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Empowering Retail SMEs & Offline Stores through LI in Emerging Countries
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AUTOMOTIVE
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AUTOMATION AND INSTRUMENTATION
CONSUMER - RETAIL
CHEMICALS AND MATERIALS
SCOPE
• Title in itself represents confluence of three economical dimensions: Retail SMEs, Location Intelligence & Emerging Countries
• Term Emerging Countries signifies the countries experiencing a transition phase on their economic growth trajectory to become Advanced Economies. Primarily composed of Asian & Latin American economies
• Retail SMEs denotes the small and mid-sized brick & mortar stores (including offline stores) having an employee strength below 1000 and dealing specifically in consumer goods
• Location Intelligence represents a form of Business Intelligence coupled with a geographical context to derive actionable insights
• Discovery, Analytics and Effectiveness forms the core of Location Intelligence
INTRODUCTION • A significant amount of data obtained through various sources has a geographical reference to it
• This sort of layering on data with respect to some geographic factor has been termed as Location Intelligence
• Irrespective of the scale of an enterprise and industry vertical, Location Intelligence can be implemented on various levels, viz:
1. Strategic Planning
2. Sales & Operations
3. Supply Chain
4. Marketing
5. Customer Service
• All these levels have various business associated attributes that can be enhanced with the assistance of Location Intelligence
RETAIL SCENARIO • Retail is a multi-trillion dollar sector in emerging economies with an year-on-year growth rate projected to
hover around 5%-7% over next five years
• A significant chunk of the market is attributed to unorganized sector that vary in its intensity across different countries
• India and China counted among the emerging economies having an unorganized retail share of more than 70%
• Foreign Investments along with Modern Retail formats (including Hypermarkets, Supermarkets & Convenience Stores) are expected to consolidate the market which in turn will bolster the growth of organized retail
• But the government liberalisation policies subjected to socio-political factors will create a vacuum while matching the reality with potential
• Also, the rapid increase in e-commerce platform to pose an imminent threat to conventional brick & mortar model, particularly in retail sector
782 539
3,920 2,507 2,184
11,739
-
5,000
10,000
15,000
Small Business Medium Business Large Enterprise
Re
ven
ue
($
M)
2015
2021
805 3,310
954 172 2,586
9,853
3,498 493
-
5,000
10,000
15,000
ConsultingServices
SystemIntegration
Services
ManagedServices
Others
Re
ven
ue
($
M)
2015
2021
3% 3% 8%
11%
54%
17%
4% Consumer
Banking, Financial Services, and Insurance
Travel
Real Estate
Transportation and Logistics
Manufacturing
Others
8%
15%
35%
25%
9%
5% 3% Sales and OperationalProfitability ManagementWorkforce Management
Facilities Management
Tracking and RouteMonitoringCustomer and MarketingManagementRisk Assesment/SituationalAwarenessOthers
Global LI & LA Market Revenue, By Organization Size, 2015, 2021 ($M) Global LI & LA Market Revenue, By Services, 2015, 2021 ($M)
Global LI & LA Market Revenue Share, By Industry, 2015 (%) Global LI & LA Market Revenue Share, By Application, 2015 (%)
Source: IndustryARC Analysis, Expert Insights
Source: IndustryARC Analysis, Expert Insights
2,515
838 1,677
210
6,901
3,943 4,765
822
-
2,000
4,000
6,000
8,000
Americas Asia- Pacific Europe RoWR
eve
nu
e (
$M
)
2015
2021
12%
10%
9%
7%
8% 7% 7%
2% 3%
3%
32%
Pitney BowesInc.Oracle
SAP SE
IBM
Caliper
Tibco
Galigeo
16%
13%
10%
9% 7% 3%
42%
Oracle
SAP
IBM
Microsoft
SAS
Teradata
Others
Business Analytics Software Revenue Share, By Vendor, 2015 (%)
Global Location Intelligence & Location Analytics Market Revenue Share, By Vendor, 2015 (%)
Global LI & LA Market Revenue, By Region, 2015, 2021 ($M)
268.3 319.2 389.9
505.1
743.3
974.7
1,340.7
0.0
500.0
1000.0
1500.0
2015 2016 2017 2018 2019 2020 2021
Re
ven
ue
($
M)
China: LI & LA Market Revenue, 2015 - 2021 ($M)
209.6 241.8 286.4 359.7
512.9
651.4
867.5
0.0
200.0
400.0
600.0
800.0
1000.0
2015 2016 2017 2018 2019 2020 2021
Re
ven
ue
($
M)
Japan: LI & LA Market Revenue, 2015 - 2021 ($M)
Singapore: LI & LA Market Revenue, 2015 - 2021 ($M) India: LI & LA Market Revenue, 2015 - 2021 ($M)
117.4 133.3 155.2 191.3
267.6
332.9
433.8
0.0
100.0
200.0
300.0
400.0
500.0
2015 2016 2017 2018 2019 2020 2021
Re
ven
ue
($
M)
100.6 128.3 167.1
229.6
356.8
492.2
709.8
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
2015 2016 2017 2018 2019 2020 2021
Re
ven
ue
($
M)
Source: IndustryARC Analysis, Expert Insights
GEOGRAPHIC CONTEXT • Irrespective of the share possessed by organized or unorganized sector, SMEs exists in both the spheres of
these sectors. And for emerging economies, such SMEs constitutes a major portion of retail market
Sales Marketing
Supply Chain
Operations
Location
Customer Services
• For each of these business aspects, Location Intelligence can be
utilized for different perspectives such as:
