It In Retail

Submitted to: - Submitted by:-

Prof. Srinivasan Jigar Mehta

Roll no:-21

PGDM-RM.

I.T. in Retail

Retail in India

Organized retailing is a decade old industry in India with an overall market share of 3 percent. Currently, the estimated total sales of organized retailers are Rs.175 billion. The sector has witnessed robust growth during the last two years which could mainly be attributed to the establishment of international quality formats modified to suit the Indian purchase behavior; entry of several domestic and international players; development of retail-specific properties; improvement in retail processes and turnaround in operations of some existing retailers.

This growth in organized retail is being driven by a number of structural, social, and demographic and macroeconomic factors as well. The increasing globalization of the Indian economy has led to growing exposure to foreign markets resulting in increasing demand for international shopping experience in India.

Availability of credit cards, increased 'lifestyle spending' and higher mobility due to increase in car / scooter owning families for whom shopping also becomes a family outing, have also helped in driving the growth of organized retailing in India.

The Indian retailing industry has been witnessing some exciting developments.

Some of such key developments are as follows:

* Emergence of Region-Specific Formats: With organized retail penetrating beyond metros, the retail industry has witnessed the emergence of stores with different sizes and formats. To illustrate, within the departmental stores' format, there are different sizes for metros and different for other cities.

* Emergence of Discount Formats: Larger discount formats are now emerging as major competitors to both unorganized and organized retailers. This has resulted on account of penetration of organized retail into the lower strata of income groups and consumer demand for increased value-for-money.

* Entry of International Players: Over the years, a number of well-known international brands have capitalized on the opportunities available in the sector by executing licensing agreements with Indian players.

* Development of malls: The establishment of malls has increased dramatically and funds for such products are being earmarked for non -metros as well.

* Improvement in Retail Operating Efficiencies: Existing retail players are taking steps to improve the internal operations of their businesses and are implementing ERP and planning support systems.

* Improving Profitability and Retail Revenues: Most of the retail players in the country are experiencing improved profitability, which is also expected to improve their credit profile in the industry.

Major retail players having prominence in the organized retail market include Shopper's Stop Limited, Pantaloon Retail (India) Limited, Trent Limited etc. The retail industry is poised for expansive growth over the next few years. The industry is in an investment mode and requires substantial funds for expansion and growth.

With global players knocking at the door, waiting for the government to open up the floodgates, all the big Indian organized retail companies are feeling the heat. The fight is now not between Big organized retail stores (3%) and Unorganized Kirana Shops (97%), but it's between global giants like Wal-Mart, Tesco and Shopper's Stop, Pantaloons.

So what could the Indian counterparts do? The Indian government can't really protect the Indian retail firms for long. It has been very clear after the current WTO conference, that FDI's would be allowed in the Indian retail sector. The issues before the government of India are in what phases they would allow FDI in India. Would they open up the retail sector totally or would they follow China's path of allowing FDI flow in phases, providing enough time for domestic players to be globally competitive. So whatever may be the procedure of FDI flow in Indian retail industry, the domestic players have to be competent enough to sustain against the global giants. They should try to leverage their know-how of Indian consumer behavior over the new global entrants. They definitely have better distribution channels and network as of now, and it would take time for the global entrants to implement the whole supply chain and distribution network effectively.

But what are these domestic companies afraid of? Is it the product portfolio, the prices or the quality of goods or service? Above everything else the greatest fear is the scale of their operations and the new age technologies used by the global giants. The global retail giants like Wal-Mart, Tesco, k-Mart operate in such a scale that reduce their cost of procurement of goods and they are able to transfer these low cost advantages to the end consumers by providing them goods at cheaper price. But it is not how cheap they are selling their goods for but how they are achieving this kind of low cost leadership, that need to be understood. If we look into their operations in a holistic manner we will see that all the cost savings these global giants could achieve, may be in procurement, supply chain, distribution, retention of customers, reducing least expenses per customers per sale, is been achieved though optimum use of technology and IT.

So in this paper we will discuss what are the different technologies that could be implemented in retail industry from Indian point of view, what are their advantages, and how can Indian retail players make them globally competitive by the use of these technology in their operations that will help them to sustain competitive advantage against the onslaught of the global players entering in India.