mayank dwivedi
TRANSCRIPT
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RESEARCH PROJECT REPORT(MBA-413)
ONA Study of Role of Information Technology in Organized Retail
Management
Submitted in Partial Fulfillment of
Master of Business Administration
Programme: (2007-09)
OfUttar Pradesh Technical University, Luck now
Under the supervision of: Submitted by:
Anant Kr Srivastava Mayank Dwivedi
M.B.A. Department Roll no. 0701470025
S.R.M.S.C.E.T., Bareilly M.B.A.- IV Sem
FACULTY OF MANAGEMENT SCIENCE
Sri Ram Murti Smarak College of Engineering &
Technology, Bareilly.
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DECLARATION
This project has been undertaken as a partial fulfillment of the requirement
for the award of the degree of Masters of Business Administration of Uttar
Pradesh Technical University, Lucknow.
The project was executed after the third semester under the supervision of
Mr. Anant Kr. Srivastava (SRMS CET, Bareilly)
Further I declare that this project is my original work and the analysis and
finding are for academic purpose only. This project has not been presented
in any seminar or submitted elsewhere for the award of any Degree or
Diploma.
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ACKNOWLEDGEMENT
Much of my work to make this report would not have been possible without
the constant guidance and support of certain key-people.
I extend my sincere gratitude to Prof. S.P. Gupta for giving me an
opportunity to explore myself and in-depth knowledge.
I would like to express my deep-felt appreciation and gratitude to Mr.
Anant Kr. Srivastava, for his continuous support and benevolence he has
bestowed on me.
I would like to express my deep-felt appreciation and gratitude to IT Head of
Big Bazzar(Kanpur) Mr. Jitendra, IT Head Of Pantaloon Retail Ltd.
(Kanpur) Mr.Rohit Khanna & IT Head of Vishal Mega Mart(Bareilly)
Mr. Ovaish Khan & Mr. Rahul Mishra.
I would like to thanks Mr. Saurabh Pandey(Network Administrator HBTI-
Kanpur),because he help me in understanding the various aspects of IT
services are provided by retailers.
Thanks Mayank Dwivedi
Date IVth semester
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Chapter-5 Findings,Limitations & Recommendations
Bibliography-
Annexure
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A Study of the Role
of IT in Organized
Retail Management
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Chapter 1
Introduction
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As India surges high with its growth story, the retail sectorin the country is
bound to come across opportunities like never before. Till a few years back,
the retail sector in India was more of an unorganized one with petty vendors
dominating the chunk of the industry but now the scenario has fast been
changing. Finally, the sector is converting into what we call as organized
retailing.
Not only Indian corporate majors like Reliance, ITC and Pantaloon have
entered into the segment but more and more foreign players are also
showing interest in USD 350 billion Indian retail markets.
Today, we turn around and find huge shopping malls and multiplexes all the
way. Perhaps thats why the retail revolution is said to be spearheading the
real estate boom in India.
1.1-The retail sector boom
While the Indian real estate markets boom with organized retailing, the
segment ensures a fluffy growth pad for itself. According to the estimations
of KSA-Technopark, a retail consulting and research firm, organized
retailing in India will grow three-fold in the next 3-years, achieving the size
of USD 21.5 billion from the current one of USD 7.5 billion.
http://www.indianground.com/retail/retail-sector-in-india.aspxhttp://www.indianground.com/http://www.indianground.com/http://www.indianground.com/retail/retail-sector-in-india.aspx -
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Given the favourable growth patterns, expanding middle class and easing
economic policies, India is ranked as the most attractive emerging markets
for retail investment, even above Russia and China.
1.2-Growth Drivers
The Indian middle class
The growth story ofIndian retail sectoris based primarily on its huge middle
class. According to a study undertaken by the National Council for Applied
Economic Research (NCAER) The Growing Indian Middle Class, the
upper middle and high-income urban households in India will touch 3.8
crore by 2007 (from 1.46 crore in 2000).
The sheer size of its upbeat middle class market makes India a happening
market place for retail players.
Besides the number advantage, the purchasing power of Indian middle class
is also growing substantially with a year-on-year growth rate of 5-per cent in
its household income.
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According to NCAER, the 9.2 crore strong Indian middle class (whose
annual income ranges between Rs 2 lakh and Rs 10 lakh) is expected to
cross 15.3 crore by 2009.
Undoubtedly, such healthy trends corroborate that the retail sector boom is
here to stay in India on sustained basis.
1.3-BackGround Of the Study-
IT and IS provide new sources of advantage for business operation .Indeed
the operative phrase today is IT changes the way we do business.
Standard IT applications when accompanied by corresponding changes
internal business process can result in significant advantages. Indian
organised retail industry is poised for growth. Rapid state of change due to
speedy technological developments, changing competitive positions, varying
consumer behaviour as well as their expectations and liberalized regulatory
environment is being observed in organized retailing. Information is crucial
to plan and control profitable retail businesses and it can be an important
source of competitive advantage so long as it is affordable and readily
available
Retailing as simply defined is the end process of supply chain management
where there is a direct interaction with the end-user or the customer. Hence
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businesses and it can be an important source of competitive advantage so
long as it is affordable and readily available. DSS (Decision Support
Systems) which provide timely and accurate information can be viewed as
an integrated entity providing management with the tools and information to
assist their decision making.
