Table of

Contents 1 Technology is the only lever to manage

change 4 Fallacies – Managing Myths

- My IT team can manage the deployments - Ambiguous ROI - Compromising security and loss of control on data over

cloud - Geared to handle social media and internet - Maintaining the front-end technology matters the most

11 Utopia – Glimpse into next generation retail

- Customer’s point-of-view - Retailer’s point of view - Expectations from ‘Next Generation Retail’

15 Research Findings – State of Technology readiness to take over opportunities

29 Be Aware, Act Now

1

Technology is the lever to

manage change

The pace of Indian consumerism is

fast changing gears and it is propelled

by important factors that augment

tantamount growth and equivalent

challenges for the retail industry. If

recent elections are to indicate any

change in how internet or rather social

networking over the internet is

impacting the decision making of the

netizens then businesses cannot

afford to ignore its impact and they

need to take the cognizance to

channelize this opportunity. In fact

researches indicate on how

technology has played a pivotal role in

not just arming the consumers with

the devices and infrastructure to

carry out shopping in multi-

dimensional manner but even how

consumer expectations and

behaviour is being modified with the

impetus of social networking.

Consumers have become fast,

collective opined, relatively impatient

and spoilt with choices. Amid this fast

evolving ecosystem, retailers are

challenged to delight customer and

mitigate their cost associated with

market and operations. Many

organized retailers are transforming

their existing operations and

introducing new formats to balance

their objective of expansion and

internal improvement that can provide

sustainable growth across various

customer touch-points over period of

next few years.

2

A closer look at the above PEST matrix

(Exhibit 1) encapsulates that while

factors emanating from Political,

Economic and Social are beyond

anyone’s control however, Technology

is the only enabler that gives control to

retailers to convert this combined threat

into opportunity. Viewing it from

perspective of Porter’s five force there is

a considerable need to amplify the

cutting edge technology at front-end that

can help retailers to know about their

customers and gauge the buyers’

sentiments through detailed analysis.

Further this real-time information should

be able to provide the action items that

not only help them cater to their target

segment but proactively analyze

customer needs and preferences for the

development of cost effective market

collaterals. In parallel, to avoid any

leakages from the operations and

supply chain they need to equally invest

into complementary back-end solutions

that does all the heavy lifting resulting

from the consumer pressure at the front-

end.

Coupled with competitive advantage

that technology provides to the

incumbents, an apt solution also serves

to manage the suppliers well resulting

into saving that can be invested back in

improvising customer experience. Retail

ecosystem has witnessed disruptive

technologies and has made possible for

consumers to engage through multiple

3

channels therefore, for retailers having

omni-channel presence and managing

various touch points become essential

as otherwise consumers may opt for an

alternate channel e.g. whether you have

on-line model, brick and mortar or hybrid

there is always a substitute for

consumer to transact and shop. Hence,

for negating the impact and for retaining

the customers, a sound technology

deployment is needed.

A quick snapshot of the retail industry

suggest above average market growth

in India that is being fuelled by favorable

demographics - a young and working

population, rising income levels,

urbanization and growing brand affinity.

India’s retail market, in 2014, was

estimated at US$580 billion and is

expected to grow at a CAGR of 13% to

reach around US$950 billion by 2018.

Organized retail is expected to clock a

19-20% p.a. growth to reach US $95

Billion. Traction from tier-II and III cities,

improvement in retail models and

operations, coupled with movement

from unorganized to organized trade are

acting as catalyst for this phenomenal

growth. The contribution of retail

industry on our economy remains

significant as it contributes around 14%

to the GDP and employs around 7% of

the total population.

3

4

Fallacies – Managing Myths In 2014, leading retailers on corporate level are emphasizing on financial profitability as

their top agenda while they continue to bat for store profitability, productivity

enhancement and better inventory management. The retailers are keeping major costs

such as logistics, supply chain and manpower in line with the revenue to ensure

profitable growth of the business. For retailers 2014-15 will be a year of balancing

growth and profitability. However, while they are clear on priority, much deliberation is

needed on how to achieve this golden equilibrium. There are few popular

misconceptions that should be busted in order to understand successful outcome.

FALLACY 1: Internal IT team is

competent enough to handle

technology deployments

It’s an ongoing endeavor for CXO’s

to get the best bang for the buck

when it comes to technology – few

concrete outcomes from technology

can really tilt the scale towards their

decision making and justify the

business case in front of the board

members. However, there is a

challenge in proving ROI for the

incremental deployments and any

lack of it would mean lag in

competitive advantage for the

organization even if significant

investments have been pumped.

