Interview and article in Images Retail

1. www.indiaretailing.com
INDIA’S
BEST SELLING
MAGAZINE
FUTURE OF BUSINESSES JULY 2012 • VOL. 11 NO. 7 ON MODERN
RETAIL
`50 US$10
Technology:
The Great
Enabler
Entrepreneur
Varsha Bhawnani
Founder
Vinegar Fashion India
The apparel retailer makes
a come-back
retail excellence
Dilip Kapur
President
ue
Hidesign
ss
og al
ol ci
yI
The leather accessories retailer
hn Spe
has made luxury affordable
OCTOBER 10 –11, 2012
Mumbai, India
c
Te

2. w w w . i n d i a r e t a i l i n g . c o m
JULY 2012 • PAGES 108 • VOL. 11 NO. 7
Editor in Chief Amitabh Taneja As modern retail expands in India, technology can help
Editorial Director R S Roy
retailers reach the next level of growth. Lean and efficient
Publisher S P Taneja
but aggressive and forward-looking operations are the
Editorial key to market domination in today’s cut-throat world.
Editor-in-Charge Sanjay Choudhry (Deputy Editor) No wonder then that technology has come to be seen
Chief of Bureau (Mumbai) Nivedita J Pawar (Sr. Assoc. Editor)
Assistant Editor Priyanka Dasgupta
by Indian retailers as the great enabler which can help
Copy Editor Shipra Sehgal them cut costs and boost operational efficiency. They are
Sr. Correspondent Payal Kapoor increasingly open to new technological innovations, from
Correspondent (Kolkata) Shubhra Saini enterprise resource planning (ERP) and in-store inventory
Correspondent (Bangalore) Roshna Chandran
management to mobile technology, social media and cloud-
Creatives based solutions.
Art Director Pawan Kumar Verma Indian modern retail is just a decade old – this has
Dy. Art Director Deepak Verma actually been a blessing in disguise. Indian retailers are
Sr. Layout Designer Prakash Jha
Layout Designer Rakesh Kumar
not constrained by investments in legacy systems and can
Sr. Photographer Vipin Kardam leapfrog to the latest technology available. And many of
them are doing so already to gain a competitive advantage.
Circulation & Support
In this special technology issue, we discuss the latest
Assoc. VP - Circulation & Subscription Anil Nagar
General Manager – Administration Hemant Wadhawan technologies available in the market for retailers and the
Sr. Manager – Circulation R P Singh opportunities these represent. One thing is clear though –
Dy. Manager – Operations Rajesh Kumar for a modern retailer to grow and expand in the modern
Sr. Executive – Subscriptions Kiran Rawat
age, there is no alternative to technology, a fact that Indian
Production retailers have increasingly begun to understand.
General Manager Manish Kadam The next edition of Images Retail would be the special
Sr. Executive Ramesh Gupta annual edition with a focus on Vision 2020 of modern
Advertising retail. How will modern Indian retail look like eight years
from now and what are the main bottlenecks hampering
Delhi: Kolkata:
Vijay Bajaj, assoc. vice president Piyali Oberoi, assoc. vice president its growth? We will connect with dozens of prominent
vijaybajaj@imagesgroup.in piyalioberoi@imagesgroup.in national and regional retailers all over India to ask their
Mob.: +91 9810304380 Mob.: +91 9831171388
Arti Kapur, general manager
views about how modern retail in India is going to shape
artikapur@imagesgroup.in Rohan Narayan, sr. executive up and what needs to be done for the country to emerge as
Mob.: +91 9313993958 rohannarayan@imagesgroup.in
Mob.: +91 9830961388
a retail powerhouse. So stay tuned and keep your feedback
Sachin Khanna, asst. manager
sachinkhanna@imagesgroup.in
pouring in!
