a		a

Contrary to the entire hullabaloo regarding security threats, sales of consumer goods via the Internet are on a brisk growth track and expected to constitute 5.5 per cent of all retail transactions in the US in 2005, says the annual Forrester Research and Shop.org study. Retailers reported 23.8 per cent increase in on-line sales last year and 20 per cent of the in-store purchases as being influenced by information found on the Web. Profitability also improved, with online retailers reporting operating margins of 28 per cent, up from 21 per cent in 2003.

More encouraging is the fact that Women are driving Internet sales, and so categories with products they purchase will probably see the biggest sales growth this year, as per NRF estimates.

There are reports of a new shopping complex in Ohio (USA), called Epicenter, which will try to combine the convenience of online stores with the hands-on experience of browsing at a mall.

Scheduled to open in Columbus at the Polaris Fashion Place by end-2006, the complex nucleus will consist of two parts -- the Buypod, a hand-held electronic device, and electronic kiosks located throughout the mall. Customers will enter the mall and register their credit card information, which will then be put into their Buypods, and as they browse merchandise, they can use the instrument to scan the labels of items they want to buy.

PC penetration is rapidly picking up in India. “Currently pegged at 3 million units per annum, the Indian PC market virtually up for grabs, with a potential size of about 8 million in the next two years,” says Ajai Chowdhry, chairman & CEO of HCL Infosystems. As broadband Internet access becomes more common, it will play an increasingly critical role in the development of retail uses for Bluetooth technology, thereby improving customer communication. At a more basic level, though, high-speed Internet access will help retailers cut training costs by more efficiently delivering in-store training to disparate locations.

With higher Internet speeds on the way, research is focusing on what IBM futurist Dan Hopping terms as “human-centric research and information delivery.” This includes things like natural-language processing and semantic-based voice recognition that could improve the way people and computers interact. “This whole idea of human-centric is where you help the associate help the consumer in the store, so software development around that concept is going to be a huge deal,” assures Hopping.

Retail IT: The Global Scenario

IT has become an indispensable part of the Retail industry. Despite this realisation, Retailers continue to spend just about 2 per cent on IT, much lower than in other industries, says the Retail CIO Outlook'04. It is this low level of IT spending that continues to leave retailers patching and fixing aging systems and finally ending up frustrated when they set out to work closer with their trading partners or try to bring new services to their customers. The Retail CIO Outlook study findings indicate that:

• Competitive intensity is increasing
• Change is continuous
• Financial pressures are unforgiving
• Unpredictable threats are a reality

There has been a modest, though significant growth in global Retail IT spending in 2004, to the tune of USD77.6 billion as compared to USD33.9 billion the previous year and is expected to be higher in the current year. This, it is contended, is mainly on account of emphasis on the futuristic RFID technology mandate by some of the leading global players. Spending in 2003 was clouded by uncertainties of war, major corporate failures and financial market instability, but post-2003 the sentiments have improved.

When a group of leading US retailers were asked to rank a set of six key business drivers as reasons behind the decision to upgrade their point-of-sale technology, 45 per cent, 41 per cent and 40 per cent of retailers respectively stated attracting new customers, speeding up customer checkout and reducing cost as the primary reason in 2003 whereas gaining better reliability and integration with other sales channels were the more important reasons a year back, when the new technology applications were yet to be tested. For instance, among food, drug, and mass retailers, 70 per cent chose employee productivity as their top driver, and customer satisfaction was a distant second with 48 per cent responses.

Of late, IT spending in the retail industry has not increased as significantly in the rest of the industries, the last major initiative being the invention of bar code scanners. But the heat is on once again. Increased competition among global retailers for gaining new territories outside of their home turf has also increased the pressure to continue to realize cost savings from supply chain efficiencies while improving customer service. This, in turn, has forced retailers to accelerate their technology investments.

Of the contemporary technologies in retail, Self-checkout is one of the many kiosk-style applications becoming increasingly popular, especially in convenience stores where touch screens allow consumers to purchase food items, coffee and other specials. This is part of an effort to draw gasoline customers inside the store – a daunting challenge since the advent of pay at the pump.

Another technology making an impact is dynamic merchandising, which pairs high-speed Internet connections with large plasma video screens for the almost-instant customisation of marketing and merchandising efforts. Department stores are using it to promote sales and seasonal specials, while quick-service restaurants (QSRs) use it to change menus between breakfast and lunch, and to provide customers with more information. “Today, if a marketing group wants to change what's being highlighted, it takes them six months to change the posters and get them out to the stores; but with dynamic marketing, they can make it happen in less than five minutes, changing the messaging in response to customers or competitors,” says Dan Hopping.

Wal-Mart is credited for having pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. The retailer introduced two innovative logistics techniques – cross-docking and electronic data interchange. Such is the usage of these applications that today we find retailers like JC Penny transmitting a minimum of 500 gigabytes of data every day via satellite from its 1,200 point-of-sales counters to its corporate headquarters.

“The scope of amalgamation of IT and Retail is huge, in fact very huge, as information technology can be manifested in almost all the areas of a retail set-up,” says George Zacharias, president and CEO, Sify. Citing the reasons for this, he explains: “Taking the example of Wal-Mart, if there is a sale taking place of a pair of Levi's jeans at 10 o'clock, there will be a replenishment at 10:05 for the simple reason that data processing at the store is very fast and that helps in efficient inventory management.” In the field of application technology, he exudes much faith on the relevance of “data transfer via video and voice” with the help of IPVPN (Inter Protocol Virtual Private Network) as it has a great deal of usage. “It is fast and helps in faster processing and transition of customer and product data,” he says.