ROLE OF INFORMATION TECHNOLOGY IN RETAIL SECTOR

Final Report

Submitted to Prof. Shweta Puneet IBS Pune

Submitted By Ms. Deepika Samtani Enrollment No. 08BS0000902

Date: 30th Dec 2009
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A REPORT ON

THE ROLE OF INFORMATION TECHNOLOGY IN RETAIL SECTOR

By Ms. Deepika Samtani

AUTHORIZATION

This is to certify that DEEPIKA SAMTANI Enrollment No. 08BS0000902 PERSUING MBA from ICFAI BUSINESS SCHOOL PUNE has done her Management Research Project work entitled The Role of Information Technology in Retail Sectorembodies the original work.

Signature of Faculty Guide

Signature of Candidate

(Prof. Shweta Puneet)

(Deepika Samtani)

ACKNOWLEDGEMENT

I have taken this opportunity to express my sincere gratitude towards the pillars of successful completion of my Management Research Project at IBS Pune, without whose unflinching assistance & co-operation at all times it would rather have been impossible for me to achieve the desired goal.

I express my deep sense of gratitude, profound respect and sincere thanks to Prof. Dhananjay Keskar, Director, ICFAI Business School (Pune), for providing me this wonderful opportunity. I would specially like to thank Prof. Shweta Puneet, Pune, who guided me during the project work, spent her valuable time and shared her views and experience. I express my sincere thanks to all others who directly or indirectly helped me in the execution of the project.

(DEEPIKA SAMTANI)

Table of Contents
Abstract........................................................................................................................................................ 7 PROJECT OVERVIEW ............................................................................................................................ 8 Objectives ................................................................................................................................................. 8 Methodology ............................................................................................................................................. 8 Limitations of the study ............................................................................................................................ 9 INTRODUCTION..................................................................................................................................... 10 BASICS OF RETAIL ORGANISATION............................................................................................... 13 Popular formats of retailing ........................................................................................................................ 15 Evolution of retail industry ......................................................................................................................... 19 Indias top retailers ................................................................................................................................. 19 Top Global Retailers ................................................................................................................................ 20 COMPLEXITIES IN RETAIL ................................................................................................................ 21 HR- a critical business process: .............................................................................................................. 22 Operational Issues ................................................................................................................................... 23 Scenario: supply chain management ....................................................................................................... 25 IT IN RETAIL SECTOR ......................................................................................................................... 27 Supply Chain Management: .................................................................................................................... 28 CRM........................................................................................................................................................ 29 Internet .................................................................................................................................................... 29 Business Intelligence .............................................................................................................................. 30 Importance of information technology in retail industry ............................................................................ 30 IT solutions for retail industry .................................................................................................................... 31 Custom solutions..................................................................................................................................... 31 Product based solution ............................................................................................................................ 31 IT PLAYERS IN RETAIL FIELD .......................................................................................................... 32 RETALIX ............................................................................................................................................... 33 ORACLE ................................................................................................................................................ 33 SAP ......................................................................................................................................................... 34 CASE STUDY ........................................................................................................................................ 35 5

Pantaloon: ERP in retail .......................................................................................................................... 35 BUSINESS PROCESS AUTOMATION IN RETAIL ........................................................................... 38 Scenario: multichannel integration ......................................................................................................... 40 Microsoft solutions for retail business process automation .................................................................... 41 Sysrepublic Real Time Integrator: Enabling Real-Time Action on Store Events ................................... 41 Cactus Global Data Synchronization (GDS) Accelerator: Enabling Efficient Supply Chains ................ 41 FUTURE TRENDS IN RETAIL ORGANISATION............................................................................. 43 Accounts and business software ............................................................................................................. 44 Reduce costs............................................................................................................................................ 45 Epos software & hardware ...................................................................................................................... 45 Fully integrated ....................................................................................................................................... 46 Barcoding and scanning technology ....................................................................................................... 46 Chip and pin ............................................................................................................................................ 47 Mobile technology .................................................................................................................................. 48 Self checkouts ......................................................................................................................................... 49 Reducing errors ....................................................................................................................................... 49 Scenario: point of service (pos) .............................................................................................................. 50 CONCLUSION: ........................................................................................................................................ 52 REFERENCES .......................................................................................................................................... 53

Abstract

At a time when the world is moving at lightning speed and technology is advancing every second, how can the fast growing sector of organized retailing ignore the opportunities provided by information technology? Organized retailing involves many operations that require dealing with loads of data. Retail managers are required to take decisions every day of the year on the basis of the previous days learnings. Information systems are enablers that provide the data necessary for taking decisions in the retail business. The report discusses the role and importance of information in retailing and the sources of information. The report also contains the understanding of new technologies of value added network, biz talk servers, data mining and business intelligence.

PROJECT OVERVIEW
The project THE ROLE OF INFORMATION TECHNOLOGY IN RETAIL SECTOR is an indicative research work, which aims to understand IT solutions provided by different Vendors and the pace with which new technologies are coming and being used in Retail. The project also enlists the ways in which technologies used are beneficial for the retailers to improve their overall operations and supply chain process.

OBJECTIVES
Understanding the basics of Retail Organisation. Complexities in Retailing. Facilitate an increase in the Role of IT in Retail. To study IT related concepts such as Data warehousing, RFID, e-Retailing which are used in Retail Sector. To study various IT solution providers. Analyzing the current trends retail industry. Coming to conclusions after analyzing various scenarios and case studies from Internet and secondary data.

METHODOLOGY
The methodology for attainment of the projects objective and its successful completion comprised mainly of analysing secondary data on Internet and web portals on the topic Retailing and IT solutions provided by various vendors and the new technologies being used in Retail.

LIMITATIONS OF THE STUDY

The main limitation of this project is that most of the sources are collected from Secondary Data which mainly includes Internet. Although secondary data has many advantages to its credit, it has its own share of pitfalls and disadvantages such as online search engine such as Google, has previous years data so the latest data was not available for study. Also, the research is based on secondary data so verification of the data is not possible.

Introduction

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he distribution of consumer products begins with the producer and ends at the ultimate consumer. Between the producer and the consumer there is a middleman---the retailer, who links the producers and the ultimate consumers. Retailing is defined as a

conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. The word retail is derived from the French work retailer, meaning to cut a piece off or to break bulk.