Bangalore:
Mob.: +91 9818818142 Suvir Jaggi, assoc. vice president
Mohd. Iqbal, asst. manager suvirjaggi@imagesgroup.in
mohdiqbal@imagesgroup.in Mob.: +91 9611127470
Mob.: +91 9871249479 Amitabh Taneja
Naveen Chauhan, deputy manager Ahmedabad: editorimagesretail@imagesgroup.in
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3. COVER STORY 46
CONTENTS
JULY 2012
IN THIS ISSUE
26 . ..............................................Retail Launch
The Watch That Talks
Dutch watch-phone brand Burg has launched its products in India
recently and is looking to take the store count to 20 this year
30 . ....................................... Retail Excellence
Hidesign: Luxury Made Affordable
Leather accessories brand Hidesign, which began as a hobby of
entrepreneur Dilip Kapur in 1978, has become synonymous with
affordable luxury
36 . ............................................. Entrepreneur Technology:
The Great Enabler
Sweet Taste of Vinegar
Varsha Bhawnani, Owner, Vinegar Fashions India, tells her story
about how she created a successful apparel brand
Can Retailers today survive without
54 . .................................................Technology
technology? The answer is a clear no.
Hottest Retail Technologies
Aneesh Reddy of Capillary Technology lists 10 hottest retail Technology is a formidable force multiplier
technologies that can give retailing a boost that helps retailers take better business
decisions, cut costs, increase operational
60 . .................................................Technology efficiency, and boost the bottmline. It is
Driving Efficiency Through Supplier Collaboration now a necessity, not an option
Successful running of a retail business to a large extent depends on a
retailer’s ability to complement his suppliers’ core capabilities, says
Shijo Sunny Thomas
88 . .......................................................Column
64 . ..................................................Technology What is Your Tech Adoption Index?
Magic of Mobile The key to harnessing technology in retail is to think beyond what is
Retailers should begin acknowledging mobile phones as the most being offered by the vendors, says Harminder Sahni
powerful tool ever for retailing and integrate these in the retail
environment, says Girish Khare 92 . .......................................................Column
Retailing in Tough Times
BS Nagesh argues that carefully managed property, inventory, and
68 . .................................................Technology customer are the key to survival for retailers
Technology in Fashion Trade
Technology adoption has become a necessity in fashion industry
which is influenced by the spoilt-for-choice customers
R EGULARS
70 . ..........................................................Profile
Watch Out for Ethos
The Chandigarh-based Ethos Swiss Watch Studios plans to
12 . ........................................National Updates
strengthen its position as the largest retailer of luxury watches in 20. ..............................................New Openings
.
India. What makes it tick?
96. ................................................ Store Design
.
78 . ......................................................... Report 100. ........................... Personality of the Month
.
What do Online Buyers Look for in Websites?
Priya Mary Mathew highlights the most valued attributes of a website 102 . ......................................Situations Vacant
being looked by online shoppers in India.
104. ...........................................................Index
.

4. cover story
Technology:
The Great Enabler
By Priyanka Dasgupta
can retailers today survive without technology? the answer is a clear no. as the customer
base of retailers goes up and they expand in scale, there is no alternative to technological
innovations to stay ahead in the marketplace. technology is a formidable force multiplier
that helps take better business decisions, cut costs, increase operational efficiency, and
boost the bottomline. is technology expensive? the up-front acquisition costs may be
high, but in the long run, it proves to be quite cost effective because of the return on
investments it provides to the retailers
46 . images retail . july 2012

5. cover story
The Indian modern retail, though managers are increasingly diverting used by larger retailers in India is
starting from a small base, is on a a significant amount of their budget ERP (enterprise resource planning),
rapid growth trajectory. Driven by a and resources towards technological followed by store inventory
slew of factors, the sector is pegged upgradation and adoption of latest management.
to grow at 30 to 35 percent year-on- hardware and software programmes
year in the foreseeable future. While to increase efficiency and deliver a lowering costs through
multiple modern retail formats are better customer experience. Without technology
mushrooming across the country, doubt, technology has emerged as a To a large extent, the business of
unorganised retailers are also fast competitive tool and key differentiator modern retail is driven by prior
sprucing up their act to compete in Indian retail and encouraged a planning and effective execution. It is
better. Since the industry operates on dramatic shift in the mind-set of the also constantly evolving in step with
wafer thin margins, the key to survival country’s retailers. the changing consumer expectations
lies in optimising resources and A recent study by the Retailer’s and behaviour. Says Shijo Thomas,
maximising customer satisfaction. Association of India (RAI) has Industry Lead, Retail & CPG, at Fujitsu
Over the years, as retailers have estimated that modern retailers in Consulting India: “The evolution of
geared up to meet the increased India would invest about `13,668 modern retail is not only towards the
competition in the market and the crore by 2017 towards technology consumer side but also towards the
heightened expectations of the solutions for cost control, opportunity suppliers and operational partners. For
customers, technology has kept assessment and risk minimisation. the critical functioning of a retailer, it
is important for him to have a sense
of visibility and operational control.