Many retail organization in their

technological maturity curve will fit

under this chasm where it implies

stretching beyond means to justify

your investment. In the fast paced

5

ecosystem where competitive

advantage is the pivot to shift the

customers’ opinion, should retailers

risk the delay until any noteworthy

solutions are to be deployed? To

tackle this egg and chicken situation

retailers really need to start thinking

this as continuous investment and

leverage the expert technology

providers who are better trained due

to their multi-client experience in

highlighting the total economic gains.

Actual support from your provider

does not come from mere solution

deployment but in consulting with

them. It also gives you a chance to

know their specific domain expertise,

their knowledge and competency

around the best practices and

deployments. Many a time -

technology investments would not

give the desired yield simply

because the manager budgeted for

the solutions, but not as much on the

consulting and management

services that can prove to be fatal

leap. To increase the probability of

success, the first consideration

should be on the consulting and

management capability of your

technology vendor.

FALLACY 2: Ambiguous ROI from

technology deployments is my

concern

“If you can’t measure it, you can’t

manage it”- Is ascertaining ROI on the

technology deployment a chronic

concern? Answering the questions

pertaining to straight cost and returns in

monetary value is easy. However,

understanding effectiveness measures

can make it further complex by

involving activity cost and other

parameters, while efficiency questions

requires information on whether the

project will produce the greatest

possible value relative to its costs?

Establishing that a particular result is

the best of all possible outcomes

requires examining many alternatives

or simulating performance in some way

that gives a valid picture – your past

experience to handle deployments and

tracking them might have been a

triumph but whatever was successful in

the past might just turn out to be

mediocre in current times. Though

organizations have established KPIs to

show the impact but this can be made

fairly simple by letting your technology

partner assist in doing the same while

your organization can continue to focus

on its core competence.

6

FALLACY 3: On Cloud, security and

privacy of data is compromised due

to loss of control as data is sitting

outside my premises

Be it with on-premises or cloud network,

no one can provide 100% security to

your data. However, contrary to notions

cloud provides better security as it’s

segmented and have encrypted

environment. Since resources in cloud

are generally distributed over many

servers, hence the multi—location has

a structured and planned protection

with reasonable level of security

compared to putting it out on a single

storage point. If there are any further

concerns then an on-premises back-up

system for super critical data can be

established to handle any eventuality.

Further if any iota about ‘loss of control’

was true then the growth in the

deployments over cloud would have

never been a reality and business

models of technology giants would

have crashed three years back. In

many ways, over cloud you have more

control even beside data because the

service, platform or infrastructure is

standardized and controllable through

APIs. The fears are true only to an

extent of losing control over the

software versions being upgraded by

service provider (for cost

effectiveness). It’s worth taking an

inventory of the fears to weight it

against any opportunity cost that

organization might be incurring. As the

cloud gets more popular and

companies start getting more mileage

in terms of economic benefits, unfound

fear would be a smaller barrier. The rest

of the common fears about the cloud

are really the same fears we face about

any new technology.

Giving up control of IT infrastructure or

services can be a big shift in the

mindsets of the organizations. But it is

like, companies should stopped

producing their own electricity and start

buying it as a service, technology is

best when used to aid business

impacting decisions and only then the

true power of cloud will be beneficial.

7

Here (Exhibit 2) are

interesting trends from the

recent survey done on 213 IT

executives from leading firms

across globe that further

revealed:

38% are indifferent as to

whether their supply chain

management and

procurement applications were run in the public or private cloud up from 24%

previous year.

Another 34% report they don’t care if their ERP or financial suite comes from public

or private clouds – up from 18% last year.

34% say where their BI or analytics services comes from isn’t important, up from 18%

last year.

Fallacy 4: We are geared to capitalize on social media and internet

A potent cocktail of internet, devices,

e-commerce infrastructure and

social media platform is changing

customer landscape faster than

anyone can anticipate, that’s not just

changing the consumer’s

expectations but also their buying

decisions. To match the exponential

pace of user generated intelligence

and its impact on the business,

organizations need to gather all its

resources to capitalize this

opportunity. Worldwide trends from

one of the research shows, and India

being no different - that today digital

customer spends around average of

4 hours a day online, more than 70%

start their buying process with a web

search, more than 50% seek reviews

and suggestions from their network,

and more than 60% expect access to

customer service within 60 seconds!

Astounding as it may sound, more

than 50% customers expect support

through social network channels,

failure of which results in around

15% customer churn.

8

Exhibit 3 sums up few

trends that would

continue to fuel the

growth of digital

customers and why

retailers need to watch

out for these

compelling factors.