1.4-Potential of IT-
The role of IT in shaping tomorrows business operations is distinctive one
IT has become a fundamental enabler in creating and maintaining a flexible
business network .Using a framework the breaks IT enabled businees
transformation into five levels I describe each levels characteristics and offer
guidelines for deriving maximal benefits. Each organization first determine
the level at which the benefits are in line with the cost or efforts of the
needed changes and then proceeded to higher levels as the demands of
competition and the need to deliver greater value to the customer increases.
About Retailing- Retailing consists of those business activities involved in
the sale of goods and services to consumers for their personal, family or
household use. It is the final stage in a channel of distribution, which
comprises all of the businesses and people involved in the physical
movement and transfer of ownership of goods and services from producer to
consumer.
Retailing involves
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Interpreting needs of the consumers
Developing good assortments of merchandise
Presenting them in an effective manner so that consumers find it easy
and attractive to buy.
Retailing differs from marketing in the sense that it refers to only those
activities, which are related to marketing goods and/or services to final
consumers for personal, family or household use. Whereas marketing,
according to American Marketing Association, refers to the process of
planning and executing the conception, pricing, promotion and distribution
of ideas, goods and services to create exchanges that satisfy individual and
organizational objectives.
Retailers include street vendors, local supermarkets, department stores,
restaurants, and hotels. Barbershops, airlines and even bike and car
showrooms. Still retailing may or may not involve the use of a physical
location. Mail and telephone orders, direct selling to consumers in their
homes and offices and vending machines - all fall within the purview of
retailing. In addition to it, retailing mayor may not involve a retailer.
Manufacturers, importers, non-profit firms and wholesalers are acting as
retailers when they sell goods and/or services to final consumers.
Whatever the form of retailing, a retail marketing strategy defines the
execution of the marketing process and facilitation of customer satisfaction.
This retail marketing strategy involves selecting a retail target market (i.e.
the carefully/exactly identified group of final consumers that a retailer seeks
to satisfy) and then implementing the corresponding retail marketing mix
(i.e. a combination of product. price, promotion and distribution strategies
that will satisfy the retail target market). The elements of the marketing mix
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encompass the facets shown in the table below. The table depicts consumer
service as the crux of the whole activity.
The choice of a store location has a profound effect on the entire business
life of a retail operation. A bad choice may all but guarantee failure, a good
choice success. This aid takes up site selection criteria, such as retail
compatibility and zoning, which the small storeowner manager must
consider after making basic economic, demographic, and traffic analyses. It
offers questions the retailer must ask (and find answers to) before making
the all important choice of store location. The first step in choosing a retail
business location takes place in your head. Before you do anything else,
define your type of business in the broadest terms and determine your long-
term objectives. Write them down. This exercise will help you later in
choosing a retail location. In picking a store site, many storeowners believe
that it's enough to learn about the demographics ("people information" like
age, income, family size, etc.) of the population, about the kind of
competition they'll be facing, and about traffic patterns in the area they're
considering. Beyond a doubt these factors are basic to all retail location
analysis. Once you've spotted a tentative location using these factors,
however, you've only done half the job. Before you make a commitment to
moving in and setting up, you must carefully check several more aspects of
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the location to help insure your satisfaction with -- and most importantly
your success at - the site you've chosen.
1.5-Role of IT in organized retailing-
Indian organised retail industry is poised for growth. Rapid state of change
due to speedy technological developments, changing competitive positions,
varying consumer behaviour as well as their expectations and liberalized
regulatory environment is being observed in organized retailing. Information
is crucial to plan and control profitable retail businesses and it can be an
important source of competitive advantage so long as it is affordable and
readily available. DSS (Decision Support Systems) which provide timely
and accurate information can be viewed as an integrated entity providing
management with the tools and information to assist their decision making.
The study, exploratory in nature plans to adopt a case study approach to
understand practices of organized retailers in grocery sector regarding
applications of various DSS tools. Conceptual overview of DSS is
undertaken by reviewing the literature. The study attempts to describe
practices and usage of DSS in operational decisions in grocery sector and
managerial issues in design and implementation of DSS.
Comparison across national chain and local organized retailer in grocery
sector reveals that national chain having implemented ERP partially are
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mostly using the same for majority of operational decisions like inventory
management, CRM, campaign management. Two local players use spread
sheets and in house software to make the above operational decisions. The
benefits realized remain the same across the retailers. Prioritization as well
as quantification of benefits was not communicated. The issues of
coordination, integration with other systems in case of ERP usage, training
were highlighted. Future outlook of DSS by the respondents portrayed a
promising picture.
Retailing as simply defined is the end process of supply chain management
where there is a direct interaction with the end-user or the customer. Hence
forth availability, assortment, display, proper handling of product plays a
vital role in a competitive world.
Organized retail stores are characterized by large professionally managed
format stores. They provide goods and services that appeal to customers, in
an excellent ambience that is conducive for shopping, created based on
consumer preference analysis, and offer good value as some of the benefits
of large-scale purchases are passed on to consumers. In India, retail has its
deep root since long back and that is why India is being known as Nation
of Shopkeepers with about 12 million retailers by 2003.Organised retailing
contributes 2% to the total Indian retail sector and expected to increase to
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5%, by 2010. Retail sector forms 10-11% of GDP. It is attractive in terms of
investment, employment opportunity, and usage of technology. Indian
organised retail industry was worth Rs. 13,000 crore in the year 2000 and
was expected to grow by 30 per cent in the next five years touching Rs.
45,000 crore in 2005. Food and personal care amounted to Rs. 1000 crore in
2000.