Any retailer who has achieved this
operational efficiency can derive
immense cost benefit that eventually
would affect his bottom line.”
This sense of visibility and control
in retail operations can be brought
about by technology which can help
lower the costs substantially. Explains
Thomas: “When we talk about things
like supply chain, store management
and managing the work force in a
business like retail, a major chunk of
the costs of a retailer goes towards
operations. The idea is to minimise
this cost while maintaining maximum
visibility and control. This is where
technology comes in to lower the
operational costs of a retailer.”
Echoing these views, Indranil
Guha, Additional GM and Head,
A typical modern retailer in India is estimated to spend around `1.55 crore on IT products annually IT Integration, with the Kolkata-
based retail chain Spencer’s, argues
pace with the developments and that technology is very important
evolved rapidly to support the in today’s world of cut-throat
growth of modern formats. In fact, According to one competition and low margins. “It has
technology has emerged as the key estimate, Modern emerged as the key differentiator.
enabling factor helping retailers stay retailers in India would Without constant innovations on the
a step ahead of others and increase technology front, a retailer just won’t
invest about `13,668
profitability. be able to run his business,” he says.
Says an industry analyst:
crore by 2017 towards Vikrant Pal, General Manager,
“Consumers have started expecting technology solutions to Business Improvement, with the
more bang for their buck and a gain a competitive edge national electronics chain Croma,
higher level of service, so no modern asserts that without technology one
retailer worth his salt can neglect the It has also discovered that on an cannot handle retail operations at
importance of technology in day-to- average, a modern retailer in the all. “Technology is the key to any
day operations.” This is a fact not country spends around `1.55 crore retail strategy. If this crucial element
lost on the Indian retailers. A few on IT products annually. The most is missing from the retail operations,
forward-looking entrepreneurs and prominent technology solution the retailer cannot think of scaling
July 2012 . images retail . 47

6. cover story
up and optimising or maximising tale to tell. “From our experience of tech file
his ROI. Without technology, one working with more than 800 retailers
cannot do any of these things on the across the globe, we have seen that
harder aspects of the business. Even in many ways the Indian retailers are
the softer aspects such as customer actually much more technologically
engagement and increased footfall are up-to-date compared to many large
not possible without technology,” he retailers across the globe,” he says.
explains. “The reason is that modern retail is
However, the level of awareness just a decade old in India, and most
on a retailer’s part about technology large retailers in the country have set
often depends on the size and scale up shop over the last five-six years.
of his business – the larger a retailer This has given them the opportunity
is, the more aware he usually is about to set up greenfield retail ventures
the benefits of technology. But in using the latest technology that has
some big retail chains in India, the IT become available in the past decade, Spencer’s
department is still considered only as thus allowing them to leapfrog to the At Spencer’s, technology has enabled the
an enabler, not as a crucial business global standards.” availability of previous day’s sales figures (pan-
partner on par with other departments This, he adds, is not the case with India, classified to article and store level) to reach
such as sales, procurement and many international retailers which target recipients through automated SMS and
inventory management. “In many have been in this business for more email in the morning. The Auto Replenishment
retail companies, the IT department than two decades and are forced to System (ARS) generates automatic purchase
continues to function under other continue with legacy applications orders that get emailed to vendors, indicating
quantity and time of delivery suiting vendor
departments such as finance. This to in which they have sunk a lot
preferences. The earlier manual ordering often
used to lead to either excess stock or stock-out.
“Our Auto Replenishment System pre-checks the vendor’s ARS improved availability of SKUs at the stores
consignments for errors and auto approves, thereby
reducing the wait time at our warehouses.”
– Indranil Guha, Additional GM & Head, IT Integration, our company needs to capture
Spencer’s accurate customer information since
we also do home delivery of products.