A retailer is a person, agent, agency, company, or organization which is instrumental in reaching the goods, merchandise, or services to the ultimate consumer. Retailers perform specific activities such as anticipating customers wants, developing assortments of products, acquiring market information, and financing. A common assumption is that retailing involves only the sale of products in stores. However, it also includes the sale of services like those offered at a restaurant, parlour, or by car rental agencies. The selling need not necessarily take place through a store. Retailing encompasses selling through the mail, the Internet, door-to-door visits---any channel that could be used to approach the consumer. When manufacturers like Dell computers sell directly to the consumer, they also perform the retailing function.

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Retailing has become such an intrinsic part of our everyday lives that it is often taken for granted. The nations that have enjoyed the greatest economic and social progress have been those with a strong retail sector. Why has retailing become such a popular method of conducting business? The answer lies in the benefits a vibrant retailing sector has to offeran easier access to a variety of products, freedom of choice and higher levels of customer service.

As we all know, the ease of entry into retail business results in fierce competition and better value for customer. To enter retailing is easy and to fail is even easier. Therefore, in order to survive in retailing, a firm must do a satisfactory job in its primary role i.e., catering to customers. Retailers cost and profit vary depending on their type of operation and major product line. Their profit is usually a small fraction of sales and is generally about 9-10%. Retail stores of different sizes face distinct challenges and their sales volume influences business opportunities, merchandise purchase policies, nature or promotion and expense control measures.

Over the last decade there have been sweeping changes in the general retailing business. For instance, what was once a strictly made-to-order market for clothing has now changed into a ready-to-wear market. Flipping through a catalogue, picking the right color, size, and type of clothing a person wanted to purchase and then waiting to have it sewn and shipped was the standard practice in the earlier days. By the turn of the century some retailers set up a storefront where people could browse, while new pieces were being sewn or customized in the back rooms. Almost all retail businesses have undergone a similar transition over the years.

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Basics of Retail Organization

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he term retail organization refers to the basic format or structure of a retail business designed to cater to the needs of the end customer. Recently, some scholars have started referring to India as a nation of shopkeepers. This epithet has its roots in the

huge number of retail enterprises in India, which were over 12 million in 2003. About 78% of these are small family businesses utilizing only household labour. Retail firms may be independently owned, parts of a retail chain, operated as a franchisee, leased departments, owned by manufacturers or wholesalers, consumers owned or cooperative society.

A retail unit could be owned by:

Manufacturer (e.g., company owned retail outlets) Wholesaler (e.g., Vastra outlet in Rajouri in New Delhi) Independent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow) Consumer (consumer owned grocery stores in man y residential societies) Co-operative society (e.g., Mother Dairy milk booths in Delhi) Government (e.g., Cottage Emporia) Ownership shared among franchiser and franchisee (e.g., Archies Gallery)

Although most Indian retailers fall in the category of small-scale units, there are also some very big retailers. Organized retail stores are generally characterized by large, professionally managed store formats providing goods and services that appeal to customers, in an ambience that is conducive for shopping and provides a memorable experience to customers.

From positioning and operating perspectives, each ownership format serves a marketplace niche and presents certain advantages and disadvantages. Retail executives must not lose sight of this in playing up their strengths and working around their weaknesses.

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POPULAR FORMATS OF RETAILING

Since the retail industry covers a wide range of corporations, it can be classified in various formats. However the most popular format of classification is by the type of business channel the retailer implements to do business. Some of the popular categories are:

Mom-and-Pop Stores: This is represented by the small, individually owned and operated retail outlet. It is often seen that these are family-run businesses which cater to the local community and are capable to provide high level of service. However they often have a limited product selection.

Mass Discounters: These are the type of retailers who sell either general or specialty merchandise. But their forte is in offering discount pricing to their customers. Compared to department stores, mass discounters offer fewer services and lower quality products.

Warehouse Stores: This is a form of mass discounter retailer. The prices offered by these types of retailers is even less than traditional mass discounters. However, the constraint on buyers is that they need to make purchases in quantities that are greater the quantities that can be purchased at mass discount stores. The level service is often low and product selection can also be limited. Also notable is that these stores are of warehouse style where customers might be found selecting products off the ground from a shipping package. Another form of warehouse stores is warehouse clubs where customers need to be members to be able to make purchases.

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Category Killers: Major retailers also focus on a concept of specialty stores wherein they service by providing multitude of options within than product category. In Indian parlance, the concept of category killers is often found in the product categories as electronics (The E-Zone), office supplies (Office Linc) and Books (Crosswords).

Department Store: These retailers offer mid-to-high quality products and strong level of service. However in most cases these retailers do not fall into the full-service category. Even though the Department stores are classified as general merchandisers; some retailers may opt to carry a more selective product line. For instance, while Big Bazaar carries a wide range of products from grocery to electronics, Shoppers Stop focuses primarily their products on apparel and lifestyle products.

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Boutique: These are usually small stores catering very specialized or niche products which is often high-end merchandise. Also in all cases the level of service is very high for this format. They often follow a full-pricing strategy and have prices which are more than the prices of merchandise available in any of the other formats.

Fig. Nespresso Boutique

Catalog Retailers: The concept of this form of retailing is that the customers will place orders after seeing products from a published catalog. Tata Sons retail venture Croma utilizes this business channel. Orders can either be delivered by in house logistics or a third-party shipper. The format utilized by McDonalds and Pizza Hut outlets for their delivery model can be identified as this format.

E-tailers: In this format the retailer principally sells via the Internet. There are thousands of online retail sellers of which Ebay is the most famous in India. The benefit of this format for customers is that it is open 24X7 and for the retailer is that it does not need to stock the merchandise.

Franchise: This form of retailing comprises of a contractual channel where one part the franchisor controls the business activities of the other party franchisee. The franchisee has access to the franchisors business methods and other important business aspects, such as the
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franchise name. In return the franchisee shares a part of the revenue with the franchisor. The common examples are McDonalds and Pizza Hut.