Retailing is in a rapid state of change due to speedy technological
developments, changing competitive positions, varying consumer behaviour
as well as their expectations and liberalized regulatory environment. In such
a scenario, information is crucial to plan and control profitable retail
businesses and it can be an important source of competitive advantage so
long as it is affordable and readily available. DSS (Decision Support
Systems) which provide timely and accurate information can be viewed as
an integrated entity providing management with the tools and information to
assist their decision making.
In west, retail businesses have been the early adopters of Information
Technology (IT). As there is a need to capture accurate information and
make it available not only within the store but send it to warehouse,
distributors and manufacturers in real time to manage the short shelf life of
some goods in grocery sector and costs of inventory, varied DSS tools have
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been adopted by organised retailers. VMIs- vendor managed inventory
systems, Scanner at the counters- point of sales systems, RFID- radio
frequency identification, OLAP (online analytical processing), supply chain
management systems, forecasting systems, CRM- customer relationship
management systems, ERP- enterprise resource performance system etc. are
the tools used by organized retailers in developed nations.
Most retailers collect and have access to huge amount of data, collected from
day to day operations e.g. customer loyalty data, retail store sales and
merchandise data, demographic projection data etc. Currently retailers are
data rich but information poor. There is a great potential to develop systems
that enable analysts and decision makers to manage, explore, analyze,
synthesize and present data in a meaningful manner for decisions.
Retail managers are in a constant need for right kind of information for
making effective decisions. Modern advancements in ITES (Information
Technology Enabled Services) and communication has permitted
deployment of DSS (Decision Support Systems). DSS can be defined as
computer based systems that help decision makers to confront ill structured
problems through direct interaction with data and analysis models.
DSS is computer enabled methodology for using the database.
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DSS are basically characterized by three capabilities; dialogues, data and
modeling- the emphasis of each varies from organization to organization.
DSS includes a wide variety of systems, tools and technology that support
decision making. EIS(electronic information system),ESS( Electronic
support system),GIS(geographic information system),OLAP(online
analytical processing),software agents, knowledge discovery system and
group DSS all can be considered as DSS .Broadly two major categories6 of
DSS namely enterprise wide DSS and desktop DSS exist . Enterprise wide
DSS are linked to large data warehouses and serve several decision makers
in a company whereas desktop single user DSS are small systems residing
on individual managers personal computer. Thus it is an interactive
computerized system that gathers and presents data from a wide range of
sources, typically for business purposes. The organization needs to pool in
both internal and external data, software, customer data, models and trained
people to appreciate and use the systems for decision making which will
help build sustainable competitive advantage. This can be depicted in the
following diagram-
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As seen from the above, external data and software alone would
not provide competitive advantage, but organizations own customer and
business data, models which convert data into useful information and
people, who will operate the systems, analyze outputs and make decisions
based on the information provided-all these would be required for
competitive edge. Companies need to make decisions faster, across more
channels and product lines, leverage more data, under greater regulatory
demands and competitive pressures, and with more complicated constraints
and trade-offs. DSS entails development of approaches for applying
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information systems, technology to increase the effectiveness of decision
makers.
Each sector with unique characteristics poses very different challenges to an
organization; hence in-depth understanding of one sector would provide
deeper insight into the requirement of DSS to enable managers in that sector
to take effective decisions. The proposed study aims at understanding DSS,
its application in grocery sector and issues arising out of implementation of
DSS in Indian retail grocery sector.
1.6-Objectives of the study-
1. To study the extent of use of IT in organized retailing-In this I devoted my
sincere efforts in finding out that upto what extent the retail organizations
are using IT based services.
2. To study the retailer perception towards the IT based services- In the
study I tried to find out that what retailers think about IT services and how
they perceive these services.
3. To explore and suggest suitable business processes for further
implementation- What business model a retailer should adopt and what
changes he want in implementing the IT services.
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1.7-Scope of the study-
The study will help in understanding the use of IT services in serving
customers in much more affective manner, and what are the things a retailer
needs to know while implementing IT based services and the main factors
which affect or influence the implementation of IT services. Study will
reveal which are important factors in customer point of view so that by
adding new service elements along with providing better quality in
delivering current service, difference may be created.
1.8-Contribution-
A study about the role of IT in organized retailing will enhance my
knowledge about the benefit of IT in organized retailing. This study will
help the companies to know the various aspects of IT, how IT can be more
successfully implemented, to what extent IT is playing crucial role in
retailing, & add value to retailer& customer.
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Chapter-2
Literature Review
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2.1-Growth of retail in INDIA-
Middle East Vision for 2012 at the company showroom in Olaya
Street yesterday Despite the economic downturn, the retail sector in the
Middle East is projected at $500 billion by 2010 with the GCC accounting
for more than 60 percent of the total retail in the region, said Gautam Hari
Singhania, chairman and managing director of Raymond Ltd. Singhania
added that a major share of the market would be held by Saudi Arabia.
With the strong presence of Indian, European and American expatriates, the
region provides unparalleled business prospects in the retail market,
Singhania said at a press conference.
Retailing in India is receiving global recognition and attention and this
emerging market is witnessing a significant change in its growth and
investment pattern. It is not just the global players like Wal-Mart, Tesco
and Metro group are eying to capture a pie of this market but also the
domestic corporate behemoths like Reliance, KK Modi , Aditya Birla
group, and Bharti group too are at some stage of retail development.