1. Demography & Consumer Behaviour
2. Supplier Tracking & Inventory Management
3. Market Structure
4. Targeted Marketing & Customer Experience
5. Operating Factors including wages, land cost etc.
IMPLEMENTATION • The geographical apprehension in a data is not limited to aforementioned contexts but rather can be
expanded to cover lurking possibilities
• Implementation of Location Intelligence (LI) tools with respect to consumer boils down to a single requirement: A Web and GIS enabled Smartphone
• And thankfully, the smartphone wave has swept across the emerging economies, particularly in urban and sub-urban centres while the rapid penetration of 4G services has augmented the possibilities for LI implementation further
• For SMEs, Location Intelligence implementation has two strategic perspectives: a) replicating large scale enterprises b) deriving a novel strategy addressing idiosyncratic nature
• Both of these perspectives need to be identified in accordance with the enterprise objectives while addressing the consumer demands effectively and efficiently
UNDERSTANDING DEMOGRAPHY • Demography mainly comprises of several personal attributes including age, gender, income, family size,
occupation class, educational qualifications etc.
• Whenever a retailer plans for a new location, aforementioned demographic factors forms the most important basis for location analysis
• The stakes for SMEs are generally higher, particularly operating in the organized sector. And hence, not only actionable but valuable insight is of paramount importance
• Location Intelligence with the aid of other BI tools provides ability to visualise spatial analysis considering demography of a focused region
• Location Intelligence as opposed to BI tools actually layer out the analysis on the map of an assessed region while offering real-time prospects
• Decision Makers are equipped with better capabilities by offering an equipoised context to data points-’Where’, ‘What’, ‘When’, ‘Who’ & ‘Why’
PERSONALIZED CUSTOMER EXPERIENCE
• A better understanding of demography will leverage LI implementation partially but maintaining a database of customers is the key to real transformation
• The existing retail industry is stirred by ‘Omni-Channel’ Strategy that intends to provide consumer a seamless experience involving multi-channel integration
• The concept of ‘Omni-Channel’ is responsible for providing customer with personalized experience, a novel approach to gain competitive edge. But the capital and operational expenditures put constraints on SMEs trying to enter this gimmick
• The viable option for SMEs operating in multiple locations is either utilization of location based service providers or a frequent collaboration with them
• The data offered by such service providers can assist SMEs in opting for either of the strategies: Contextual Targeting, Proximity Marketing & Couponing through the aid of retail beacons
MARKET STRUCTURE
• The Market Structure here signifies the market potential and competitive landscape as well as the factors impacting the sales of respective enterprise
• It is the most notable operational aspect of any business firm. Previously, BI tools supported the analysis of market landscape but with LI, a spatial context provides a better framework to analyse prevalent demand and competition
• A definite edge with LI results in identifying the location of competitors and associated analysis for their respective strategy. Although LI offers a suitable framework but creating a competitive analysis out of it is a highly subjective matter
• Demography has an obvious role to play in determining the market potential and demand but the true assessment is subjected to deep examination of macro and micro economic impacts on a particular region
• Both macro and micro economic policies have diversified impacts on a particular location. And with federal structure existing in different capacities among different emerging economies, it is the need of hour for SMEs to opt for a geospatial analysis to aptly evaluate the local market dynamics and underlying factors
CONCLUSION • The potential and implementation scalability of Location Intelligence in Emerging Economies for Retail
vertical is yet to be analysed in a befitting manner
• Owing to the current dynamics, some speculations can be provided in terms of growth drivers, challenges and future scenario
• The key challenge in existing conditions include Awareness. Countries like India, Mexico, China and few others are still trying to hold on to the technological bandwagon which has impacted the technical acumen of Gen-X, largest stakeholders of SMEs
• Another obvious challenge associated with this population category will be Overcoming their Reluctant Nature that detest Change & Far-Sighted gains
• But as governments in respective economies are trying to promote growth of organized retail either through advocating cashless transactions or increasing FDI cap; the retail chains from SME owners will witness a swift adoption of LI tools
• In the coming years, a considerable amount of unorganized players with optimal financial capabilities will also switch to some form of LI tools or at least techniques in order to provide a coherent customer services