Convenience Store: As the name implies these general merchandise retailers cater to offering customers an easy purchase experience. Convenience is offered in many ways including through easily accessible store locations, small store size that allows for quick shopping, and fast checkout. The product selection offered by these retailers is very limited and pricing can be high.

Vending: This form of retailing involves utilizing automated methods for customers to quickly purchase the desired product. This can be interactive kiosks and vending machines. The presence of vending machines for purchase of smaller items, such as beverages and snack food, is already common in case of products like beverages and magazines. However newer devices are entering the market which will be able to vend more expensive and bulkier products. By access of either Internet or telecommunications link, these systems will enable customers to use credit cards.

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EVOLUTION OF RETAIL INDUSTRY

In the early eighties retailing in India was synonymous with peddlers, vegetable vendors, neighborhood kirana stores (small grocery stores) or sole clothing and consumer durable stores in a nearby town. These retailers operated in a highly unstructured and fragmented market. Very few retailers operated in more than one city. Before 1990, organized retailing in India was led by few manufacturer owned retail outlets, mainly from the textile industry, for example, Bombay Dyeing, Raymonds, S Kumars, and Grasim. But the Indian retail scenario started changing in the nineties. Liberalization of the Indian economy led to the dilution of stringent restrictions. This paved the way for the entry of few multinational players like Nanz into the Indian market. This was further augmented by the changing profile of the Indian consumers, who were being greatly influenced by western lifestyles. Increasing wages of the employees working in Greenfield sectors gave rise to a completely new group of buyers with higher purchasing power. Moreover, the entry of multinational brads also generated considerable enthusiasm and interest among domestic retailers. This encouraged setting up of retail chains by domestic retailers like Cotton World (Mumbai), Nirulas (Delhi) and the Viveks and Nilgiris in the South.

Indias top retailers Big Bazaar-Pantaloons: Big bazaar a division of pantaloons Retail (India) is already Indias biggest retailers. Food world: Food world in India is an alliance between the RPG group in India and Dairy International of Jardine Matheson Group. Trinetra: It is a super market chain that has a pre-dominant presence in southern states. Apna bazaar: It is a 140 crore consumer co-operative society, plans to cater to an upwardly mobile urban population.
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Top Global Retailers

Global sales rank Supermarkets Hypermarkets Convenience stores Seven Wal-Mart 1 Kroger Co (United States) Safeway 2 States) Tesco 3 Kingdom) Plc (United Inc (United Carrefour SA (France) Tesco Kingdom) Plc (United Stores Inc & I

Holdings Co, Ltd (United States) Itochu (Japan) Lawson (Japan) Internationale Spar Centrale Inc Group

(United States)

Royal 4

Ahold

NV

Auchan (France)

Group

SA

BV (Netherlands) Carrefour SA

(Netherlands) ITM Entreprises SA

(France) Edeka Zentrale AG & Co

E Leclerc (France) J Sainsbury Plc (United Kingdom)

(France) Uny Co Ltd

KG (Germany)

(Japan) Tesco Plc

Royal 7 Carrefour SA (France) Delhaize 8 (Belgium) Group SA

Ahold

NV

(United Kingdom)

(Netherlands) Casino Guichard-

Musgrave Group Plc (Ireland) Co-operative Group (CWS) (United

Perrachon SA (France)

Supervalu 9 States)

Inc

(United

Schwarz

Beteiligungs

Ltd

GmbH (Germany)

Kingdom) FEMSA (Fomento Economico

Publix Super Markets Inc 10 (United States) Meijer Inc (Japan)

Mexicano SA de CV) (Mexico)

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Complexities in Retail
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etailing in its traditional form has been existing for decades. But retail management in the true sense (as retailing is known in the west) is a relatively new discipline in some countries. It is unlike other forms of marketing and the traditional marketing rules do

not apply. In retailing, as in service, there is a fifth P added to the existing 4 of marketing, the People. Therefore the contact person (whom the consumers interact with) becomes a doubly important entity. The most important difference is that where marketing has the classic 4 Ps (Product, Promotion, Price and place), in retailing a fifth P, people is added which is critical. They are critical to a service business like retailing both as employees who execute the business and the customers with whom retailers must interact. The following are the key challenges of retailing: Large transactions: Retailers need to handle smaller transactions in large numbers and still be able to make money. Low price strategy: The Indian consumer being value-conscious, a key to success for many retailers is the ability to attract customers by offering low price guarantee. Aggressive sales, discount and collection schemes (say, credit facilities.) and thus keep the enthusiasm going. Consumer behaviors - Retailers need to conduct MRs and behavioral studies into the consumers psyche simply because he is so different from the rest and in fact, different from the other consumers. Consumers shopping patterns need to be analyzed in detail. Location: A prime location in the city/town so a big plus. Things such as waiting and parking areas need to be taken care of. Use of information technology (IT) in developing a supply chain and integrating all the retailing processes from procurement to after sales.

HR- a critical business process:

The Industry is facing a severe shortage of talented professional, especially at middlemanagement level. Areas gradually becoming critical are technology, supply chain, business
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development, marketing, product development and research. Successful Indian retailers are creating a robust second and third level of management by hiring aggressively for these key roles. There is also an increase in number of retail management programs and institutes. This will bridge the gap in availability of talented professionals at the middle and lower levels. There is also an increasing trend towards hiring hotel management graduates in the retail sector. The retail industry is expected to create 2 million jobs between now and 2010.However, talented professionals will put increased pressure on wage costs. Therefore, operating margins, especially for mid-sized retailers will shrink. There is also a huge risk for Indian retailers becoming a poaching ground for international retailers once they enter India.

Operational Issues
In order to survive in this Industry, which is driven by the consumer demand Retailers need to successfully counter the operational issues. If the Retailers fail to diagnose and address those operational issues their existence will be jeopardized. Supply Chain Management and Logistics The process of getting goods to the customer has been traditionally known as Physical Distribution. Physical Distribution starts at the factory and it ends at the store. Nowadays the definition of Physical distribution is expanded and a broader concept has come which is Supply Chain Management. Ideally Supply Chain Management encompasses the material flow from suppliers suppliers to the final destination. Retailers need to have a grip on that whole chain in order to control the procurement and delivery cost. This will help them to choose the right supplier for the merchandise. Retailers need to come out of the constricted view about the supply chain which is viewing the market as a point to point destination; instead they need to consider the holistic picture which is a part of Market Logistics. Market Logistics involves physical flow of materials from point of origin to the point where it meets the customers requirement.