Reliance, announced that it will invest $3.4 billion to become the
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country's largest modern retailer by establishing a chain of 1,575 stores
by March 2007. The last couple of years have been rosy for real estate
developers and the retailers are finding suitable retail space in prominent
locations. The industry is buoyant about growth and the early starters are
in expansion mood. There is increased sophistication in the shopping
pattern of consumers, which has resulted in big retail chains coming up
in most metros; mini metros and towns being the next target. Consumer
taste and preferences are changing leading to radical alteration in
lifestyles and spending patterns which in turn is giving rise to new
business opportunities. Companies need to be dynamic and proactive
while responding to the ever-changing trends in consumer lifestyle and
behavior.
Retailing in India is currently estimated to be a USD 200 billion
industry, of which organised retailing makes up 3 percent or USD 6.4
billion. By 2010, organised retail is projected to reach USD 23 billion
and in terms of market share it is expected to rise by 20 to 25 per cent.
The report also predicts a stronger retailer growth than that
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of GDP in the coming five years.
The generic growth is likely to be driven by changing lifestyles and by
strong surge in income, which in turn will be supported by favorable
demographic patterns. Rapid growth in international quality retail space
brings joy to shoppers and shopping malls are becoming increasingly
common in large cities, and announced development plans project at
least 150 new shopping malls by 2008. The number of department stores
is growing at a much faster pace than overall retail, at 24 per cent
annually. Supermarkets have been taking an increasing share of general
food and grocery trade over the last two decades.
Development of mega malls in India is adding new dimensions to the
booming retail sector. Shopping experience in the nation of shopkeepers
is changing and changing very fast. There is significant development in
retail landscape not only in the metros but also in the smaller cities. Even
ITC went one step ahead to revolutionize rural retail by developing
Choupal Sagar a rural mall. On one hand there are groups of visionary
corporate working constantly to improve upon urban shopping
experience and on the other hand some companies are trying to infuse
innovative retail experience into the rural set up.
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After leading the IT bandwagon, India is poised to grow as a Retail hub. It is
imperative to sustain the modernization of the retail sector and dispel the
myth that the game is big Vs smallortraditional Vs modern ororganized Vs
unorganizedorlocal Vs foreign . What is needed is to create an appropriate
environment to propel retail where all benefit, he said.
India's huge population, he said, has the potential for mammoth consumption
if given the power of spending and that is only possible through large scale
development generating employment which is already happening with retail
as the driving force.
Talking about the key challenge areas for the retail growth Mr. Nath
expressed concern over escalating real estate cost, scarcity of skilled
workforce and structured supply of merchandise which he assured would be
tacked in co-operation with the retail industry and the support organizations.
Revealing key figures from the India Retail Report 2007, Amitabh Taneja,
Chief Convenor of India Retail Forum said that the organised sector
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reduced prices of farm sector goods, rural farmers benefit by way of higher
returns for their produce.
With several States allowing retailers direct access to farm produce, there is
a new revolution taking shape in rural India. Farmers are cultivating crops as
per specifications and requirements of retail companies such as Reliance,
ITC, Godrej and many others. More than 2,000 small farmers, for instance,
are benefiting from such arrangements in Andhra Pradesh, he said.
Talking about the global perception about India, about its economic might
and potential in terms of market size, Mr. Kamal Nath said that there had
been a drastic change over the last few years. While the buoyant
manufacturing and services sectors had contributed in fuelling consumption
demand in urban as well as rural areas, the government on its part remained
committed to improving infrastructure and providing a congenial
environment for indigenous business modules to blossom and harness
domestic as well as foreign investment to optimum levels. Economic
prosperity also meant higher standards of living and higher consumption
levels, and only an efficient and organised Retail sector could ensure and
sustain this growing demand of the evolved consumer.
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But unlike the experiences in most other countries, growth of Indian retail
is not going to be a staggered and time-taking process: India has already
shown the world how quick it can adapt to hi-tech products and services and
will again set a record of sorts in setting up world class retail formats across
the country in record time. In the next five years India should have retail
entities strong enough to compete with the best in the world, added Mr.
Nath.
At present, he said, India's retail sector is largely unorganized, with about 15
million tiny outlets catering to consumer needs across the country it
employs the second-largest number of people after agriculture. Organised
retail is now focused primarily on the 300 million urban "middle classes''
and an additional 200 million rural rich, who form a consumer market worth
more than US$100 billion. So, there is enough ground for the modern and
the traditional formats to co-exist.
Narrating India's economic growth story Mr. Nath highlighted three
important things:
One - that here is a society in which the fruits of development are more
evenly spread, in which democracy is more real and palpable to the mass of
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the population, which makes for a stable social environment that is attractive
and reassuring;
Two - that India is an enormous market, of which you are seeing only the tip
of the iceberg;
And Three - the tremendous resilience of India: we survived the zooming oil
prices, the fluctuating dollar and global recession, with barely a hiccup.
The Indian economy is integrating with the world, and yet it simultaneously
has its own dynamics, which cushion global shocks as in no other country.
India had kept the retail sector largely closed to outsiders to safeguard the
livelihood of nearly 15 million small storeowners and only allows 51 per
cent foreign investment in single-brand retail with prior government
permission. FDI is also allowed in the wholesale business. Single-brand
retailers such as Louis Vuitton, Fendi, LLadro, Nike and Toyota can operate
now on their own. Metro is already operating through the cash-and-carry
wholesale mode.
The issue of Foreign Direct Investment (FDI) has been debated time
and again as the Indian Government has been under pressure to open up
further. The policy makers continue to explore areas where FDI can be
invited without hurting the interest of local retail community. Mr. Kamal
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Nath confirmed that the Government is considering opening up of the retail
trading for select sectors such as electronic goods, stationery, sports goods,
and building equipment.