Our customers have to be given a
choice as to when they want the
a large extent limits awareness about of money. Since they have been purchased goods delivered at their
what technology can do to benefit using older technology for many homes, the demo and installation
retail operations,” says Thomas of years, they now face challenges in – the things typically associated
Fujitsu Consulting. upgrading to newer solutions. “For with home delivery. Our custom-
These attitudes are however instance, a global retailer might use made port allows us to enter all this
changing, with retailers now taking modern technology in many of their information when we are billing the
a keen interest in technological customer-facing applications, but their customer. That is not the standard
innovations such as enterprise class backbone could primarily be based mode in which retailers operate. This
applications and solutions to better on mainframe computers, which is application we have built for ourselves
manage the customer base, expand a legacy application. If you compare on our own,” he says.
nationally and diversify the product this scenario with the Indian retailers, Croma has a delivery system
range. Says Thomas: “Not only the you will find that most large players integrated with the vendor. The
larger retailers, we are also seeing the are using the latest enterprise class company puts the stock at a
smaller state-level retailers having applications in different areas of their vendor’s location. As and when a
not more than 10 to 15 stores being business,” explains Thomas. customer buys a product, the vendor
very keen about using technology for Pal of Croma could not agree more. automatically gets a purchase order.
work-force management and customer The retail chain uses the same basic “We can pick up the product directly
loyalty, which are traditionally the technological structure for its stores from the vendor and deliver it to the
playing field of bigger retailers.” as most other retailers. “We have customer. This cuts our inventory
a core ERP system which has got holding because we are able to make
New Innovations functionalities such as merchandising, a purchase order to the vendor as
Many people think Indian retailers HR, and finance built into the soon as a customer buys any product
are somehow slower in adopting solution. This kind of system most from our store. This is done online,”
technology in their day-to-day other retailers also use. However, on says Pal.
operations compared to their global top of this, we have built our own Croma has also moved away
counterparts. However, Thomas of port which we operate in our stores. from the traditional method of
Fujitsu Consulting has a different This is a custom development because stock replenishment and delivery,
48 . images retail . july 2012

7. and upgraded to a new they reach the company
technology-based system. warehouse. This drastically
This has cut its inventory reduces the wait time of the
cost by about 25 percent vendor at the warehouse.
and its EBITA by about For customer engagement,
60 percent, according to loyalty and retention,
company officials. Spencers is using a web-
Says Pal: “Earlier we used based CRM application
to follow a min-max system system. For the back-end
at our stores, like most other operations, logistics and
retailers. This means that for store operations, the food
any product, say a laptop, and grocery retail chain
you carry four pieces as has deployed SAP and a
maximum and two pieces few other web applications,
as minimum in inventory. while it uses SAP BI system
So you will always have for analytics.
four pieces in stock, but Industry experts say
if the cost of the product there is still a great deal
comes down, then you of opportunity for Indian
can source two more. This retailers to leverage
was our regular mode of technology to gain a
operation which remained competitive edge. “As
fixed even when the sales retailers continue to
of the product fell. There expand in multiple product
was no proper method by segments as across the
which our replenishment tier II and III cities, they
system could follow the should invest in technology
buying pattern of customers. to create visibility in their
We have now completely operations,” says Thomas
changed that system and of Fujitsu Consulting. “In a
made it elastic. Depending large country such as India,
on how the customers are retail segments like food and
buying a particular product, grocery are evolving at a
the solution automatically rapid pace. Retailers should
increases or decreases really look at some kind of
the stock.” maturity and technology
Spencer’s uses advancement in creating
ERP solution from visibility in the food supply
SAP, with other web- chain. This is the area where
based applications many foreign retailers have
integrated for specific scored extremely high.”
purposes. The company Some Indian retailers
has introduced a “vendor are trying to use business
portal” – an interface analytics to identify costs
through which its vendors across the enterprise and
can log into its system to optimise their business
check information about processes. They are
them with respect to sales, increasingly looking at
stock, status of invoices, technology solutions for
etc. This can be drilled improved decision-making,
down right to the individual better efficiency and
store level. Spencer’s also enhanced productivity.
uses something called However, on the other end,
ASN (Advanced Shipment many mid-sized retailers are
Notice) which is an still in the process of putting
application by which a a transaction system in place
vendor’s consignments that includes a POS system.
are pre-checked for errors Industry analysts say this
and auto-approved before should be followed by

8. cover story
systems for merchandise management Web interface in one way or the other loyalty initiative can be launched
and customer relationships. Later, to reach out to current and potential with a far better understanding of the
they should invest in supply chain customers. Mobile-based solutions consumer-buying patterns.