Digital customers are

more prevalent and

probable to interact

through multiple

channels or are rather

omni-channel users

and they have choice to engage

across any contact point (like kiosk,

store, web or mobile), the retailers

across the globe are feeling

challenged to manage their

expectations and conduit this

growing opportunity, failure of which

is leading to mediocre customer

experience and attrition. Exhibit 4

shows up some revelation from a

research study on retailers, the

need-gap and expectations of omni-

channel customers. Therefore, for

retailers being mindful and

9

controlling the investments into

technology would turn out to be

more profitable than doing the

business in conventional way. If

retailers want to capture these

futuristic shoppers, they must align

their catchment areas to create a

personalized shopping experience

that transcends across different

channels. As may be true with Indian

landscape the readiness of retailers

to handle omni-channel customers is

lower than the global average hence,

retailers must step up the pace on

this front and monetize social

networking.

Fallacy 5: Front-end solutions and customer touch point matters the most

Front-end optimizations are the low

hanging fruit because they are

relatively straightforward to

implement and secure the top-line. It

is very important in the ever

changing consumer landscape to

have a robust front-end so that

retailers can engage and increase

their yield per customer. However,

equally crucial is to have a strong

back-end performance since it deals

in the world of exponents. Especially

for infrastructure related

dependencies while user load

increases linearly, the inefficiency of

the system will increase

exponentially and would look like a

‘Hockey stick’ (Exhibit 5) thus,

resulting into high turn-around time

for the organization that can mean

losing opportunities and customer

base.

While the organization diligently

plans to balance the customer

centric solutions both on front-end

and back-end, there is also a need to

take employee factor into

cognizance as BYOD culture

becomes increasingly popular. While

organizations should give access to

employees on its network but they

should be equally alert about any

10

susceptible areas whose efficiency might be compromised including customer data that

can have a long-lasting impact to the business.

Array of solutions can be deployed when addressing security for BYOD, from device

level (MDM) security to containerized app specific MAM technology. Your mobile

backend security strategy also needs to ensure that appropriate security and integrity is

in place before the data reaches the app. Hence, it is necessary for retailers to look at

things from the backend perspective that will allow them to address these requirements,

and with the support of an experienced vendor this can be managed effectively whether

your data resides in the captive data center or in cloud. The policy of BYOD for internal

employees also tend to complement with the investments made to manage the

customer devices that might create load on the infrastructure but in return provide good

customer experience. So while the retailers work on addressing device and app security

for the external customers and employees (BYOD strategy), they also need to make

sure that they do not leave their backend exposed resulting into pilferage of bottom line.

10

11

Utopia – Glimpse into

Next generation retail

Customer’s point-of-view

Ria stops at her favourite clothing

store to pick up a new outfit for her

dinner party at the weekend. Details

of Ria are available with the store

when she enrolled in their Loyalty

program, allowing the customer

kiosk at the front door to sense her

mobile phone as she enters the store

and pass her frequent shopping card

information to the store system.

Since all store executives carry a

mobile tablet, the system sends an

alert to all executives to flag Ria’s

arrival, along with her historical

interactions highlighting her

preferences. Her favourite floor

executive is alerted about Ria being

in the store, she immediately presses

a key on her mobile device to notify

all other store executives that she will

be attending her. Through the kiosk

information, executive is quickly able

to locate Ria to extend a personal

greeting. This CRM system coupled

with data analytics on a mobile

device is able help store staff to know

about their high value customers.

Ria heads to the dressing room with

her selected clothes. She likes the

skirt she is trying on, but needs it in

another size and colour. Through the

interactive RFID-enabled mirror

installed in the room, Ria can press

the display on the mirror and is able

to check the current inventory for

available sizes, colours and

complementing pieces. The retailer

is committed to present Ria with all

the appropriate choices that are

currently in the store and available

for purchase — RFID-enabled

12

shelves and racks in the store

provides real-time information into all

inventory in the store. Ria selects

three items she would like to see

from inventory via user friendly check

boxes, and with a press of a button

sends the message to the floor

executive. The executive receives an

alert on her mobile device, and

notices Ria’s request for the items.

She locates two of three garments

quickly, but the third item does not

seem to be on the allocated rack. At

the press of a few buttons on a

handheld RFID reader, the floor

executive is able to locate misplaced

garment within seconds. Kudos to

RFID technology, the executive is

able to deliver the items right to Ria’s

dressing room — Ria is happy since

she does not have to re-dress and

search the floor for the items. Ria

decides to buy selected items but

would like one of the garments in a

different colour, which she is unable

to locate in her size at the store. She

speaks to the floor executive, who

scans the bar code on the item with

a mobile computer. As the store has

integrated inventory management

system hence floor executive can

access real-time inventory for all

stores and quickly locates the item —

in another store. Store associate

mobile device is also outfitted with a

magnetic stripe reader and

electronic signature capture, so she

swips Ria’s credit card and collects

her signature on the display of the

mobile computer after promising for

overnight shipment delivery to her

home. The electronic receipt is sent

to Ria’s e-mail ID and the entire

transaction is complete on the spot.

