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INDUSTRY & SERVICES
 
RETAILING
OverviewThe attitudinal shift of the Indian consumer in terms of "Choice Preference", "Value for Money" and the emergence of organised retail formats have transformed the face of Retailing in India. With a growth over 20 percent per annum over the last 5 years,organised retailing is projected to reach US$ 23 Billion by 2010.The Indian retail industry though predominantly fragmented through the owner -run "Mom and Pop outlets" has been witnessing the emergence of a few medium sized IndianRetail chains, namely Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (TataGroup) and Lifestyle International.Given the attractiveness of the Indian retail sector, foreign retailers like Wal-Mart,Carrefour SA, Europe's largest retailer and Tesco Plc, the UK's largest retailer, were keento enter this growing market, despite the Indian retail sector being closed to foreign directinvestment (FDI).In the last few years, Indians have gone through a dramatic transformation in lifestyle bymoving from traditional spending on food, groceries and clothing to lifestyle categoriesthat deliver better quality and taste. Modern retailing satisfies rising demand for suchgoods and services with many players entering the bandwagon in an attempt to tapgreater opportunities.The Growth DriversThe Indian Retail growth can be attributed to the several factors including
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Demography Dynamics: Approximately 60 per cent of Indian population below30 years of age.
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Double Incomes: Increasing instances of Double Incomes in most familiescoupled with the rise in spending power.
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Plastic Revolution: Increasing use of credit cards for categories relating toApparel, Consumer Durable Goods, Food and Grocery etc.
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Urbanisation: increased urbanisation has led to higher customer density areas thusenabling retailers to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale.
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Covering distances has become easier: with increased automobile penetration andan overall improvement in the transportation infrastructure, covering distances has become easier than before. Now a customer can travel miles to reach a particular shop, if he or she sees value in shopping from a particular location.Technology in Retail
 
Over the years as the consumer demand increased and the retailers geared up to meet thisincrease, technology evolved rapidly to support this growth. The hardware and softwaretools that have now become almost essential for retailing can be into 3 broad categories.
Customer Interfacing Systems
 
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Bar Coding and ScannersPoint 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. TunnelScanning is a new concept where the consumer pushes the full shopping cartthrough an electronic gate to the point of sale. In a matter of seconds, the items inthe cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.
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PaymentPayment through credit cards has become quite widespread and this enables a fastand easy payment process. Electronic cheque conversion, a recent development inthis area, processes a cheque electronically by transmitting transactioninformation to the retailer and consumer's bank. Rather than manually process acheque, the retailer voids it and hands it back to the consumer along with areceipt, having digitally captured and stored the image of the cheque, whichmakes the process very fast.
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InternetInternet is also rapidly evolving as a customer interface, removing the need of aconsumer physically visiting the store.
Operation Support Systems
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ERP SystemVarious ERP vendors have developed retail-specific systems which help inintegrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps theretailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better.
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CRM SystemsThe rise of loyalty programs, mail order and the Internet has provided retailerswith real access to consumer data. Data warehousing & mining technologiesoffers retailers the tools they need to make sense of their consumer data and apply
 
it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers totheir businesses.
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Advanced Planning and Scheduling SystemsAPS systems can provide improved control across the supply chain, all the wayfrom raw material suppliers right through to the retail shelf. These APS packagescomplement existing (but often limited) ERP packages. They enable consolidationof activities such as long term budgeting, monthly forecasting, weekly factoryscheduling and daily distribution scheduling into one overall planning processusing a single set of data.Leading manufactures, distributors and retailers and considering APS packagessuch as those from i2, Manugistics, Bann, MerciaLincs and Stirling-Douglas.
Strategic Decision Support Systems
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Store Site LocationDemographics and buying patterns of residents of an area can be used to comparevarious possible sites for opening new stores. Today, software packages arehelping retailers not only in their locational decisions but in decisions regardingstore sizing and floor-spaces as well.
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Visual MerchandisingThe decision on how to place & stack items in a store is no more taken on the gutfeel of the store manager. A larger number of visual merchandising tools areavailable to him to evaluate the impact of his stacking options. The SPACEMANStore Suit from AC Neilsen and ModaCAD are example of products helping inmodeling a retail store design.Investment Opportunities
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Potential For Investment: The total estimated Investment Opportunity in the retailsector is around US$ 5-6 Billion in the Next five years.
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Location: with modern retail formats having made their foray into the top citiesnamely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai,Bangalore, Delhi, Nagpur there exists tremendous potential in two tier towns over the next 5 years.
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Sectors with High Growth Potential: Certain segments that promise a high growth
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