and logistics management systems are expected to cut cost and increase National retail chains such as the
as well as business intelligence and efficiency of retailers but investment Future Group, the Landmark Group,
analytics software, thus completing on these technologies take a slightly Reliance Retail and other players
their technological upgradation. longer time to show actual returns. are extending their loyalty card
The need to adopt suitable In principle, the mobile customer programmes by adopting SMS-based
technology solutions is being driven engagement programmes are quite marketing campaigns. For example,
by business dynamics. Retailers simple – the mobile number of the Lifestyle chain of stores allows its
are using technology applications the customer is used as the main customers to accrue and redeem points
for managing loyalty programmes, customer key, leading to simplicity through a simple SMS without the
inventory management, supply chain of customer engagement. It enables need of physical cards. Apparel stores
management, security solutions, data uniquely identifying a customer, such as Chemistry and the beauty
repository and management, etc. to communicate with them easily and retail chain NewU have also adopted
get the basic technology infrastructure cost-effectively, and authenticate the same mobile mechanism, totally
in place. They are also beginning to while rewarding – the three most doing away with plastic loyalty cards.
move from card-based offline loyalty critical aspects of the customer Social networking is another
programmes to mobile-based real-time interface for any loyalty programme. medium which the Indian retailers
solutions since the cost of issuing By combining this with real-time are actively leveraging. They are
physical cards is going up. communication, mobile vouchers, and using online portals – exclusive or
point-of-purchase analytics, the simple otherwise – to reach out to their
mobile and social media concept of mobile engagement can targeted audiences, making them
The increasing popularity of mobile become a potent weapon for a retailer. feel special by offering deals based
phone technology and social media The most important aspect of using on an understanding of their unique
has revolutionised how retailers mobile CRM is to vastly increase the preferences. Retailers mostly use the
connect with customers for marketing customer base. According to research data generated through the customers’
their business. Industry watchers by the technology product company transaction history to make new offers
reckon about 20 percent of modern Capillary, most mobile-based CRM to them.
retailers in India are using mobile and
tech file
“We want everybody in our company to hook on to the
cloud and work from there. That’s our technology vision
for the next two years.”
– Vikrant Pal, GM, Business Improvement, Croma
programmes are able to sign up as Needless to say, this trend has
high as 80–90 percent of customers as spilled over into the mobile space as
against 10–15 percent in card-based well. For instance, if a shopper has the
programmes. The operating cost of Bluetooth functionality on his mobile
a card-less programme is close to phone turned on and he happens to
zero, cutting out the cost of cards, the walk around leading malls in Delhi,
effort in logistics and management, Mumbai or Bangalore, he would
Croma paper-based forms and data entry, automatically be “fed” promotional
Electronics retailer Croma has developed a relying on m-vouchers for gratification offers from individual stores in
customised port. Customer information fed and SMS/email for communication, the vicinity. As he walks up to the
into it on the point-of-sale flows to a business thereby generating massive ROI next floor, the offers would change
intelligence platform. The captured information on investments. It is also quite depending on the location and time of
pertaining to the customer is quite accurate environment friendly. the day. Some would argue that this is
because of the home delivery of products. The One of the key benefits of mobile an intrusive technology, but the fact
chain has a detailed data of its customers CRM is that a retailer can launch a remains that Indian retailers are now
numbering about 1.4 million. Its marketing
simple engagement scheme with data learning to intelligently target their
department has a dedicated person who keeps
mining data on a regular basis and looking at the
capture without a formal points-based customers using a variety of devices
psychographic and demographic positioning of the loyalty programme, such as a simple and solutions.
customers. Based on this, customer-engagement seasonal milestone programme. After
offers are generated. studying the programme for a few is technology expensive?
months, a well-modelled points-based Whether any IT solution appears
50 . images retail . july 2012

9. cover story
The technology available to the retailers is not expensive considering the return on investments it provides
expensive to a particular retailer Croma on its part is making
depends on the scale of his business. significant investments towards its
According to Sunil Pandkar, Head, technology spends. Says Pal: “We
Portfolio Management, Fujitsu spend close to .7 to .8 percent of our
Consulting India, if a retailer budget on information technology. On
chooses an IT application and the transformation projects such as new
corresponding hardware depending on initiatives and innovations, we spend
his scale of operations and the future close to .2 percent of our revenue
plans for expansion, and manages to every year on improvisation.” At the
strike a balance between these, he will end of the day, technology has to
get an excellent return on investment. subscribe and adapt to the unique
He explains: “Sometimes a small nature of the retailer’s business. But at
retailer goes for world-class IT the same time, to realise the benefits
solutions which are expensive. On of technology, retailers need a lot of
the other hand, many retailers who business discipline and operational
have got into a big scale of operations consistency.