The end result - Ria enjoys the

benefits of a amalgamated brick-

and-mortar and online store. She got

the touch and feel experience that

can only happen in the physical

brick-and-mortar store and at the

same time, she enjoys convenient

one-swipe purchasing with the same

delivery service she expects from

online stores. This enhances Ria’s

experience with her favourite retail

outlet as she enjoys the seamless

transaction.

13

Retailer’s point-of-view

The technology that enables

differentiating customer experience

also complements many operational

business objectives. The RFID-

enabled dressing room tracks the

items that are carried in and out of

the dressing room thus, maintaining

the log and also keeping ‘shrinkage’

in check. While the handheld RFID

reader is used to locate the missing

item that can enable a complete

inventory of the entire store stock in

minutes as otherwise this data could

take many days to compile. From

tightly integrated CRM and Inventory

management systems that provides

real- time information, retailer get

visibility into stock movements

(indicating buying patterns of the

customers) based on which they can

manage their shelf better and make

quick decisions to replenish the

required inventory thus reducing the

undesired investments.

The benefits of real-time inventory

dovetail with the supply chain

effectiveness in the form of more

prompt and refined orders thus,

allowing retailers to better manage

their suppliers and fine tuning the

manufacturing schedules. The back-

end RFID enabled warehouse

management system makes sure

that material /stock movement is

optimally distributed between

different stores as per the logged

requests. This results in short

turnaround time thereby, reducing

loss of opportunity and minimizing

the cost of logistics. Since orders can

be fulfilled more rapidly, retailers can

enjoy more inventory turns: smaller

orders can be placed more

frequently, allowing the retailer to

maintain an optimum stocks at store

and yet respond instantly to

consumer buying trends and

patterns. From this neat integration

of technology enable systems,

consumers enjoy a consistently

great selection of merchandise that

will increase the likelihood of a return

visit in future.

14

Expectations from ‘Next Generation Retail’

Fulfilling the expectations and

providing a consistent ground breaking

experience to customer can be taxing,

if not backed up by an appropriate

technological solution set. To get

proper grasp we need to look at the

factors (Exhibit 6) revealed through a

research that highlights the customer

pain-points while visiting retail outlets.

In another observation, Indian

customers were researched about

what characteristics do they attribute to

‘Next-Generation Retailer'. Three

factors were formulated (namely

technology, innovative format and

customer centricity) with the mix of 14

different variables. The findings

highlight the top 5 characteristics

(marked below) that they associate

with the next generation retail wherein

at two places technology plays an

active role and at others it becomes an

enabler.

1. Must Exceed Customer

Expectations (Customer centricity)

2. Must have Electronic Billing

(Technology)

3. Should have attractive visual

merchandizing (Innovative format)

4. Speedier Processing at the store

and delivery (Technology)

5. Providing rich customer

experience (Customer centricity)

Like stated at the beginning of the

report, out of 4 factors of PEST

(political, economic, social and

technological), only technology is the

factor that help retailers control or

manage other three factors to their

advantage hence, next generation

retailers should get hands-on with

the high impacting technology by

acquiring reliable service provider.

15

15

Research Findings - State of Technology readiness to take over opportunities

From the research, majority of retailers seem to be positive about the economic situations

over the next year and apparently macro situation does not seem to be a cause of

concern. Around 95% of them are optimistic about the economy while 5% believe that it

would be status quo and would not bear any significant impact on the retail industry.

However, at business level

23% of them feel threatened by

low cost producer who might

win away the market share.

Similarly 23% showed concern

about increasing impact of

customer mobility and the

readiness to engage with them

across multiple channels. 20%

of the IT heads also realize that

they need to invest more

resources on honing the skills

Losing share to lower–cost

producers23%

Customer mobility (across

various channels like PC, mobile,

offline, etc)23%

Lack of qualified

workforce20%

Disruptive technologies

(Mobile, Apps, Cloud, etc)

17%

Lack of investment in

sufficient technology

17%

Biggest threats to retailers business model

16

of their team while 17% believe that their business model might get impacted by

disruptive technologies that has been the trend of late. Remaining are of the view that if

proper technology investment are not sanctioned by the management then it might

reduce their competitive advantage thus, posing risk to their business model over the

horizon of 1-2 years.

In spite of the challenges that retailers

foresee, 68% agree that their business

will increase by 20% Y-o-Y or more while

18% have confidence that the customer

share would increase between 19%-11%

and 14% of them expect customer base

to increase just between 6%~10% over

next year.

17

Retailers are leveraging technology in

different areas for strategic advantage

and decision making. A quick look

through various solution sets reveal

that almost everyone in the organized

retail industry use logistics and supply

solutions for cost saving and bringing

the efficiency. Augmented by

operations management solutions,

logistics and supply forms the back

bone of the retail operations and 95%

of the respondents tend to agree with

this fact. While 95% of the IT heads

also agreed solutions revolving

around customer insights are useful in

strategic decision making. In-store

customer experience solutions (WiFi,

billing, etc) and portfolio rationalization

solutions have some way to go to be

accepted for strategic utilization and

around 11% and 24% technology

heads have stated that their

organizations does not use them for

strategic use.

