a		a

If technology in retail was like a genie in the fabled lamp of Alladdin, then we as consumers would never be able to ask it to go back into the lamp, because we are so dependent on it as retailers and consumers. Just how automated is retail likely to become? In the first part of a projection, Sanjay Sachdeva tries to look into the retail crystal ball...

Scene 2010

Mrs.Chopra drives into a plush shopping mall in New Delhi and parks her car in the basement, only to find a smart cart next to her car. She wheels her cart and as she touches the hand rail of her cart the biometric reader recognises her and greets her through the monitor: “Good Morning, Mrs. Chopra!”

From her past visits, the wireless computer which is connected to the main frame, recognises her and remembers her past shopping patterns and preferences. It starts showing her on the screen what are the specials for the day or any special offers running or any new products in the categories where she usually shops.

She even takes the help of the computer on the cart to guide her through the maze of new products available in so many aisles, thereby saving a lot of time. On her way out, she does not have to stand in a long-drawn queue at the cash counter, but just rolls out her cart through a smart scanner that scans her entire purchases in one go. Then she gets he credit card scanned and all the amounts of her purchase are debited to her card. Finally, she wheels the trolley back to her car.

Store of the Future

Today, customer-centric retailers worldwide are increasingly banking on technology, not people, to gain an advantage in the marketplace, and with many companies in various fields in retail introducing Radio Frequency Identification technology (RFID), the chase is on to make it happen.

In a relentlessly competitive retail environment, particularly in the US and Europe, the goal is to identify key customers, what these customers want, and to have what they want in stock and on store shelves as soon as it is made. Cutting the down time between the product selling from the shelves and the time taken to replenish it and also to get a new product on to the shelves as soon as possible, is heavily dependent on technology today.

For some, the implementation is on now, but for others, it may be decades away. But Indian chains will have to adapt quickly as prototype technologies reshape retail in the next five to ten years. Though there are a few people in India who have already started implementing the technologies that are new. A case in point is the Adora jewellery brand – one of the fastest growing diamond jewellery brands in India. They already have 160 outlets and are projected to grow to over 300 in the next 18 months. Not only have they successfully implemented a very extensive ERP technology covering manufacturing, supply chain management, but also to a great extent have been successful in installing customer-friendly touch screen terminals with wireless internet at many of their shop-in-shops.

Managing Director Prabir Chatterjee claims that, “This technology is being used for the first time by a jewellery brand in the retail industry and will cut down the time between selection of a product by a customer and delivery to him from the current three weeks to 72 hours.”

The customer can access from any of the 5,000-odd designs available in ready stock at any of the outlets in India. Upon confirmation of the order, the piece will be shipped to the ordering outlet within 24 hours, thereby making over 5,000 products available to the customer at the touch of a button even though the stocking at each outlet may not be more than 300 pieces.

"The new technologies will decisively contribute to changing the image of today's retailing business. Soon, they will play an important role in communication between suppliers, retailers and their customers," forecasts Hans-Joachim Koerber, chairman and CEO of the Metro group.

How Does This New Technology Work, and Where?

The concept is based upon the use of RFID along the entire retail supply chain. "An intelligent tag" that utilises a miniature computer chip and antenna is attached to the product and transport package. It is similar to more conventional barcodes. In fact, it is expected that it will eventually replace barcodes. Right now, it is expensive for some applications, but it provides the manufacturer and retailer with important product information.

For retailers, the technology optimises tracking of merchandise, minimising losses and maximising product management. For consumers, it means fewer out-of-stock situations on shelves and quicker checks of a product's expiry date.

What Will It Look Like Tomorrow??

In the Store of the Future, RFID wireless technology is being tested mainly for supply chain management. It can track the movement of goods to the warehouse, to the store, and replenishment of goods on "intelligent shelves" in the store. RFID technology is also the key to other applications in the Store of the Future.

For the moment, only individual, stand-alone applications of innovative technologies have been implemented at retail. In the future, the plan is to link a variety of these technologies to provide a more sophisticated package.

There are several basic interactive areas in the Store of the Future. For instance, when the customer checks in using a card that is issued to regular customers, a user-friendly computer on the shopping cart greets the customer by name and becomes the shopper's Personal Shopping Assistant (PSA).

The computer displays information and prices when customers scan the product barcode over the built-in reading device. It also provides information about special promotions, directs customers to products they usually buy, keeps a running total of the shopping bill, and facilitates checkout (since customers have already scanned purchases). The card, which is also a loyalty card, automatically enters customers into the store's bonus system.

Information terminals are also set up for various merchandise groups to offer details about the products. In food stores, it might offer recipes. An "intelligent scale" not only identifies the product, but also weighs it and emits a price slip. Electronic advertising displays are placed near the merchandise to which they apply. And "smart shelves" stocked with RFID-tagged products communicate with store personnel so that they are rarely empty.

Virtual sales could enable customers to feel the silk of a new dress or smell the aroma of freshly ground coffee when they are sitting in front of their TVs or computers at home, areas where retailers see sales increasingly being made.