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This Demand Chain orientation can help them to cut down the procurement cost to a great extent. IKEA the global furniture retailing giant has successfully addressed this issue and they are able to sell quality furniture at a much lower cost than his competitors.

Pricing In Retailing environment pricing has become a burning issue to the retailers. Customers expectation from a Retail store has become very high and customers are looking for more and more bargain prices. This situation can be referred as Price drought. Price deflation is taking hold in the Retail environment and any reduction in volume is complicating the scenario further. This trend is quite evident in Apparel and Consumer goods market. Pricing seems to be a key positioning factor and must be decided in relation to the target market, Assortment mix and competition. Strategic pricing has become an important strategic tool to the retailers. Airlines Industry started this strategic pricing technique where the underlying philosophy is not all consumers want a particular product at the same time and the degree of demand will also vary. With this idea in mind different consumers are charged different prices for the same product or service. Retailers need to adopt the right pricing tactics in this environment of fierce competition. Retail stores markdown the price for some items to attract people, this is called traffic building. They also run storewide reduction sell. It is observed that a shoe Retail outlet sells 50% of the product at normal mark up, 25% of the product at 40% mark up and remaining 25% at cost. Some Retailers have done away with sales pricing and they are resorting to everyday low price (EDLP). It leads to lower advertising cost, greater pricing stability and higher Retail profits. Wal- Mart uses this kind of pricing strategy.

Sales Channels Design of sales channel is also a key operational issue in todays Retail industry. Technology has become one indispensable business component and Retailers need to
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make use of this successfully. Retailer needs to come out from the mindset of traditional store retailing and they need to use all available channels to reach a wider consumer community. Amongst Non store Retail channels Internet and E commerce is gradually gaining popularity. Consumers do not need to come to store for buying goods or service they can do that over a click of a button from their drawing room. Retailers need to derive benefit from that. Marketing through call centre or catalogue marketing is also an emerging trend. Retailers need to choose sales channels carefully and need to use all those channels effectively to acquire more customer centricity. Ultimate objective here is to offer a consumer a tailor made shopping experience and to provide more easy access to his product and service offering.

SCENARIO: SUPPLY CHAIN MANAGEMENT

Overview The majority of retail systems (67 percent) are home-grown legacy systems that are not equipped to enable efficient collaboration with business partners. Increasingly, retailers with a closely connected supply chain (such as Wal-Mart) have a strategic competitive advantage against those that dont. Supply chain management solutions from Microsoft deliver an integrated approach to merchandise management that allows retailers to deploy state-of-the-art technologies at a low total cost of ownership (TCO) to meet the increasingly demanding business needs of merchandise management and demand planning (using standards like UCCnet Global Data Synchronization and EDI/AS2).

Benefits Effective, demand-driven replenishment; integration with legacy environments; full integration for multiple channels; agility to implement and integrate emerging technologies like RFID and GDS/UCCnet

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Case Study London Drugs, a leading Canadian retail chain serving customers across Alberta and British Columbia, had historically performed virtually all of its mission-critical processeshuman resources, general ledger, inventory, and merchandisingon legacy applications that were running on an AS/400 computer. The company was missing business opportunities because these applications were outdated, expensive to support, and didnt offer the flexibility necessary for creating a much-needed automated supply chain process. London Drugs implemented a new business process automation infrastructure based on best-of-breed enterprise resource planning and supply chain applications and real-time integration. London Drugs has now linked its enterprise systems with automated supply chain handling and automatic replenishment and order generation. The solution reduces manual processing and errors, lowers holding costs by speeding inventory movement and reducing standing inventory, and increases revenue by ensuring more dependable inventory stocking.

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IT in Retail Sector
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nformation Technology has become a key business driver in todays world. Retailers are also trying to reap in the benefits of the technology. Thus technology has become a critical and competitive tool for surviving in the business. Retailers are using software systems to

manage and plan their inventory, to reduce the procurement costs, electronic ordering, electronic fund transfer, e mail communication and for many other things. IT is poised to take a much bigger role in Retail Industry however the high implementation cost of IT projects has restricted many Retailers to go for proper IT solution. IT growth areas in Retail are mentioned below.

Supply Chain Management:

Supply chain is one of the focus areas for the Retailers and immense opportunity of business process improvement and scope of technological empowerment is there in this area. In todays tough economic climate customers have become price sensitive and there is a price draught in the market. Retailers are struggling to control the cost and in this environment effective Supply Chain Management can act as a big contributor. It helps them to integrate with their suppliers and through collaborative planning retailers can reduce the cost.

SCM solutions will enable Retailers to track their inventory movement from suppliers premises to the point of sale. It gives a better visibility in the area of demand planning, forecasting and inventory management. Worlds largest Retailer Wal Mart has adopted a state of the art SCM
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system which not only tracks the inventory but also it increases the efficiency of the process. Wal Mart has also introduced the Radio Frequency Identification (RFID) of merchandise.

CRM
CRM continues to be a growth area for IT in Retail sector. Advancement in this field helps to maintain sophisticated customer database and systems that can maximize multi channel returns. This helps the retailers to understand the customers demand pattern and enables them to offer a tailor made shopping experience.

Internet
Internet has unfolded lot of opportunities to the Retailers. Retailers can do business over internet. It can also be used as a communication medium. Successful Retail community uses internet technology for reliable communication between Retailers, customers and suppliers.

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Business Intelligence
Business Intelligence is an effective analytical tool which helps the Retailers to understand the eco system of retail business. It helps the business community to take mission critical business decisions which will help them to navigate in the right direction. In todays world Retailers equipped with such data mining or data warehousing tool can have the micro level understanding of customer demand.

IMPORTANCE OF INFORMATION TECHNOLOGY IN RETAIL INDUSTRY

The retail market is in exponential growth. Retailing includes all the activities involved in selling goods or services for the consumer. These activities includes demand and sales forecasting, inventory management, store management, transportation etc. Information technology is the capability to electronically input process, store, and output, transport, receive data and information. It plays a very important role in todays business world. New technologies evolved in retaining are Radio frequency (RFID), smart operating solutions, smart Point of Sale (POS) etc.