65%

83%

90%

94%

95%

95%

100%

24%

11%

10%

6%

5%

5%

PORTFOLIO RATIONALIZATION

IN-STORE CUSTOMER EXPERIENCE

PRICING DECISION

INVENTORY MANAGEMENT

OPERATIONS MANAGEMENT

CUSTOMER INSIGHTS

LOGISTICS AND SUPPLY

Areas in which retailers use Technology for strategic advantage and decision making

Yes No

18

There is a cross pollination of phenomena like social networking, having bearing on

almost all the other areas of businesses. 77% of respondents state that Social Media is

having ‘High’ impact on the retail business while 18% and 5% agree of moderate impact

and low impact respectively. Around 55% agree that Omni-channel availability is having

high impact on retail while the study also reveals that at the moment cloud and employee

mobility is not having relatively high impact or at least retailers does not agree much to it.

This highlights that in own way and wisdom, every retailer of repute is recognizing the

threats and risks resulting into different kinds of cost and they feel compelled to put a

mechanism in place that can bring more efficiency and effectiveness in their organization.

19%

21%

30%

55%

77%

31%

47%

40%

35%

18%

50%

26%

25%

10%

5%

EMPLOYEE MOBILITY (BYOD)

CLOUD DEPLOYMENTS

USE OF IN-STORE MOBILE TECHNOLOGY

MULTI-CHANNEL SHOPPING & PAYMENTS

SOCIAL NETWORKING

Degree of impact by recent phenomena on retail business

High Moderate Low

19

All the efforts boils down to revenue and share and retail industry is no different. However

due to highly diverse market and large base of informed customers, it becomes

mandatory that retailers focus on retaining customers for high yield and in parallel

implement mechanism to add new customers. Focus on customer experience would

further augment the efforts of retailers to increase the customer stickiness. All the three

top factors are directly stitched to the immediate customer growth thereby increasing the

revenue however, it is also

important that retailers should

start realizing the priority and

worth of back-end solution, lack

of which can actually result in

loss of customer opportunity.

While discussing around the biggest restraint that retailers foresee for growth of their

business, it is ‘Lack of qualified workforce’, be it in the area of shop floor to handle

customers or employees harnessing the available technology. Few research have

highlighted that customers are thoroughly informed and they carry out research over the

net before coming to the stores. Usually they are better informed on the products and

other substitutes hence, retailer are under pressure to be continuously train their

workforce. Moreover, it is also challenging for retailers to retain the trained workforce as

they relatively have low exit barrier. Other restraints like process cost and compliance

regulations can be clubbed together since in absence of benchmarked technology that

helps managing them, there can be a void for implementing better processes leading to

compliance issues or least even recognizing them. Due to absence of a credible service

provider retailers also grapple with technology and it’s ROI. Retail companies must avoid

or overcome these barriers by

being alert, by hiring a reliable

technology partners who can

knows the nuances and can

recommend them the appropriate

benchmarks.

20

During the discussion on the factors impacting profit margins of the retail businesses over

the next year, all the respondents agreed that the cost of inputs are to be managed

effectively. This can be understood from the demand and supply perspective i.e. when

there is a demand by the efficient retailers in the ecosystem the suppliers have options

to easily liquidate and they do not feel pressurized for returns and over-stocking. The cost

saving processes and technology helps retailers and suppliers mitigate the risk and

unevenness associated with the supply. In this kind of market place where the

competition is geared with robust supply chain management solutions, situations can

become challenging for relatively ‘not so efficient’ retailers who do not access to

benchmarked processes and technology to manage their supply chain thus, leading to

increase in cost of goods. This eventually means that they would not be able to pass

benefits to the customers or they will be forced to cut cost and would not be in a position

to train their workforce hence, resulting in low performance both on customer and

employee front.

Therefore, managing cost of goods is essential to avoid customer attrition that is the

second biggest concern for

retailers that might impact the

profit margins.

Amid the Omni-channel

environment, in absence of

customer insights and their buying habits, the aggregate cost or marketing cost starting

from transferring goods to the customers, storing in warehouse pending deliveries or

promoting the products can go up tremendously. It would be difficult to manage the

inventory carrying cost as retailers are not in position to optimize their stocks and adjust

to variations in market demand.

Marketing cost and administrative cost rank as fourth and fifth concerns that retailers

want to alleviate through the appropriate technology solutions.