often settle for low-end IT solutions Says Thomas of Fujitsu Consulting:
and products in certain areas due “In many cases, the expectations
to budget constraints. It is not only of a retailer from technology are
the question of understanding huge. We need to understand that
technology – it is also about matching doing a business like retail in India
the right technology with the scale is extremely complex because of
of the retailer. For retailers in India, the diverse demography. In many
the scale keeps increasing with time instances, particular businesses end
– that is what we have observed. up customising themselves to such
So we can say that the technology an extent that it becomes difficult
that is available to the retailer is not for technology to adapt to that kind
expensive considering the return on of complexity. That I feel is the
investments it provides.” biggest challenge when it comes to
July 2012 . images retail . 51

10. cover story
adopting technology for a retailer. into the store. We
In terms of the expectations of the want everybody
retailer, choosing the right technology to hook on to the
according to the scale of the business cloud and work
is crucial.” from there. That’s
our near-term vision
future in the technology
As far as the latest developments in space over the next
technology are concerned, a lot of two years.”
interest is being generated among Despite all the
Indian retailers for open-source challenges the
cloud-hosted solutions. When they Indian economy
expand rapidly, the cloud can provide is facing today,
them the ability to derive incremental industry experts
cost savings in terms of operations, feel modern retail The rising customer base is driving the adoption of technology by retailers
customer base and business division. in India is going to
Says Thomas of Fujitsu: “Open sustain itself and grow further, driven “This is a population with extremely
source has always been a favourite, by the billion-plus population of the complex demographic characteristics,
not only among Indians but also country. Technology adoption by so some of the buzzwords we are
retailers globally because of its cost- retailers will be governed by business hearing from retailers around the
effectiveness. We are seeing a lot of decisions that will cater to such a world include the term ‘big data.’
retailer interest in business solutions, huge number of customers. This is because a huge amount
of data is being churned out from
“Technology helps in minimising costs of a retailer while customers and operational activities
maintaining the maximum visibility and control of retail of retailers in India,” says Thomas
operations.” of Fujitsu Consulting. “The country
– Shijo Thomas, Industry Lead, Retail & CPG, Fujitsu is going to be an exciting case study
Consulting India for technology-intensive areas.
The reason is that the technology
play from ‘big data’ allows retailers
to rapidly make decisions on an
irrespective of the platform and the tech file extremely voluminous and complex
technology they are built on, because data. In a huge consumer base like
solutions ultimately provide value to India that is doing transactions across
the business division.” multiple locations and complex
Guha of Spencer’s says the demographic characteristics, retailers
company may deploy the warehouse need to quickly analyse the data and
management system (WMS) module take business decisions.”
of SAP’s ERP solution, leading to India would also see modern retail
better supply chain management at penetrating into tier II and III cities
all its stores in the near future. “We in a big way in the coming years.
may also adopt technologies such as The retailers would need technology
the HANA appliance software of SAP solutions to gain operational visibility
which aggregates huge amount of data at these locations, learning from
for very fast computing. We may also international retailers which use
upgrade our POS software platform Ethos technology more efficiently, resulting
leading to faster customer checkout at Swiss watch retailer Ethos, with its strong in healthy bottom lines and more
the POS counters,” he adds. customer focus, wanted a business solution to satisfied consumers.
Further technological upgradation integrate all its stores and processes acros India. Looking at the middle-class
seems to be the future agenda of The management also needed real-time access to growth and consumption patterns in
Croma as well which has identified critical information that could empower them to India, retailers here have a unique
technology as a major force multiplier. take informed decisions. To support effective and opportunity to embrace technology
Says Pal of Croma: “We are trying precise operations, Ethos was looking for single in an innovative manner, thereby
solution with modules for sale, purchase, finance,
initiatives in the field of mobile improving their services, increasing
and inventory so that all retail operations could
phones. We would want to give profitability and bracing themselves
be managed centrally. A company called LS Retail
customers flexibility of paying at the helped Ethos standardise process flows such as more effectively for the heightened
spot where he purchases a product. internal location transfers, serialise items, back competition once FDI in multi-brand
He need not walk to the cash counter. office control, and inventory look-up. retail opens up.