To understand the reasoning and implications of such moves it was vital to
size up the entire retail market in various segments and consumption levels
across product categories with share of the organized segment and it was just
the right time for India Retail Forum to take the initiative of researching the
scope of retail businesses in India, said R S Roy, Editorial Director, Images
India Retail report 2007.
Mr. Nath commended the pioneering efforts of the Images Group and India
Retail Forum in compiling and pooling together relevant yet highly scattered
and difficult to get information on this vital sector, which helps investors get
a better understanding of the unfolding scenario. India Retail Report 2007
will set benchmark figures on consumer spend, retail market size across key
categories and segments with scope and also performance of key players and
their expansion plans.
In his address Dr. Ajay K Dua, Secretary, Department of Industrial
Policy & promotion, Ministry of Commerce & Industry said, The
growth of the Indian economy is now manifesting itself in the growing
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purchasing power of its citizens. A ten to twelve per cent increase in the
economy's disposable income and a much higher one in urban areas is also
reflecting itself in the way goods and services are bought and sold.
There would be a real revolution in the Indian retail industry, if the changes
being witnessed in the metropolitan and other tier-one towns percolate to all
the 784 urban settlements, with populations above 50,000 persons. This is
likely to happen as the real estate prices in the large metropolitan towns are
increasingly becoming prohibitive and consequently giving distinct
advantage to those who are already in the business of retailing, viz., the
traditional mom & pop stores. Rural and semi-urban incomes are also
expectedly to grow much faster in future, once the agriculture growth rate
pushes up. Our civic laws concerning construction and property
development also need to be re-looked, as the earlier convenience-stores get
replaced by shopping malls and other formats of organized retail trade, he
added.
Expressing concern over the consumption and mall development trend,
Editorial Director of this mega research of India retail research, R S Roy
called upon the entire retail fraternity, concerned Govt. departments and the
supporting organizations to work towards giving Indian retail - a face of
India. India Brand Story can travel across the globe with 'Delhi Hat' type
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shopping cum entertainment centres opening not only across India but all
over the world. Public private partnership can revitalise the formats like
Khadi Bhawans that runs one of the largest retail networks in the world, and
also govt. state run emporia, he said.
As India emerges as one of the most potential markets for global brands and
retailers and retail reinvents the way modern Indians celebrate their spending
power, India that takes pride in its rich culture, heritage, art, craft and variety
of wares must capitalize on this ever escalating consumerism and channelise
the spending towards healthy consumption for overall development of the
country.
Initiated by India Retail Forum and Images F&R Research, world's some of
the top global research & consulting firms like AT Kearney, Ernst & Young,
PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg, Synovate,
Cushman & Wakefield etc. contributed for the India Retail Report 2007
research.
IMAGES India Retail report 2007 sizes up the entire retail market in various
segments and consumption levels across product categories with share of the
organized segment. Profiling formats and retailers therein, the study, full of
facts and figures, is expected to reveal many interesting facets of the Indian
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development tools, it will also contain exclusive and investigative editorial
content that we can promise, no other media has access to, he added.
Besides retail news feeds, indiaretailing.com will boast an exclusive
database of retailers, retail real estate developers, retail technology and
systems firms, retail finance outfits, store design and shopfit pros, human
resource sourcing and jobsite management, exclusive video interviews, live
coverage of retail events and many more.
The portal is expected to have around 200000 page views in the very first
month of operation and is strongly geared up to enjoy a very high and
filtered subscriber number. To begin with the subscription number for daily
News Letters is expected to reach over 25000 key people in the retail
industry
The Larger Picture
Indian economy has shown an impressive growth of over 6 per cent for
last five years and continues to surge ahead. GDP growth rate in 2003-04
recorded a fifteen year high of 8.5% and subsequently maintained a
steady growth for the next two years. Real GDP growth accelerated from
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7.5 per cent during 2004-05 to 8.4 per cent during 2005-06 on the back
of buoyant manufacturing and services activity supported by a recovery
in the agricultural sector. The central bank forecasts similar growth of
7.5-8 percent during 2006-07. With strong economic growth
consumerism is increasing in the country and India is the fourth largest
economy as far as purchasing power parity is concerned, just behind
USA, Japan and China.
Organised retail in India has the potential to add over Rs 2,00,000 crore
($45 billion) business by the Year 2010 generating employment for
some 2.5 million people in various retail operations and over 10 million
additional workforce in retail support activities including contract
production & processing, supply chain & logistics, retail real estate
development & management etc., said Mr. Kamal Nath, Commerce &
Industry Minister .
Consumer Trend
India is currently having the largest young population in the world and
54 per cent of Indias population is below 25 years of age and 80 per
cent are below 45 years. As per Indias Marketing Whitebook (2006) by
Businessworld, India has around 192 million households. Of these only a
little over six million are affluent that is, with household income in
excess of INR215, 000. Another 75 million households are in the
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category of well off immediately below the affluent, earning between
INR45,000 and INR215,000. This is a sizable proportion which offers
excellent opportunity for organized retailers to serve.
AC Nielsens Retail and Shopper Trends 2004 Report made the
following observations on shoppers behavior in India:
(1) Indian shoppers spend an average of INR2500 on food, groceries and
personal care items every month and
(2) Convenience stores are booming in most markets, as the number of
such stores exceeds 80,000.