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The result indicates that, retail complexities may reduce with the application of information technology in the process. The right solution can result in the improved productivity and major cost saving through the advantages such as more accurate supply chain, forecasting, and better inventory management. Information technology also helps the retailers to solve major problems related to customer services, customer loyalty and customer satisfaction. A typical retail operation would have multiple retail outlets, warehouses, and offices. How does the Headquarter know about the daily turnover at each of its outlets, how does it knows which products are selling the most and in which region at which outlet. How does one store stock out item in its inventory is available at another store location for which it is slow item? Most of these issues can be solves by using appropriate technology use in the system.

IT SOLUTIONS FOR RETAIL INDUSTRY

Custom solutions
Customized solutions are tailor made for the problem at hand. One needs to pay for the features and flexibility required rather than the standard features built in by the standard solution supplier. These applications may meet some of the specific needs but will definitely require additional costly customizations, integrations, and possibly proprietary hardware, software, networking equipment, or interfaces. Furthermore, there will usually be annual upgrade costs. In case of customized solution, technology provider works directly with the client team and takes into account company specific objectives, priorities, current systems, constraints and other details.

Product based solution

The products are readily available in the market. These solutions get refined with every implementation, and take care of large number of operational nuances. They are less flexible as compared to custom based products. At the same time they are based upon some of the best practices followed in the industry. ERP solution providers such as SAP and ORACLE have their own planned products that are directly sold to the clients off the shelf.
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IT Players in Retail Field

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RETALIX
Retalix is one of the leading software providers in the Retail sector. Its North American headquarters is located in Dallas, Texas. Retalix software is designed to be modular, scalable to large transaction volumes, capable of handling rapid scanning with high reliability. The product is compatible with multiple store format and hardware systems. Retalix is fulfilling the role of a true strategic technology partner, helping their clients to adapt to rapidly changing market requirements by using the multi format Retail solution. With the help of constant industry interaction they fine tune their solution portfolio continuously. The breadth of functionality and versatility of Retalix solutions has enabled Retalix to achieve a sizeable market penetration. With installations in more than 25,000 stores and quick service restaurants across 44 countries Retalix has emerged as a significant player in this market.

ORACLE
After a fierce battle with SAP, Oracle has recently completed its acquisition of Retek, one of the leading software product vendors in Retail sector. With the help of this acquisition Oracle has gained a competitive edge in the market place.

Oracles Retail solution a combination of technology and comprehensive business application helps the retailers to do their forecasting and demand planning in a more accurate manner. It streamlines the supply chain operation and helps the business to reduce the supply chain costs and to accelerate the inventory turnover process. It has the capability of handling different kinds of pricing and promotions. Effective supplier collaboration is also possible through Oracles solution.

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SAP
SAP worlds most successful ERP vendor is also a front runner in the Retail Industry segment. SAPs Retail solution is an Industry specific solution that is tailored to the specific standards, process and challenges of Retail industry. It delivers rich functionality productivity building tools throughout the organization and they help the business to adopt the best business practices that SAP has developed in over 30 years of working with industry leaders worldwide. SAPs solution is modular in nature and it gives the flexibility to the business to select the building blocks and it ensures faster implementation. SAP offers easy integration and virtually unlimited scalability. SAP has more than 2700 customers in the Retail industry worldwide. SAP has recently completed the acquisition of Triversity. According to the market analysts SAP will be able to extend its market leadership with the help of this acquisition. For nearly two decades, Triversity has been a leader in the worldwide retail marketplace with solutions deployed in 32 countries. Triversity delivers flexible, comprehensive, retail marketleading solutions that include traditional and enterprise point-of-sale, store inventory management, POS loss prevention, customer loyalty, stored value, store back-office and in-store and multi-channel customer service. These solutions are highly complementary to SAPs existing retail solution offering, and SAP and Triversity already have a strong list of joint customers including The Body Shop, Casa Ley, Indigo Books, Wawa and Trader Joes.

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CASE STUDY
Pantaloon: ERP in retail Needing an organization-wide IT solution to help it perform better, Pantaloon decided to implement an ERP system from SAP. More than eight years after it forayed into the retail business, Pantaloon Retail in 2004 decided to implement SAP to keep itself competitive in the rapidly growing Indian retail market. Pantaloon was regularly opening stores in the metros and there was an urgent need for a reliable enterprise wide application to help run its business effectively. The basic need was to have a robust transaction management system and an enterprise wide platform to run the operations, - Rakesh Biyani, Director, Pantaloon. The company was looking for a solution that would bring all of its businesses and processes together. After a comprehensive evaluation of different options and software companies, the management at Pantaloon decided to go in for SAP.

The Solution Some of the qualities of SAP retail solutions are that it supports product development, which includes ideation, trend analysis, and collaboration with partners in the supply chain; sourcing and procurement, which involves working with manufacturers to fulfill orders according to strategic merchandising plans and optimise cost, quality, and speedvariables that must be weighted differently as business needs, buying plans, and market demand patterns change; managing the supply chain, which involves handling the logistics of moving finished goods from the source into stores and overseeing global trade and procurement requirements; selling goods across a variety of channels to customers, which requires marketing and brand management;

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managing mark-downs and capturing customer reactions, analysing data, and using it to optimise the next phase of the design process. In a Nutshell Aim : To deploy a robust transaction management system and an enterprise-wide platform to run its operations. Solution Implemented by : SAP retail solution : SAP team with the help of Novasoft, Singapore Number of users Time taken Cost implementation : Around 1,200 : About six months of : About $10 million

The implementation The implementation was outsourced to a third party. The implementation was done by the SAP team with help of Novasoft which is based out of Singapore, says Biyani. Some people from Pantaloon also assisted in the project. About 24 qualified people worked on this SAP implementation. SAP was chosen as the outsourcing party on a turnkey basis. Three Phases SAP implementation is not a single phase process. The project was divided into three phases. The first phase involved blueprinting existing processes and mapping them to the desired state. In this phase, the entire project team worked on current processes within the structure of the
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organization, analysed and drafted them. This blueprint was later used in the formation of new states of the solution. Since the SAP would combine all the processes, each and every one of these had to be evaluated. In the second phase, the SAP platform was developed with the help of Novasofts template which was predefined by SAP after evaluation of Pantaloons needs and expertise in retail solutions. The last phase in this project was for stores to switch over to the new system and for current data to be ported. Before the SAP implementation, all the data was unorganized. This data had to be migrated to the new SAP application. The project was flagged off on 15th June 2005 and took about six months to finish. It went live at the head office on 1st January 2006. The stores went live on SAP from 1st January 2006 to 30th June 2006. After the successful implementation of SAP for its retail chain, Pantaloon also planned to go ahead with IT projects such as implementation of WMS with RFID, Customer Intelligence and CRM. Inventory and Promotions Optimization were also pursued the same year.

