of Kingfisher beer and Old Cask rum also buy
Nestle's Charge chocolate? And Sundrop cooking oil buyers
also buy oil brand Idayam? These are some interesting
purchase patterns found at Foodworld's Anna Salai outlet
in Chennai. A study of this kind of purchase pattern was
carried out by G. Raghuram, a faculty member of the Indian
Insitute of Management, Ahmedabad.
Speaking at a seminar sometime back, Prof Raghuram said
that fast moving consumer goods, or FMCG, manufacturers
and marketers can tap a wealth of information from retailers
who have invested in information technology. On the basis
of true demand data, FMCG companies can tailor their sales
promotions and product pricing, make inter-brand comparisons
and even plan their production schedules, he said. In
addition, employee productivity and profitability can
Scanners, computers, printers and other hi-tech gadgets
have become familiar in retail stores. "Not just
for faster billing. Investment in computer systems has
become compulsory for processes such as inventory management
and merchandising," comments R. Subramanian, director,
Subiksha Trading Services Pvt Ltd, which runs the Subiksha
Compared to running a single shop, managing a retail
chain is an entirely different cup of tea. Complexities
and imponderables multiply with size. "The business
has necessarily to be united by infotech. Tracking 300
suppliers, 4,000 SKUs (or stock keeping unit), 30 stores
and year-round operations would go haywire if proper IT
were not in place," reasons K. Radhakrishnan, vice
president, Foodworld Supermarkets. Just-in-time inventory,
which saves tremendously on cost, is also possible through
good IT connectivity.
Around 20 per cent of the total outlay for a retail store
now goes towards installing an efficient IT system. Shoppers
Stop became the first retail chain to opt for an ERP package.
The package cost Rs 5 crore. Globus, which started its
first store in Indore, followed by another in Bangalore,
has invested around Rs 9 crore in a JDA software package.
JDA is among the best known for retail-specific software
The south-based Vitan Departmental Stores & Industries
Ltd, its chairman V.P. Chockani claims, has spent around
Rs 35 crore in developing its operational software. And
Vivek & Company has asked TCS to develop software
for its stores.
Speaking of the IT plans for Health the & Glow chain,
Oscar Braganza, chief executive officer of RPG Guardian
Ltd, says, "Currently, inventory is managed on a
per store basis. The next stage is to have a virtual warehouse
by networking all the stores. We are working with TCS
on this." The system would generate and place orders
with suppliers, who in turn would deliver to the outlets
directly, he adds.
Foodworld (also an RPG group chain in the south), say
industry sources, spends around Rs 55 lakh annually on
sticking labels, bar coding and other such things, tasks
FMCG manufacturers can do themselves without any significant
additional cost, the retail industry feels.
Enough retailers have voiced this need, and some manufacturers
have started heeding their advice. Industry sources say
Shoppers Stop has held talks with Arvind Mills and Coats
Viyella (India) Ltd for supplying bar-coded garments,
preferably in EAN standards with additional coded information
like colour, fabric texture, and other such details.
Talk information technology and you can't ignore the
Internet. The retailers are not ignoring it either. While
some are debating whether the Indian consumer will buy
groceries and consumer durables on the Net, garment sales
over the Net have begun.
A study done by Ernst & Young reveals the seriousness
with which retailers are viewing business via the Internet.
Of the 46 stores surveyed across the country, 24 have
their own websites, and nine have Net shopping facilities.
Six of these nine are based in the south. Stores such
as Rasi Silks, Nalli Silks, Kumaran Stores, Colourplus
-- all based in Chennai -- are already doing business
on the Net.
IT in retail is bound to get sophisticated fast, specially
with the chains, since it provides a lot of advantages
in a challenging marketplace. Knowledge of customer buying
habits can help better with customisation and proposition,
leading to higher retention successes. Better
connectivity does provide for better cost management,
essential in a business where success is measured in cost
per square foot.
also see :
Retail in greater detail