According to the report, 48 per cent of shoppers in India admit that they
love to try new things, making them the most novelty seeking shoppers
around the region and total average monthly expenditure is only $50, of
this, $21 is spent on fresh food, comprising 42 per cent of the entire
monthly spend. Indians also appear to spend more on groceries and
personal care items.
Business communities believe that sizable disposable income in India is
concentrated in the urban areas and well off and affluent classes; income
distribution is unequal compared to other Asian economies. In fact, the
20 million middle class home in rural India equal the number in urban
India and thus have the same purchasing power. Therefore, there is
significant and considerable opportunity for organized retailers in the
rural areas. There is no denying that the rural market holds immense
promise for the organized retail but companies ponder over how to serve
that market profitably.
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Unlike the urban market, it is less developed in terms of infrastructure
and facilities. More than any thing else, the larger issue is to find out a
suitable business model and retail format to fit local taste and preference.
Of course cost of doing business in rural market would be lesser
compared to urban market but reaching out to the mass is a concern. It is
not impossible but a bit more difficult. For example the most successful
and the largest incorporation Wal-Mart started in the rural market where
as competition started in the urban market. This retailer has proved that
it is important to understand how do you operate your business model
rather than where you do it.
Given the increasing urban exposure of rural India, the urban and the
rural upper-income groups can form an interesting continuum market,
giving it a scale of 23 million households, or 115 million consumers. In
2006-07, the consuming class would be about 60 million households, or
300 million consumers.
NCAER data shows that for 1998-99, for a basket of 22 FMCG productsit tracks, a total of over Rs 91,500 crore was spent. Of this, 37% was
spent by the two lowest-income groups in rural India, and only about
20% by the top two income groups in urban areas. This is, perhaps, the
best and only statement of the structure and potential of the Indian
market. Hence, marketers have to worry about purchasing power of
consumer not where he is living. For example there are nearly 42,000
rural haats, average number of sales outlets per haat is 300 and average
sales per outlet is INR 900 and average foot fall in a haat is about 4,500.
In rural India there are 50 million Kisan Credit Card (KCC) holders and
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in 2002-03, LIC sold 50 percent of its policies in rural India. These are
some of the indicators how rural India is performing.
2.2-Drivers of Retail
On one hand favorable demographic and psychographic changes in the
Indian consumer class, rising income, international exposure, availability
of quality retail space, wider brand choice and better marketing
communication are some of the factors driving Indian retail. On the
other side a lot depends on the preparedness of Indian retailers in terms
of having suitable formats, scalable business model, appropriate
technology and relevant organization capability for the success.
Currently the country has a population of over one billion, 60% of which
is under 30 years of age. This means majority of the population is young
and working class with higher purchasing power. The low median age of
population means a higher current consumption rate which augurs well
for the retail sector. Consumer spending in India has grown at over 12
percent since mid-1990s and 64 per cent of Indian GDP is accounted for
by private consumption. Over the last decade, the average Indian
spending has gone up from INR 5,745 in 1992-93 to INR 16,457 in
2003-04 and is expected to grow around its trend rate of 12 per cent
There are fundamental but significant changes underway in this country.
In January 2006, the government announced that foreign companies can
own up to 51 percent of a single-brand retail company, such as Nike or
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Adidas. This decision would certainly encourage retailers such as Zara
and Gap to enter this market. Tesco is planning to enter the market
through a partnership with Home Care Retail Mart Pvt Ltd and expects
to open 50 stores by 2010.
2.3-Use of IT in Retail market-
In India, organized retailing, is contributing 3% of total retail sector and is
still evolving. However, it is expected to increase to 5%, by 2010. Retail
sector forms 10-11% of GDP. It is alluring in terms of investment,
employment opportunity, and usage of technology.
Retailing is in a rapid state of change due to speedy technological
developments, changing competitive positions, varying consumer behavior
as well as their expectations and liberalized regulatory environment. In such
a scenario, information is crucial to plan and control profitable retail
businesses and it can be an important source of competitive advantage so
long as it is affordable and readily available.
2.4-Retailing in India-
Indian organised retail industry was to the tune of Rs. 13,000 crore for the
year 2000. Organised retail industry was expected to grow by 30 per cent in
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the next five years and was expected to touch Rs. 45,000 crore in 2005, by
2010.Indian retailing is clearly at a tipping point. India is currently the ninth
largest retail market in the world.
In west, many organisations have deployed ERP as the foundation of their IT
Set Up, organised retailers are exploring CRM (customer relationship
Management), BI (Business Intelligence) , RFID (Radio Frequency
Identification Deployment).
Each sector with unique characteristics poses very different challenges to an
organisation; hence in-depth understanding of one sector would provide
deeper insight into the requirement of DSS to enable managers in that sector
to take effective decisions. The proposed study, exploratory in nature aims at
understanding DSS, its application in sector and issues arising out of
implementation of DSS in Indian retail sector.
In west, retail businesses have been the early adopters of Information
Technology (IT). As there is a need to capture accurate information and
make it available not only within the store but send it to warehouse,
distributors and manufacturers in real time to manage the short shelf life of
some goods in grocery sector and costs of inventory.
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sed DSS for different decision situations using two specific measurements:
DSS spread and DSS complexity. The results obtained suggest that the
framework which was developed by the authors is useful for categorizing the
degree of maturity of organizations regarding their usage and development
of actual DSS applications.
Implementation challenges of Decision Support Systems in Pricing for retail
managers. With the evolution/explosion of quality data and computing
ability, retail managers have desired to implement demand based
management. Demand based management uses statistical models to predict
consumer price response using historical information. Many firms are
offering software to perform price optimization.