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Business Process Automation in Retail

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he retail industry is facing sweeping and unprecedented change. Customers expectations grow higher, economic pressures require them to do more with less, and each day new competitors appear. Responding to that rapid pace of change, retailers

tell us, is both their biggest challenge and their biggest opportunity. Retailers who can adapt to change can make intelligent, fast decisions; find new markets to exploit; and constantly improve their products, services, and operations. But retailers dont have a switch to flip that turns them into super-smart, super-adaptable businesses. Hoping to find that switch, they often turn to technology, looking for some magic to help them navigate a changing business environment. However, technology by itself is not the solution. Any discussion about generating a positive impact for the business should first center on how to empower people with effective solutions that deliver results. A connected retailer not only leverages a flexible, economical technology platform that drives results, but also focuses primarily on its greatest asset: people empowered by the right solutions to act on the right information at the right time. To enable your or ganizations people assets to extend their potential through the use of software, Microsoft delivers agile and adaptive solutions for business process automation (BPA). BPA solutions provide the tools, technologies, and infrastructure to automate complex business processes end to end in order to help increase competitive advantage and deliver tremendous value and visibility to your business, customers, and trading partners. This enables you to: Increase personal and organizational productivity. By automating business policies and best practices, removing manual tasks, and eliminating error-prone reentry of information, BPA boosts individual and team efficiency, which enables retail organizations to deliver results faster and with greater predictability. Make better decisions. By providing real-time insight into key business metrics and providing proactive alerts and notifications, BPA gives broader insight into essential business processes that are critical to your business (across both the store and headquarters) and provides real-time analytics that enable you to make better decisions faster. Enhance operational excellence. Ensuring a continuous, high-quality customer experience requires support for mission-critical business processes with the utmost levels of reliability. BPA provides a rock-solid foundation that delivers the security, performance, scalability, and reliability demanded by the distributed, mission-critical systems of modern retail enterprises.
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Three key areas of retail business process innovation that can be transformed through business process automation are the point of service, supply chain management, and multichannel integration priority solution scenarios. These scenarios, or strategic areas of focus, are examined in more detail on the following pages.

SCENARIO: MULTICHANNEL INTEGRATION

Overview Todays retailers are under pressure to provide a more seamless customer experience across multiple channels (store, Web, call center, etc.). Burdened by aging legacy systems and processes, their current retail channel silos and fragmented customer interactions result in a high cost of sales and service, poor employee productivity, limited flexibility, duplication in maintenance of processes and systems, and, ultimately, presentation of an undifferentiated value proposition to customers. Multichannel integration solutions from Microsoft enable retailers to achieve a competitive advantage in todays customer economy. By providing a unification of the customer experience across channels, the Microsoft solutions enable retailers to attract and retain customers and meet customers expectations whenever, wherever, and however the customer chooses.

Benefits Increased customer acquisition and retention; improved customer analytics; improved direct marketing efforts; new revenue streams through effective cross-sell and up sell strategies; reduced cycle time between order and delivery; lower fulfillment costs; real-time inventory visibility

Case Study With more than 1,000 superstores, Barnes & Noble has a significant retail presence across the United States, selling almost 445 million books per year. The company had the

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challenge of linking its disparate operations (store, Internet, publishing) into a smoothly functioning infrastructure. Barnes & Noble implemented a new multichannel process automation solution that enables customers to easily browse and purchase books across either in-store or Internet-based channels, and allows the company to manage distribution and fulfillment in an integrated fashion. The solution has provided improved insight into customer shopping behavior, improved customer satisfaction, greater efficiency, and improved scalability and reliability.

MICROSOFT SOLUTIONS FOR RETAIL BUSINESS PROCESS AUTOMATION

Sysrepublic Real Time Integrator: Enabling Real-Time Action on Store Events

Sysrepublic Real Time Integrator for Microsoft BizTalk Server provides a robust and scalable real-time integration backbone that links events in the store with headquarters operations. It enables retail customers to integrate legacy, current and future applications and systems together in an efficient manner. Real Time Integrator provides a flexible framework that operates alongside your current technology systems and can be readily extended and changed as your business changes. Out-of-the-box POS Adapters provide access to your multivendor POS transactions as they occur, and also provide visibility into this critical business information. This enables the analysis of immediate store performance metrics and provides a foundation for implementing real-time analytical applications (including out-of-stock analysis, labor monitoring, fraud detection, inventory management, etc.).Integrated components include Microsoft BizTalk Server, SQL Server, Windows Server, SharePoint Portal Server, and Microsoft Office InfoPath.

Cactus Global Data Synchronization (GDS) Accelerator: Enabling Efficient Supply Chains

The Cactus GDS Accelerator leverages the robust integration capabilities of BizTalk Server and overlays data poolspecific configurations and functionality to provide a global data synchronization solution for reducing the costs and business impact associated with tradingpartner integration for retail and manufacturing supply chains. The Cactus GDS Accelerator lowers administration costs by practically eliminating the need for rekeying information and documents, resulting in fewer errors and invoice disputesall of which reduces product introduction and promotion lead time. It improves logistics by enhancing
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the rate of accurate orders, which results in fewer return shipments, fewer emergency orders, and more efficient short-term planning to help avoid issues such as back-ordering.

