What''s in store?

Large retail outlets will move to a centralised, network-based processing architecture to over come challenges like limited visibility into the supply chain and store operations; time-consuming business processes, restricted customer information, and little collaboration between store sites.

Imagine you have some last minute Diwali shopping to complete and walk into your favorite city mall. You are greeted with a huge bustling crowd of shoppers, but in typical Murphy's Law style, you misplace your shopping list and end up picking out the most expensive gift item currently on display.

Now imagine another scenario (year 2010) — you again have some last minute Diwali shopping and walk into your favourite mall. You are expecting the usual crowds but wait, what do you see? Once you're in the store, managers with wireless handheld devices are controlling the crowd and changing floor layouts to ensure a smooth customer traffic flow. Wireless shelf tags, and web-enabled terminals give you real-time information about in-store promotions and you end up getting some really good bargains.

If you're thinking these conjured images sound more sci-fi rather than scenes from the store of the future, you are totally off the mark.

While current deployments are nowhere half as sophisticated as these examples, leading retail outlets will eventually move to a centralised, network-based processing architecture that takes advantage of high-speed broadband connections to survive and thrive in the future.

Independent studies already show that the majority of retailers plan to build or upgrade to broadband networks by 2005 to address the challenges that they are facing. These challenges include limited visibility into the supply chain and store operations; time-consuming business processes, restricted customer information, and little collaboration between store sites.

The broadband infrastructure is expected to lay the groundwork for multi-channel sales expansion and growth, creating in the process an agile, service-centric retail operation.

With over 12-million retail outlets of all sizes and styles, India is one of the biggest retail markets world-wide. This, notwithstanding the fact that the sector is still largely underdeveloped — of the Rs900,000 crore Indian retail industry, organised retail accounts for a paltry two per cent! (Source: Enam Securities Research Report)

Taking a step back to thus assess the potential of the Indian market, let's understand at what stage India currently is in the retail evolution cycle. There are four distinct phases through which retail passes in its evolution cycle. In the first phase new entrants create awareness of modern formats and raise consumer expectations.

In the second phase consumers demand a modern format as the market develops – thereby leading to strong growth. The third phase sees a maturing market and as the market consolidates, intense competition forces retailers to invest in back-end operating efficiency. And in the fourth phase retailers explore new markets as well as inorganic opportunities as growth tapers.

Today, India is at the cusp of the first and second phase, with the modern retailing format having emerged centre stage. The growing preference of the affluent and upper middle classes for shopping at these types of retail stores, given the conveniences they offer such as shopping ambience, variety and a single-point source for purchases have been the driving factors behind this transformation.

From supermarkets such as Big Bazaar or Foodworld, which are large self-service stores selling a variety of products at discounted prices to malls and department stores such as Crossroads, Lifestyle and Westside, the Indian consumer is fast catching up with his / her global counterpart.

As per a survey by Euromonitor on the retail industry in India (March 2004), there were only 14 companies that ran department stores in the country and two with hypermarkets. While the number of businesses operating supermarkets was higher (385 in 2003), most of these had only one outlet.

Inevitably, modernisation of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, department stores and hypermarkets. And with this increased competition, retailers will look at various opportunities to maximise customer satisfaction. These will include initiatives to streamline internal back end costs so as to translate savings onto customers, maximising mind share in a cluttered market and delivering the best in store experience. Keeping these deliverables in mind, some of the key modules that the store of the future will look to implement will include:

Store Connectivity: Stores will invest in building wide-area networks (WANs) and virtual private networks (VPNs) to access information across various sites. With visibility into every resource, stores will take advantage of up-to-the-minute data at the right time for increased strategic flexibility and informed decision-making.

Widely regarded as the key defining technology to hit the retail sector, RFID tags on each piece of merchandise will enable companies to monitor their inventory at a more detailed level than ever before. Executives will identify when problems occur by monitoring signal readers installed at key junctures, such as loading docks, receiving points, distribution centres, backrooms and store shelves. These readers in turn will be networked to a centralised monitoring system that would give companies information they could never imagine with current operations, allowing them to identify problems as shop lifting, inventory management, and even "gray market" sales that can erode profits and damage distribution relationships.

Store Mobility: Stores will use wireless technologies at the point of sale for faster checkout and real-time product information in the store to improve operations, and throughout the supply chain to reduce costs.

IP Communications: Stores will converge their data and voice systems, providing instant communication throughout stores at significantly reduced costs.

The Store as a Medium: With the average time any buyer spends in the department store estimated to be under 48 minutes, the challenges presented by this rapidly moving audience will encourage retailers to look for new ways to attract and interact with customers throughout the store. Stores will thus leverage off IP technologies to deliver dynamic content such as in-store broadcasting and digital signage to create new revenue-generating advertising as well as accelerating brand awareness and customised messaging. The same platform will also be used to support cross branch employee training and productivity.

In conclusion, suffice to say that faced with legacy technologies and a rapidly changing environment, today's retailers will most definitively look for the most effective way to simplify operations, control costs, and build for the future. With networks that will improve store operations, mobile, telephony communications, and collaborative technologies that will increase productivity and in-store broadcasting that will revolutionise the shopping experience, the Indian consumer has a lot that's in store.

* The author is senior vice president-enterprise, Cisco Systems, (India & SAARC) Pvt. Ltd.