We don’t want to keep any hardware
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11. technology
Driving Efficiency Through
Supplier Collaboration
In a negotiation-oriented
relationship such as that
between a retailer and his
suppliers, a practical and
incremental collaboration
approach is required,
driven by business discipline
and aided by a flexible
technology platform. in
order to build a holistic
approach towards supplier
collaboration, a retailer
should take gradual
steps towards identifying
multiple collaboration
levels where each level
satisfies a definite business
objective
By Shijo Sunny Thomas
the retailer’s confidence at customer
checkout. Successful retail execution
depends immensely on a retailer’s
ability to complement the supplier’s
core capabilities with a timely and
decision-enabling insight into all
points of the product path within the
Successful retail execution depends on a retailer’s ability to complement the supplier’s core capabilities retail value chain.
The benefits of such collaboration
At a recently concluded gathering a baby step towards establishing an were traditionally perceived to be only
for retailers in India, those present initial level of trust and a precursor for the purchasing functions of a retail
were asked about the supplier to larger supplier engagements with organization. That is the reason why
collaboration initiatives taken in their a vision to increase revenues and most retailers look at collaboration
organizations. For many, supply chain market share. as an automated transmission of
collaboration implied automation In an execution-driven business purchase orders, delivery notes,
and dissemination of transactional such as retail, there are two invoices, etc. In order to build a
information to their supplier base. relationships that are sacrosanct with holistic approach towards supplier
For some, the collaboration efforts customers and suppliers. Customer collaboration, a retailer should take
were towards sharing sales and behavior towards a retailer’s product gradual steps towards identifying
stock dashboards. A common and service assortments represents multiple collaboration levels where
premise across many responses was the moment of truth for the retailer each level satisfies a definite business
that collaboration was equated to and is the result of an arduous retail objective. For some, the ideal levels
automation and was an initiative to planning and execution exercise. could be to first establish visibility
lower administrative costs. However, Suppliers in turn focus on product in certain business areas and then
for a large group of retailers, the innovation, pricing, branding and to increase profitability and demand
current levels of collaboration were timely shelf availability, thus boosting forecast accuracy.
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12. technology
In addition to the suppliers, Take the example of a large multi-pronged approach. The first is
equally important stakeholders health and beauty retailer which is to induce discipline into the supplier-
in the supply chain collaboration planning to organize a campaign for facing business functions and the
are the various departments of a its entire range of makeup products. second is to employ technology that
retail organization. The buying The campaign includes product subscribes to the discipline. This is
or sourcing function becomes the promotions in the form of discounts, easier said than done. More than
key stakeholder and owner of the additional loyalty points on purchase, often, retail organizations follow
supplier relationships. Supply chain in-store beauty services, special different processes for different
needs to be involved to maintain display units, etc. in stores. The buyer merchandise categories or geographic
discipline in inventory storage and sends out an email to all relevant regions. Some of these are warranted
movement throughout the chain suppliers on the impending campaign by the peculiar nature of each of the
from supplier to store or customer. and asks them to submit the range of merchandise categories. At the same
Finance has a role to play not only products and the applicable promotion time, there is a lot of opportunity to
for accurate payables but also for offers. All supplier-submitted streamline and define a consistency
supplier receivables in the form of promotions need to be circulated to to the processes across merchandise
claims. IT is needed to orchestrate marketing, store operations, supply categories and geographical regions.
Technology forms a collaboration-
enabling layer across a multitude of
retail business functions. Commencing
from a basic model making use
of emails and data templates,
retailers can establish transactional
communication for activities such
as item on-boarding, price updates,
and promotions. This approach will
work for smaller retailers with limited
merchandise categories with a shallow
depth of products supported by a few
suppliers. As the number of SKU’s,
suppliers and geographical footprint of
a retailer increase, it puts a strain on
the supply chain visibility and service
levels. This situation calls for a totally
different level of automation of the
retail processes.