Cactus GDS Accelerator provides a cost-effective way to quickly connect to multiple data pools (like 1SYNC and the WWRE) to manage communications with trading partners and integrate real-time data through product information management (PIM). This lays the groundwork for future RFID initiatives with minimal investment and impact on existing systems, processes, and infrastructures. Integrated components include BizTalk Server, SQL Server, Windows Server, SharePoint Portal Server, Microsoft Commerce Server, and Microsoft Office InfoPath.

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Future Trends in Retail Organisation

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n 2006 a magazine known Shelflife overviewed a variety of technologies that were having a major impact in retail and distribution areas such as:

Bar-coding / scanning technology /labelling Epos software & hardware Accountancy & payroll Supply chain solutions RFID Chip & Pin technology Wireless Shelf-checkout

The first issue of 2007 of Shelflife asked some of the people involved in the above areas regarding the new developments that will help to shape the retail horizon through technology.

Accounts and business software

Business software has become very important not just for retailers but for any business. The software has got so sophisticated that it can now be integrated into other areas of the company. Darren Sexton, a retail product manager for Sage said that business software for systems such as Epos are in big demand. It is also observed that there is a requirement among smaller retail customers for a more cost effective solution that is out of the box and easy to install on any existing touch screen till. With this in mind Sage introduced its Retail for Small Business which gives smaller retailers access to a cost effective out of the box PoS system.

Sage Retail for Small Business also manages the day routines, uploading transactions and a stock file that will link to Sage accounting solutions to more accurately track stock, said Sexton. The ability to share information between the point of sale, front and back office systems has been identified as providing clear competitive advantage for companies that successfully introduce it, said Sexton. As part of our commitment to providing real business advantage through linking our leading products together, users can integrate Sage MMS Retail Edition to the tills at the point of sale, using Sage PayPoint, and to our market-leading Customer Relationship Management systems.
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Reduce costs
The former Cara Payroll Group, has been in the payroll outsourcing business for nearly 40 years. The traditional reason for many organisations to outsource internal functions was to reduce their operating costs. Today, whilst cost is still an important factor, the drivers are more sophisticated and the gains are far more beneficial. Businesses have become ever more conscious of the need to focus time, energy and resource on their core business, so they are increasingly turning to outsourcing. Experts said that besides cost savings, companies now see outsourcing as also helping them to: Remove risks in non-core functions by transferring the responsibilities of adherence to law and adoption of best practice to the supplier, in a controlled and agreed manner. Refocus on core competencies, enabling employees to concentrate on key issu es that directly relate to the companys business goals. Improve their ability to react quickly to changing business circumstances suppliers of outsourcing services have streamlined processes that are carried out in a time efficient manner by qualified and experienced employees.

Epos software & hardware

IBM in the late 2007 released details of a significant project with a large European based retailer. Whats interesting here is that it is a good example of a large range of the IBM Epos product range and how they can connect together. The new solution, built on IBMs store integration framework allowed the retailer to better manage its store sales data, faster and more efficient point-of-sale services, including self-service checkout and the ability to implement and integrate additional applications into store operations.

As well as Epos retail hardware which includes IBM sales terminals, touch screens and printers, the solution includes a three year after-sales support for the customer's software application, customer loyalty system, operating system and support for their credit card process application which processes 60% of the company's revenue. This end to end solution ensures that the client
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can easily integrate and manage their international Epos systems leading to consistent levels of service and improved costs. Also this solution ensures savings which include; savings in employee productivity, increase revenue due to faster customer service and transaction handling, savings in staff training costs and an increased customer experience.

Fully integrated
According to PC Cubeds Chris Tate( a retail outlet), customer service is by far one of the most important aspects of any business, especially in retail. Fully integrated EPoS systems can give retailers more efficiency and management at the point of sale. From a hardware point of view, Tate believes the main developments in 2007 included touchscreen technology, additional features and developments in EPoS hardware such as dual screens, allowing for advertising at the point of sale, fanless units to reduce noise heat and expense and smaller units to allow for more space at the point of sale. Another area of development is the infrared touch technology. It is the only technology that does not rely on an overlay to register a touch, so its impossible to physically wear out the touchscreen. Integration of a second monitor on an EPoS unit enables informational or promotional messages to be run at the point of sale. Software developments include segmented screens showing webcam images at concealed areas within the store and allowing external monitoring via the web.

Barcoding and scanning technology

New scanning technologies will continue to improve retail management and store efficiency. Scanning technology will continue to grow as retailers see the concrete benefits barcoding and scanning technology can give to their store. Management decisions can be based on solid and current information. Technology that can increase

productivity,show retailers a concrete return on investment and reduce costs will continue to be developed throughout the coming future. A product set launched by Metrologic
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in 2007 was the OrbitCG. Scanners are getting smarter. Space is a premium at the point of sale and todays checkout challenges demand a modern solution. This new omnidirectional scanner is engineered to provide high performance barcode scanning technology. Enhancements include a full power save mode, integrated EAS for tag deactivation and an extended depth of field to 275mm. Self scanning will continue to grow. This technology includes a touch screen display, barcode scanner, weighing scales, credit card reader, cash reader and deposit unit. Laser scanners are beginning to find more and more complex applications as the technology becomes more reliable and easier to use.

Chip and pin

David MacHale of Torex Retail in 2007 said Chip & Pin, credit cards and wireless technology is definitely moving at a faster pace than was the case this time last year. The major banks have only approved integrated Chip & Pin systems in the last two months and it will undoubtedly lead to greater footfall and better accuracy for retailers in their site reconciliation at day-end. The future will see the roll-out of these systems benefiting retailers and their customers alike. The next twelve months should also see the end of annoying waits for customers and lost business for c-store owners. Credit card transactions in three seconds are now being offered from Torex Retail for all retailers who wish to provide the quality of the service their customers demand. These services are inexpensive but impact hugely on the customers experience and more importantly for the retailer. The worlds leading international retail solution suppliers have worked on major research and development programmes specifically targeted at the Irish market. Its not only the major software retailers that will need to partner next year, but there will be a need for the major symbol groups and wholesalers to work more closely with the major IT vendors in the market. Improved communications between the groups will be of great benefit to both groups and ultimately help the retailers in an increasingly competitive marketplace.