21

Having measure and control in place to mitigate the cost associated with processes or

risks has been on the mind of the IT leaders. During discussion, 70% of the respondents

agreed that they have supply chain management strategy in place to manage the cost

associated with back-end. Similarly 45% have put a plan to secure selling, general and

administrative cost while 25% agree that they have also considered outsourcing or

changing their model to cloud or shared services.

25%

45%

70%

RE-VISITING SERVICE DELIVERY MODELS (OFFSHORING/SHARED SERVICES/CLOUD)

OPTIMIZING SG&A AND FRONT-END SOLUTIONS

SUPPLY CHAIN COSTS AND BACK-END SOLUTIONS

Strategy that retailers have implemented to combat costs

22

Growth and Plan for IT spend in 2014-15

Aggregation of survey respondents reveals that only 8% of the organized retailers have

1:1 PC Employee ratio and overall investment in Technology is growing at an average of

30% Y-o-Y. Nearly 59% of the respondents agree that around 64% of their IT investment

would be made at improving back-end support through the deployments of supply chain

management system. 55% of the respondents agree that they will spend 6% of their

budget on infrastructure and 5% on CRM solutions over the course of 2014-15.

In absolute monetary terms IT companies would spend less on Security without

compromising on its quality by availing the solutions over cloud and hence the

optimization in the budget.

% split of IT investments

in 2014

% of retailers planning to invest in specific technology solutions

Data Analytics Solutions

SCM Solutions

CRM Solutions

Infrastructure (Data Centre, etc.)

Network & Network Applications

Warehouse Management Solutions

Security Solutions

Inventory Management Solutions

Unified Communications, etc.

64 %

59 %

55 %

50 %

45 %

41 %

36%

9 %

64 %

6 %

5 %

4 %

3 %

3 %

3 %

2 %

1 %

55 %

2 %

23

Impact of technology on overall organizational objectives

High majority of respondents unanimously agree that all the below listed technologies will

make a positive impact on their businesses. Some difference of opinion gets reflected for

CRM, Inventory Management and data analytics solutions where respondents did not get

satisfactory outcome as expected from these solutions in their set-up.

Respondents also agree that Inventory Management and CRM solutions followed by

SCM solutions has the highest impact on their business while unified communication has

moderate or little bearing on their business objectives.

Impact of Technological Solutions on Retailers

(Positive/Negative/Not Sure)

Degree of impact on overall organizational objectives (High / Moderate /Low)

95%

91%

90%

95%

5%

18% 82%

9%

5%

38%

44% 44% 11%

50%

53%

Data Analytics Solutions

SCM Solutions

CRM Solutions

Network & Network Apps.

Security Solutions

Inventory Mgmt. Soln.

Unified Communications

Warehouse Mgmt. Soln.

Infrastructure (DC, etc.)

9%

73% 27%

59%

73%

91%

95%

9%

32%

18%

9%

5%

5%

68%

70%

32%

15% 15%

57% 5%

90% 5% 5%

37% 53% 11%

39% 11%

29% 18%

47% 47% 7%

24

With the advent of digital customers, front-end solutions have been the priority for

retailers within which billing solutions occupies the top position on priority list with 90% of

IT heads agreeing that it has ‘high’ impact followed by other technologies pertaining to

in-store solutions like RFID racks, Wifi, etc. Digital customers come through varying

routes and more than 90% of retailers agree that e-commerce and mobile commerce

would be the call of the day having ‘high to moderate’ impact on retail businesses.

Supply chain management occupies the top priority among the array of back-end

solutions retailers wanting to deploy. Around 90% respondents agree that it would have

a high impact on cost saving and keeping the bottom-line healthy. Along with that

warehouse management solutions apparently have ‘high’ cost saving impact and that is

resonated by 72% of retailers, followed by customer relationship management system

that is echoed by 70% respondents. Unified communications has not been able to

convince and qualify under the same league for its cost saving capabilities and hence

53% consider it to have ‘moderate’ impact and only 13% opine for its ‘high’ impact.

13%

72%

90%

70%

53%

28%

10%

30%

33%COLLABORATION (VIDEO/AUDIO CALLING)

WAREHOUSE MANAGEMENT SOLUTIONS

SUPPLY CHAIN MANAGEMENT SOLUTIONS

CRM SOLUTIONS

Degree of impact from back-end solutions on retail

High Moderate Low

47%

60%

67%

90%

47%

35%

29%

10%

6%

5%

5%

MOBILE COMMERCE

E-COMMERCE

IN-STORE SOLUTIONS

BILLING SOLUTIONS (POINT OF SALE SOLN.)