Retailers have a plethora of
technology options available today
for supply chain collaboration. A
fundamental feature across these is
Retailers have a plethora of technology options available today for supply chain collaboration that the supplier-facing application
is integrated to inventory, finance
and merchandising data hosted
in order to drive collaboration within the enterprise within a retailer’s internal application
and with the suppliers, retailers need to adopt a multi- landscape. Suppliers can securely
pronged approach view and respond to information from
the retailer’s internal applications
all processes in the respective chain and the finance departments. using public applications such as
applications and is the enabler to The campaign needs to be executed, Web browsers. The integration of the
the business. Visual merchandising the stock shelved in stores on time, collaboration layer with a retailer’s
needs to be in the loop for display the sales lift monitored and supplier ERP is the most key, crucial and
units and space plans provided by the claims submitted along with the critical aspect of any IT initiative
suppliers, a feature which was once proof of sale for the hit on margins. towards supply chain collaboration.
the mainstay of fashion retail but And this is just one of the many The options available for integration
now can be seen even in consumer possible business functions where are many and should form a key
goods. In summary, the entire retail collaboration could drive profitability parameter while evaluating technology
organization needs to collaborate and efficiency within the retail chain. options for supplier collaboration.
alike, internally with each other and In order to drive collaboration Some retailers opt for custom
externally with the supplier base within the enterprise and with the portals where they gradually build
across various business functions. suppliers, retailers need to adopt a supplier facing functionality over
July 2012 . images retail . 61

13. technology
time which are designed to work consistency at a low TCO, minimum such as new product development
well on current processes. Addition administrative complexity and the and introduction, sharing range
of new business functions requires highest scalability. Every retailer’s attributes for suppliers to propose
a fresh dose of engineering. Often, business processes, organization assortments etc. Buying activities
changes in processes and integration structure and ERP application such as contracts, product information
require an element of re-engineering. are unique in nature. The best management, product price updates
There is also the option to use work collaboration layer will need to and supplier performance scorecards
flow platforms to build supplier adapt itself to these unique retail can be collaboration-enabled.
collaboration applications. Using requirements in the least possible Purchasing, distribution and payables
these, retailers can build specific time. Therefore, the most imperative are already the most technology
enabled area where retailers have
introduced technology to provide
visibility to suppliers into the
purchase to pay processes.
A growing interest is being
witnessed in enabling supplier
visibility into point-of-service areas
such as promotion effectiveness, sales
and stock reports, loyalty information,
etc. The technology option chosen by
the retailer should not be restricted
to a few business functions; instead
it should allow retailers to climb the
collaboration maturity ladder in the
shortest time.
At each rung of the collaboration
ladder, a retailer will need to
measure the impact of collaboration
on each of its business areas
through well-formulated KPI’s. For
the planning functions, demand
volatility can be address through
collaboration, resulting in predictive
replenishments. Supply chain lead
times can be improved leading
to faster time to market. Finance
The best collaboration layer needs to adapt to unique retail requirements in the least possible time can optimize the working capital
requirements by arresting revenue
processes and integrate them with leakages and optimizing payables.
their ERP applications. There are Supply chain Suppliers and the merchandising
some extremely robust and flexible collaboration is about department can collaborate to devise
platforms available in the industry moving from a “need- and implement more effective and
today for this purpose. profitable promotions.
to-know” visibility into
A third option that a retailer can In the end, supply chain
consider is the best-of-breed ERP
information to building collaboration is directed at creating
applications that offer supplier incremental trust across value for the customer. It is about
collaboration tools as extension to the retail value chain retailers and suppliers transitioning
the ERP application. These tools offer from a “need-to-know” visibility into
process coverage of business functions value that a retailer should demand, information to building incremental
in the planning and buying areas demonstrate and derive from trust across the retail value chain.
of retail which work well with the technology is whether it fits their
respective ERP applications. business and technology landscape
A point that retailers should keep and the time-frame required to do so. ABOUT THE AUTHOR
in mind while evaluating technology Process coverage is another Shijo Sunny Thomas is the
options to enable collaboration is important parameter. Retailers Industry Lead (Retail & CPG) at
that retail is not a process-intensive can induce collaboration across a Fujitsu Consulting India. He has
industry like banking and telecom. wide area of business functions. spent over nine years associated
The priority within the retail business In the planning area, retailers and with the consumer retail industry
is to bring visibility, control and suppliers can collaborate in areas in India and other geographies
62 . images retail . july 2012