Check Out

Every retail experience ends with some version of checkout. The Store of the Future checkout requires no unloading of the cart (because everything in the cart has already been scanned). Customers check themselves out (passing a RFID security check and a RFID deactivator to ease exit).

Behind the technology, inventory management is the basic building block from the retailer's perspective. A mobile assistant/personal digital assistant helps employees help customers. An inventory count is available by just pushing a button. And smart shelves prevent out-of-stock situations or misplaced items. There is also the promise of future supply chains that interact, that can track shipments from the producer to stores equipped with this new technology. Once in the store, it can track the flow of merchandise from stockroom to store shelf to customer checkout.

Not so far into the future, it may be possible to customise products that are, today, mass produced, and to have those products delivered when and where customers need them.

The exponential growth of the Internet makes this vision more realistic than it was a few years ago. About 71 million people born between 1979 and 2002 are coming of shopping age and are very comfortable with technology, in many cases more so than members of immediately preceding generations.

"The net result will be tremendous efficiency and visibility across the retail supply chain, as well as an enhanced customer experience," says John Davies, vice president of Intel's solutions’ market development group.

Cart-level and pilot-level applications will be visible in five years; significant use of wireless tagging will take seven years or more, says David Hogan, CIO, National Retail Federation. "Widespread adoption by retailers will depend on how fast the price of the RFID technology comes down,” he says.

Tags now cost about Rs.12 to Rs.15 each but time and widespread use should bring the cost down to a few paisa.

Technology has been used extensively in retail banking, servicing the needs of the consumers across the nation. Imagine not having the online banking system – you could only withdraw money from your branch via a cheque instead of the smart ATM card that enables you to do multiple transactions at any point in the world even though your account may be in a small branch in New Delhi!

This has also changed the face of the stock trading, retail trading in stocks and shares and the financial and equity markets by making so much available. Can we afford therefore to stay away from technology in retail?

It is after all the point where the customer actually touches and feels the heart of the final usage of technology and makes life so much simpler.

The Art and Science of Retailing

While many continue to believe that retailing is an art, US-based studies are trying to bring the business into the realm of scientific investigation. While some researchers opine that retailers are the last to imbibe the latest management concepts, retail firms are in the forefront in the adoption of emerging technologies – considering their successful forays into electronic commerce. Many brick-and-mortar businesses have been working hard to upgrade themselves to click-and-mortar ones.

As the firm launches its own unique ways of doing business for staying ahead of the competition, management researchers have been forced to subscribe to the modern retailing mantra: One-size-does-not-fit-all!

This viewpoint is duly reflected in Paco Underhill's book, 'Why We Buy', wherein the author observes:

"Darwin went about measuring the length of birds' beaks, which is pretty small work even by our standards. But from his studies came a fundamental shift in our theories about living things and why they thrive or fail. Darwin's main finding sounds like common sense, too - that successful organisms are the ones that best adapt to their environment. In stores, something similar happens, except that in retailing it's the environment that must adapt to the organism."

Future IT Trends and Benefits for Retailers

The hardware and software tools that have now become almost essential for retailing can be into three broad categories.

Systems that affect the customer directly

• Bar coding and scanners

Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.

• Payment

Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored and image of the cheque, which makes the process very fast.

• Internet

Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store.

Retail Operation Control Systems

• Retail exchanges

Various retail exchanges have been set up in the US and in Europe. One of them is the World Wide Retail Exchange, which enables retailers to interact with vendors and with other retailers for B2B transactions. Such exchanges help in reducing transaction costs. They need to be set up in India, too.

• ERP Systems

Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better.

Retail ERP packages

In the future there would be a need to evaluate if retail ERP packages like JDA, SAP, and Retek are suitable for Indian retailers. These products have an integrated solution for demand forecasting, merchandising, replenishments, supply chain, etc. Most of these packages have built-in CRM, OLAP tools, collaborative planning and supply chain systems that are tightly integrated with the merchandising and forecasting functionality. Though the flip side is that these packages are costly, the return on investment takes longer and expertise to implement the systems is gradually being developed in India. Hence, it would be a good idea to evaluate these packages, determine the cost-benefit analysis, and wherever possible, source the software from one vendor organisation that would provide all the functional requirements of the retailer from an information technology perspective.

The Indian experience in implementing Retail ERPs has been difficult due to the lack of trained ERP package implementers in India. Hence, the cost of implementation has gone up, as package experts have to be brought in from abroad. But this is true for all ERP implementation in India, whether in the retail sector or in the manufacturing sector. In the past, manufacturing industries also faced difficulties in implementing ERP packages specifically meant for the industry, but over time, with expertise in the packages and in their implementation building up within India, the success rates of such implementations have increased. Hence, over the next two to three years, Retail ERP expertise will grow and will be able to support the needs of Indian retailers, who in that timeframe would have progressed up the learning curve on the benefits of information technology.

But one has to learn where to draw the line and cannot go on with adapting new technologies which sometimes may not be cost effective solutions.

At the same time, growth is rapidly evolving and change is the only thing that is constant. If we in Indian retail business don't adapt ourselves with the changing times we will be left way behind in another day and age.