Degree of impact from front-end solutions on retail

High Moderate Low

25

Only 24% respondents have confidently stated that they their organization has ‘high’ IT

maturity for the deployment and usage of front-end solution. Meaning they have

successfully mapped and optimized processes that are tied to their business metrics and

performance. More than 70% of IT leads qualify their IT set-up between ‘high to average’

maturity level, meaning that they have a mix of optimized and ad-hoc processes that can

be further improvised by engaging with experienced vendor and using industry

benchmarks. While 4% of them

assess their organization’s IT maturity

to be just ‘average’ implying that there

is tremendous scope for growth to

systemize the deployment and usage

of front end solutions that can

accelerate their business and provide

better customer share and increased

revenue.

Compared to front-end solutions, companies appear to be more confident on their IT

maturity for back-end deployments as 36% of the respondents report their organizations

to be in ‘high’ zone. More than 46% respondents asses their maturity for deployment

between ‘high to average’. Many retailers (around 18%) seem to have acknowledge that

lot of improvisation is needed in shortest possible time for them to scale up their IT

maturity. They need to leverage expert

service providers who bring in multi-

client experience and can recommend

appropriate technologies and

benchmarked processes. This would

help them leap the entire cycle of

starting from scratch and be business

ready.

24%

72%

4%

Percieved IT maturity by retailers for front-end

High High~Avg Avg

36%

46%

18%

Percieved IT maturity by retailers for back-end

High High~Avg Avg

26

Retailers on Cloud technology

IT Heads in retail organizations who plan to shift their IT spend on solutions hosted in

cloud, they would prioritize CRM deployments followed by data analytics and

Infrastructure. Apparently moving warehouse management, security and unified

communications solutions over cloud would be low priority areas.

Retailers see clear business reasons to deploy solutions on cloud, 55% of them believe

that it will provide them better management without worrying too much over their non-

core area while 50% of them acknowledge that it will help them save cost and 27% agree

that moving the deployment over cloud would help them improve their turn-around time

and manage their supplier-customer better.

It will provide better mgmt. for soln., services,

platform or network

It will reduce cost

It will change our interactions with suppliers &

customers

It will accelerate time to market

It will fundamentally change our business

model

55%

50%

27%

23%

14%

27

For the year 2014-15, around one-third of retailers are considering the cloud based

solutions with highest uptake around CRM followed by Inventory management and data

analytics solutions and around 45%, 44% and 70% IT heads tend to agree to this fact,

respectively. Hence, their IT spend for these areas has reduced and now they can

allocate the same resources to other critical applications. On the other hand security

solutions uptake would be on-premises for securing legacy data along with newer devices

and solutions. With the exception of CRM, IT heads’ plan is tilted towards on-premises

deployments. SCM stands out and would continue to be ‘High’ focus area with around

81% retailers agreeing on the same out of which 63% plan to deploy it on-premises and

remaining 37% would go for cloud deployment. Data analytics solution and Infrastructure

with around 70% and 57% retailers respectively suggesting the next ‘High’ focus areas

where again they would consider on-premises arrangement over cloud.

Planned model of deployment

(Cloud / On-Premise)

Focus areas of IT Spend

(High / Low /No Spend)

Warehouse Mgmt. Soln.

9%

CRM Solutions

Inventory Management Soln.

Data Analytics Soln.

Unified Communications

Security Soln.

SCM Soln.

Infrastructure (Data Centre, etc.)

45%

23%

14%

6%

10%

70%

54%

33% 20%

57% 36% 7%

13%

27% 73%

Network & Network Apps.

40%

44% 39% 17%

24%

81%

23%

47%

25% 63%

38% 62%

57%

77%

71%

67%

63%

57%

77%

86%

43%

43%

37%

33%

29%

23%

23%

14%

28

Top concerns regarding cloud offering are reliability, security and loss of control. Nearly

73% acknowledge reliability of the vendor as a ‘High’ concern, for 18% this is a ‘Low’

challenge while 9% do not consider this as a concern at all. Second biggest challenge is

around security of data wherein almost 68% agree to this fact and rate it as ‘High’, 27%

rate it as ‘Low’ and 5% as not a significant factor. Mind-set of Indian retailers seem to be

grappled with the next common concern evident in the industry i.e. Loss of Control where

almost 50% IT Heads tend to agree and term it as ‘High’ concern area, 36% as ‘Low’ and

14% does not consider this as a challenge any more. It is apparent through research that

clear cut cost benefit of cloud is not a popular value proposition perceived by IT heads

as 52% seem to consider it in a ‘Low’ bracket, see under ROI. Study also highlights an

encouraging trends that Cloud in retail industry is not being perceived as a threat for the

IT team and organizations are open-minded to accept it as a next model.

Degree of concerns (High / Low/ Not a concern)

43%

Reliability of the vendor

Security Concerns

Compliance Issues

Standardization & Integration Challenges

Legacy On-premise assets and solutions

Ambiguity on ROI

Impact on the present team / headcount

Culture and change management

Will change the fundamental business

model of org.