Any DSS for strategic, tactical or operational planning is based on
interaction of information systems and decision models and progressive
transformation of data into information and knowledge. DSS for supply
chain planning (SCP) decisions SCP system has an embedded decision
engine that uses a two-stage stochastic program as a paradigm for
optimization under uncertainty. The system has been used for decision
making in diverse domains, including automotive manufacturing and
consumer products.
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The role of model-based decision making is gaining increasing acceptance
as organizations try to gain a competitive advantage. The progress in
information systems development has led to a natural coupling between the
data modeling, symbolic modeling and What-if analysis phases of a
decision support system (DSS). DSS tools help companies automate an
enterprise-wide assessment of cause and effect. The software monitors "soft"
factors, which indicate whether a certain strategy has been successful, as
opposed to operational measures. These tools can help in creating a culture
of management based common views and goals.
The goal of the DSS system is to improve marketing strategy and marketing
resource allocation for a large multi store, multi department retailer.
However effectiveness of the system will depend on willingness on the part
of managers to adapt. DSS evolves constantly as its users and developers
interface, generate problems, questions and desires.
2.5-DSS in retailing -
Decision support "represents one of the key enabling technologies allowing
corporations to unlock useful information hidden away in databases."
Decision support queries need to be executed against large databases which
often grow into the "hundreds of gigabytes" range. The technology is
prohibitively expensive, except for the largest retailers such as Walmart, it is
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Advantages of DSS are: faster data accessibility, stock availability resulting
into no lost sales due to stock outs, better choice of assortments, timely
distribution, tracking buying patterns of consumers and quick decisions.
Softwares in retailing-
Fusion Retail
Collection of smartest retail techniques & ideas
Out-of-the-box, mature and ready to use retail automation software
Efficient & error free data entry
Real time reports with on-line filters and zoom in
Customizable search for product, customer and supplier
Fastest implementation
Highly scalable & flexible
Fully modular system
Secure, reliable & robust database
Manage chain stores (across cities & countries)
Manage your sales staff
Integrated financial accounting
Integrated customer loyalty programs
Integration with Tally accounting software
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Third party link for integrating with other systems
Utilize a wide range of barcode & POS hardware
Ongoing upgrades
Chapter-3
Research Methodology
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3.1-Research Design Descriptive and conclusive3.2-Data used-Both primary as well as secondary.
3.3-Tools & Instruments-Questionnaire & Personal Interview3.4Sample plan-
3.4.1 Sampling method-Judgment based convenient sampling34.2 Sample Size- 3 Retailers.3.4.3Sample area- Bareilly, & Kanpur City
3.1-Research Design-
Fundamental to the success of any formal marking research project is sound
research methodology. A research design purely and simply the framework
or plan for a study that guides the collection and analysis of the data.
In my research I use Descriptive & conclusive research design.
It involve collecting quantitative information & Involves gathering data that
describe events and then organizes, tabulates, depicts, and describes the data.
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It Uses description as a tool to organize data into patterns that emerge during
analysis .It Often uses visual aids such as graphs and charts to aid the reader.
3.2-Data used-
The research was conducted using primary as a source of information and
the method adopted was 'surveying'. Survey is the most commonly used of
primary data collection in market research. This widely used of its extreme
flexibility.
Survey research is a systematic gathering of data from respondents through
questionnaires. The purpose of research is to facilitate understanding the role
of IT in organized retailing.. A questionnaire is a formal list of questions to
be answered in the survey.
The questionnaire formed contained direct question, which was close-ended.
The questions were framed keeping the objective of research in mind and in
such a way that they are able to extract the required information from the
respondents.
3.3-Tools & Instruments-
The task of data collection begins after a research problem has been defined
and research design is chalked out. While deciding about the method of data
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collection to be used for the study; the researchers should keep in mind two
types of data i.e. Primary and Secondary data.
The primary data are those which are collected afresh and for the first
time, and thus happen to be original in character. The secondary data on
other hand are those which have already been collected by someone else and
which have already been passed through the statistical process.
The data used for the present research is primary data. The different
methods that are used for collecting primary data are as follows:
A) Contact Method:
The 'contact method ' considering the short coming was selected to personal
interviewing. This method being versatile was arranged interviewing as it
made concerned approach to the respondent.
B) Questionnaire Method:
The method of data collection is quite popular and is being adopted by
research workers, private individuals and organization.
3.4- SAMPLING PLAN:
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The Sampling plan was designed as follows:
Sampling Unit :
Organized Retailers
.
Sample Size: To gather information which could form a reliable
database? The sample size was as follows:
Retailers - 3
Sampling method
Convenient & judgmental
Sampling area
Bareilly & Kanpur city
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Chapter-4
Data Analysis & Interpretation
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Analysis of data
Q.1-Are you using IT based services in your retail store?
No %
YES 3 100
NO 0 0
YES
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business operation.Retail stores have implemented IT services in all sections
of stores.
Q.3-IN which area of store you have implemented IT successfully?
No. %
Order Fulfillment 3 100
Billing 3 100Order Taking 0 0
Procuring 3 100
0
20
40
60
80
100
120
Order
Fulfillment
Billing Order
Taking
Procuring
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Interpretation-All retailers are using IT based services to reduce their
cost & to serve customers in an effective manner. In my study no retailers
are providing the facility of E-retailing.
Q.4-How IT is helping you in serving customer?