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Wireless, handheld and self checkout The use of wireless technology within the retail sector is expanding as more and more stores are now using wireless barcode scanning for receiving stock into the warehouse. Wireless equipment can also be used for the inclusion of additional Epos terminals with in the store when the need arises. With the advent of higher speeds in wireless technology it will be possible for wireless information terminals to be installed within the store offering the customers other services. The majority of all stores using wireless technology conform to the Wi. Fi. 802.11 standard, however when wireless terminals are taken out of the store for use on delivery vehicles they must use a wide aea network. (ie. 3G/GPRS networks). if they wish to be connected to the store. This will require an additional wireless modem to be installed within the portable scanner terminal. This can have major benefits to the store and the customer. In certain type of stores where it is not feasible to use either flatbed or corded scanners, the use of cordless wireless scanners can be considered. These scanners have now become very powerful, offering scanning transmission up to a distance of 10 meters from the terminal.

Also with the introduction of composite barcodes which is a combination of Linear and 2D barcodes in one code the selection of scanners is going to very important. These scanners will tend to be CCD technology which will be able to read both barcodes at the same time. The use of wireless technology is expanding all the time and we should see more interesting new developments in this area over the next few years.

Mobile technology
The development in mobile solutions in the retail space has definitely impacted on IT investment over the last few years. This will continue to be the case as more and more companies will recognize the benefits of such an investment. The retailers are also turning their attention to mobile technology as a means of differentiating themselves from their competitors in what is becoming an increasingly hostile market. Such technology can give staff more time with the customer and reduce time wastage. Wireless systems also enable management to take better control over their operation. Technology into 2007 will continue to deliver retailers with more cost savings and customers with an improved retail experience. Retail stores in future will see shorter checkout queues and an increase in customer service through implementation of new
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technologies. Mobile computing to manage the retail enterprise will also continue to grow throughout 2007 as retailers are becoming more aware of the business benefits. Maximising flexibility and increasing return on deployment in any retail outlet. investment are key to a successful mobile computing

Self checkouts
Wireless printing for shelf edge labels is in great demand. Symbol hand held terminals married to Zebra portable printers. This allows for efficient shelf edge labelling and price markdown. No more printing pages of SELs on the back office printer and then placing. Simply scan the existing label and if an update is required it prints on the wireless printer attached to your belt. If a customer terrupts the task, then its no problem, deal with the customer and return to the task when possible with no loss of momentum or labels.

Reducing errors
The retail space in Ireland is only now beging to adopt the use of hand held computers to do stock takes shelf edge labeling etc. This is evident in the fact a major Irish retailer has just rolled out this for ticketing i.e. shelf edge labeling. RFID may appear in the warehouse tracking for example pallets or high value goods. A big growth area in 2007 will be at the delivery end of the business, major distribution companies are already using voice picking solutions to pick the orders for shops thus reducing picking errors and speeding up the amount of picks a picker can do in a busy distribution warehouse. When the goods are being delivered to the back door of the retailers they will be presented with a handheld computer scanning to goods off the truck and a receipt being printed by the driver then and there. This will have the effect for the retailer of accurate accounts of what they were delivered the producer or distributor can begin the invoice procedure immediately and reduce the errors which result in lost time for both the retailer and distributor.

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SCENARIO: POINT OF SERVICE (POS)

Overview Retailers are facing increasing competitive pressure to implement innovative in-store solutions (for example, self-checkout, kiosks, RFID) that d ifferentiate through an enhanced customer experience.

However, due to razor-thin margins, they also face a need to extend the value of legacy systems and minimize the
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technology infrastructure investment required within the store. Point-of-service solutions from Microsoft enable the next generation of in-store retail innovation by enabling retailers to take advantage of new technologies that provide better customer connection through a point-ofservice offering, all at a lower TCO.

Benefits Real-time information flow across the critical systems that perform traditional transaction functions, such as POS, inventory control, etc.; enhanced customer interactions, like selfcheckout; efficient store management with loss prevention, out-of-stock control, etc.

Case Study Virgin Entertainment Group wanted to reduce the significant losses it was experiencing due to employee theft in its music and entertainment stores, but that effort was hampered by long lag times in data reporting that made it hard to identify suspicious activity. The multichannel entertainment retailer automated its point-o f-sale processes and enabled flexible data access and information sharing across stores and systems in headquarters. This new solution enables reporting that provides real-time data monitoring, suspicious activity alerts, and long-term trend analysis to help the loss prevention team at Virgin Entertainment Group identify and prevent employee theft. This has improved reporting capabilities and has boosted fraud detection by 50 percent.

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CONCLUSION:
From the above report it has been seen that the value of information systems is being realized and appreciated by retailers throughout the world. Many large retailers have benefitted from the use of information systems. The systems approach has helped them perform efficiently, reduce costs, improve service levels, expand the customer base and manage their functional area better. Information Technology has helped retailers meet customer demands concerning better product availability and better product assortments. Huge databases and sophisticated data mining systems are enabling retailers to reach many customers in a personalized way. The use of information systems has led to major changes in merchandise distribution. Distribution centers are now being used for cross-docking instead of storage. The quick response delivery system has enabled the delivery of floor ready merchandise. The availability of timely and accurate information on daily customer demands had led to the development of new pull logistics strategies. Information Technology has enabled retailers to compete successfully in a complex and challenging environment.

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REFERENCES

1. Retail Management by ICMR Publication

2. Report on Business Process Automation in Retail from www.microsoft.com/biztalk download.microsoft.com/download/0/B/8/0B832C3D.../Retail.pdf

3. Eamon McGrane report on Future trends in Retail technology in the year 2007. www.pccubed.ie/uploads/Shelflife%20Jan%2007.pdf

4. Industry Insights on Indian Retail Industry by Cygnus Group, July 2008 www.cygnusindia.com/pdfs/TOC-Indian%20Retail%20Industry.pdf

5. Report on Customer success by SAGE businessworks www.sagecrmsolutions.com/.../Sagenorthamerica/.../Success.../BW072991_AdvRetail_corp_lores.pdf

6. Case Study on Pantaloon : ERP in Retail http://www.networkmagazineindia.com/200703/casestudy02.shtml

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