73% 18% 9%

68% 27% 5%

50% 36% 14%

43% 43% 14%

38% 29% 33%

19% 52% 29%

48%

7% 36% 57%

5% 35% 60%

41% 41% 18%

10%

List of Concerns for cloud deployment

Loss of Control on Data

29

29

Be Aware, Act Now… Consumer industries and retailers operate in hyper competitive environments, catering

to consumers who are smart, critical and more informed. While it provides immense

opportunity for retailers to monetize the voluminous customer segments, it comes with its

own set of challenges that continues to grow in speed, volume, and complexity.

Implementing best technology to harness the process and organizational objectives

would provide more sustainable action plan. This report after assessing the business

priorities and technology readiness of retail industry calls for some main GO DO actions:

Be aware of your own limitations

Make bigger ripples with fewer pebbles… A visionary CTO / IT Lead

should be candid on their team’s capability and capacity. Since for

your organisation you have better visibility over business priorities,

market situation and technological readiness therefore, you should

challenge the status quo and explore the methods for better ROI or

even determine if you are getting the best bang for the buck.

Leverage the expertise of technology services provider by not just

roping them for solutions’ deployment but to consult and maintain the

systems as well i.e. end-to-end. Or rather with the cloud computing

becoming norm in many domains, save the capital investments and

outsource selectively. Focus on the core areas of technology that can

bring both sizable transformational and transactional changes. After

all, technology deployment is not a one-time obligation but an on-

going commitment. This will make justifying the IT investments easier

along with availability of benchmarked processes and solutions.

Be aware of the competition

Your loss is competitor’s gain… Onus of bringing accountability in

the back-end processes and helping them to transcend to the

1

2

30

business model through technology would result in quick time to

market and mitigate any opportunity cost. Choosing an apt model

(e.g. cloud), scalable back-end infrastructure, optimum solution sets

around SCM, warehouse management or inventory management

would provide a competitive advantage. Hence, hallmark of the next

generation retailer would not only be better customer facing

solutions and transaction point but a robust and complementing

back-end system that is able to handle fast changing and ever

growing front load.

Be aware of the consumer landscape

Time is money – couldn’t be more true when you are a CTO and your

business demands stupendous agility in order to tap market

opportunities and consumer shifts. As stated earlier in this report

there are new evolving dimensions in ecosystem with consumers

becoming active on multiple channels and choosing to engage at will

- ranging from kiosks to stores, website and over social networking

sites. They expect consistent experience across channels. For

retailers, success is not just being measured by revenue and share

but also by sustainable customer experience that eventually leads to

exponential increase in business over a longer time that otherwise is

an opportunity cost.

Apart from orchestrating technology charter, it becomes important

that you lead the customer centricity philosophy for your organization

and enable it through the apt service provider. Actually technology is

incidental, you need to look out for a service-cum-consulting partner

who brings value from their multi-client experience and closely

calibrated solutions. This will help the organization to pro-actively

gauge the consumer sentiments and adjust the processes, business

model and employee training with urgency. Technology response

and its readiness would be leading indicators of any retailer’s

success in coming times.

3

31

Report compiled by: Cornerstone Research & Consulting

References

1. Paige research

2. Next-Generation Retailing In India: An Empirical Study Using Factor Analysis published in International Review of Management and

Marketing Vol. 1, No. 2, 2011, pp. 25-35, ISSN: 2146-4405

3. Pulse of Indian Retail Market – A survey of CFOs in the Indian retail sector, March 2014 by E&Y and RAI.

4. Omni-channel Shoppers -Synchronizing channels to transcend boundaries between online and off; RIS news.com, August 2013.

5. The next revolution in retail technology – whitepaper by Motorola, etc

Disclaimer

The information held in this publication is for general purposes and guidance only and does not purport to constitute legal or professional

advice. These materials are subject to change without notice and are collection from primary and secondary research conducted on behalf of

BT and available through public sources across domains, reports and research. No guarantee is provided on the accuracy on the findings of

the primary research or information used from secondary sources. Appropriate References have been provided with no intention of making

claims on the data, images or text. BT and its affiliated companies or its partners and vendors may be referred for informational purposes

only, without representation or warranty of any kind, and BT shall not be liable for errors or omissions with respect to the materials or

references. Nothing herein should be construed as constituting any warranty. The views and opinions from the survey findings are those of

the survey respondents and do not necessarily represent the views and opinions of BT, RAI or Cornerstone Research & Consulting.

None of BT, its member firms, or its and their respective affiliates, partners or vendors shall be responsible for any loss whatsoever sustained by any person who relies on this material.

© Copyright of this reports lies with BT and RAI (Retailers Association of India) and, any unauthorized reproduction or

distribution of copyrighted work is illegal. Criminal copyright infringement, including infringement without monetary gain, is investigated by the government and is punishable.