Yes No
Customers are better
served
3 0
0
0.5
1
1.5
2
2.5
3
Yes No
Customers are bet
served
Yes No
Customers are not
friendly with the use of
IT
0 3
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Customers are not friendly with the use of IT
0
0.5
1
1.5
2
2.5
3
3.5
Yes No
Customers are not frien
with the use of IT
Interpretation-With the effective use of IT customers are served &
retailers are creating value for them. Customers are very much aware about
aware about the IT. They perceive IT as a enabler for themselves.
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Q.5. Your IT based services are whether internally managed or
outsourced!
PercentageOutsourced 100
Internall managed 0
0
10
20
30
40
50
60
70
80
90
100
Outsourced Internall managed
Interpretation-All the IT services which are using by the retail stores
are outsourced. They purchased the IT services from various service
providers.
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Q.6-How IT is helping in Supply chain?
Percentage
Highly Supportive 100Suuportive 0
Not suuportive 0
Percentage
0
20
40
60
80
100
120
Highly Supportive Suuportive Not suuportive
Interpretation-The use of IT services are very supportive in every
manner or in every aspects of retailing. Pantaloon & Big bazaar uses WAN
for its retail store format.
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Q.7- Customers are satisfied by the use of IT or not?
Percentage
Highly Satisfied 100
Satisfied 0Dissatisfied 0
0
10
20
30
40
50
60
70
80
90
100
Highly Satisfied Satisfied Dissatisfied
Percentage
Interpretation- The benefits which It based services are providing
customers perceive them fruitful for them. Customers are highly satisfied
with the use of IT based services.
Q.8- How much IT has changed the face of organized retailing?
Percentage
0-40% 0
40-60% 0
Above 60% 100
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Percentage
0
20
40
60
80
100
120
0-40% 40-60% Above 60%
Interpretation- With the use of IT the face of retailing has changed
drastically. IT is playing a crucial role in providing value to both retailers &
customers. The whole face of retailing experiencing the benefit of IT.
Q.9- Are your IT system is working properly or need some changes?Interpretation-Here through research I found that it depends on the area in
which retail organization using IT services. I found that most of the retailers
are working on SAP.
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SAP-SAP provides a comprehensive range of enterprise software
applications and business solutions to empower every aspect of your
business.
You gain the visibility to pinpoint inefficiencies and the capabilities to
transform them into competitive advantage. The foresight to identify new
opportunities and the agility to respond. The functionality to optimize your
operations and resources to extend best practices to your entire value
chain.
Vishal mega mart using SAP 5.0. But after 2 months from now they will be
able to work on SAP new version 6.00.
Write now organizations are successfully using IT services. Their systems
are efficiently working. But as the time passes they need changes.
Q.10- If system fails for a period then in how much time it is trouble
shooted?
Answer of this question is varying from organization to organization. Big
bazaar & pantaloon said that It depends on the nature of problem.They never
encounter with any such problem.
Vishal mega mart said that they have a 24*7 solution named RXCL.
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But it does not take more than 30 min to solve that issue.
The most important thing is that it does not affect the sale of stores.
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3. Retailers in India do not provide E-Retailing services.
4. IT is creating value for both retailers as well as customers. It is giving an
edge to the retailer.
5. IT is helping in all manner means Procurement, order fulfilling, billing.
6. The various IT services which are using by Retailers are outsourced.
7. Organized retailing is in its nascent stage in India but it is developing in a
very fast pace as compared to other sectors.
8. with the use of IT based services retailers are able to meet customers
demand in vary rapid manner.
9. With the use of IT based services a close relationship is maintained with
the suppliers as well as customers.
10. Retailers are highly dependent on IT based Services & are better serving
to its customers.
Limitations
1. The study is confined to only 3 retail stores named Pantaloon, Big bazaar
& Vishal Mega Mart.
2. As I was concerned only a very limited area such as use of IT based
services.
3. The study is confined to very limited area of retailing.
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Recommendations
1. E-retailing facility should be provided to increase customer bases.
2. IT based services should increases in all functions of retailing.
3. Retailers increase or update its IT based services according to time.
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Bibliography
1. www.indiaretailing.com
2. www.arabnews.com
3. www.icmrindia.org
4. www.thehindubusinessline.com
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5. www.indiaground.com
6. www.rediff.com
Report-
1. A study from Ankush Sharma (IIM-A)
2. A report from TSMG (Tata Strategic Management
Group)
Books-
1 .Retail Mgmt.-Berman & Evans
2. Retail Mgmt.-Lusch & Griffith
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Annexure
Questionnaire
1. Are you using IT based services in your retail store?
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a) (Yes) b) (No)
2. To what extent you are implemented IT in your retail store?
a) (0-40%) b) (40-60%) c) (Above 60%)
3. IN which area of store you have implemented IT successfully?
a) (Order fulfillment) b) (Billing) c) (Order taking) d) (Procuring)
4. How IT is helping you in serving customer?
a) Customers are better served.
b) Customers are not very friendly about IT.
5. Your IT based services are whether internally managed or outsourced!
a) Outsourced b) Internally managed
6. How IT is helping in Supply chain?
.
a) Highly Supportive b) supportive c) Not supportive
7. Customers are satisfied by the use of IT or not?
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a) Highly satisfied b) satisfied c) Not satisfied
8. How much IT has changed the face of organized retailing?
a) 0-40% b) 40-60% c) above 60%
9. Are your IT system is working properly or need some changes?
a) Efficiently working b) need changes.
10. If system fails for a period then in how much time it is trouble shooted?
a) 0-10 min b) 10-30 min c) 30 min -1 hour d) more than 1 hour