RLS saw the release of 7 Knowledge reports. Key insights are highlighted here – full details are available at http://rls.net.in/Knowledge_Zone.html

RAI – TCS: Retail Operations Benchmarking Excellence Survey (ROBES)

There has been an increased e-commerce adoption by consumers during 2013. Brick and Mortar retailers have begun to view multi-channel strategically, instead of considering their e-tailing counterparts as price predators.  This report benchmarks the multi-channel practices of 40 Retail brands against e-tailers.  Key insights which emerged:

• Brick and mortar retailers are looking at multi-channels as one of the top 5 priorities for 2014.
• Ecommerce channels (non-store channel ) of brick and mortar retailers are yielding higher growth, higher cash memo size, and lower returns.
• For example, on an average, brick and mortar retailers find that their online cash memo size is 12% higher than in-store.
• Online returns of Brick and mortar retailers are <3% – significantly lower than pure-play e-tailers.

For brick and mortar retailers, multi-channel is about “on-demand retailing” – about giving the consumer better access and deeper range. Unlike their ecommerce counterparts, it is not a ‘pricing’ game: most retailers have a uniform pricing policy across all channels.

RAI-KPMG: Emerging Consumer Segments in India

This report identifies new segments of consumers including – the urban time starved consumer, the rural ‘windfall’ consumer, the “Value conscious” customer etc.
Key insights:

• Leveraging technology is the key to reaching the consumer.
• Supply chain innovation is needed to provide ‘stripped down’ service models.
• Hybrid models – using a mix of online and offline are emerging.

RAI-AIMIA India Millennial loyalty survey

Millennials are defined as those between the age of 19 and 29, and are expected to be the generation that will force brands to change the way they build sustainable customer loyalty.

AIMIA loyalty survey profiles the buying habits of this segment of customers. Key insights:

• Today’s customers are more ‘social and vocal’: 60% of millenials use social media and 41% seek opinions of their network before buying.
• They are willing to share data, but need transparency on what that data would be used for.
• They are more willing to engage than their counterparts in other countries.
• They are interested in more than just cash rewards.
• They want loyalty programs to provide ‘faster’ rewards.

RAI –PWC: Total Retail:  A change is underway

This quantitative survey of 1000 Indian online consumers profiles buying habits.  Key insights:

• Online shopping is driven as much by “trust” as by “price”.
• Online is about convenience.
• The customer experience matters even in an online context.

RAI-GP2WW: Great Places to Work in Indian Retail

This ‘first of a kind’ report surveyed 50 retailers to answer the question “Which retailer is the best employer?”. The Great Places to work with uses a proprietary framework which includes employee surveys and interviews as well as representations from management.

Lifestyle International emerged as the top retailer in India, followed by Titan and Shoppers Stop.

RAI –JLL: Emerging trends in retail spaces

This report profiles cities which are emerging as retail destinations in Tier 2 India.

• Retail realty in India is driven by income growth, a demographic ‘dividend’ and the fact that available space is polarized as regards quality.
• Mumbai, Delhi and Bangalore continue to mature.
• Emerging markets include Pune, Chennai, Ahmedabad, Chandigarh, followed by Surat, Amritsar, Ludhiana and Jaipur.

RAI – WWF: Sustainability in India Retail

This report profiles global practices by retailers in terms of creating sustainability in the supply chain and business practices.  Key insights:

• The world is today consuming 1.5 planets worth of resources annually.
• Demand for certain commodities such as palm oil, milk and beef (buffalo meat) is threatening India’s biodiversity.
• Owing to its direct contact with consumers, the retail industry is in a position to drive change towards sustainability.
• Experience with mature markets shows that the ‘tipping point’ towards structural sustainability is when consumers adopt and are willing to pay for sustainable products.

This gives rise to the obvious question “Why focus on sustainability?”

The word sustainability connotes a pollution free world. This can be achieved when energy consumption is minimized, carbon foot print reduced and employees have a healthy work environment. To achieve this, retailers need to mend the supply chain system, revamp stores and distribution centres and minimize waste generation.

The background
The Switch Programme developed by European Union helps retailers adopt sustainable supply chain practices. Switch stands for switching to sustainable consumption and production practices.

The objective is to create and understand change through the comparisons of ‘pre’ and ‘post’ metrics. Change is required in the upstream value chain, where a number of suppliers and vendors collaborate, to downstream of the value chain – where the consumer is impacted.

To implement change on this magnitude, the Switch Asia Programme, a regional programme, is running the Green Retail Project of four year duration in India.  The Green Retail Project, funded by the European Union (EU), is spearheaded by CII along with the four partners, Retailers Association of India (RAI), Asia Society for Social Improvement and Sustainable Transformation (ASSIST), Austria Recycling (AREC) and Stenum ASIA.

Focus: Food & Beverages
Like other industries, retail has taken its share of the blame in impacting the environment. As the sector grows this impact becomes severe. For example:  the Food & Beverage (F&B) sector, which accounts for 60% of retail business, is the most energy intensive industry in India.

Ms Seema Arora, Director of Green Retail Project, says, “In the F&B sector, 40% of products go to waste either in supply chain operations, retail outlets or consumer use phases. This is a huge number, indicative of inefficiencies in the system and has direct financial implications – cost, production output and sales. Even if we are able to address these two big sustainability impacts of the chain, it is not complete until we work with consumers and society in getting them to use more sustainable products towards improving their lifestyle. To achieve this, retailers have to provide products that are more sustainable than the norm in their manufacture, use and disposal – this requires close collaboration with supply chain members – and also generate awareness, communicate and educate consumers in going for a more sustainable option. Creating a shift in consumers’ mindset is a hard but extremely important task that the retail industry has to undertake.”

Future focus:
India has adopted National action Plan on Climate Change (NAPCC) in 2008 to implement integrated strategies for achieving key goals in the context of the climate change. The eighth National Mission is the core mission of NAPCC which is coordinated by the Mission on Solar Energy and Energy Efficiency.  As an extension of the national plan, state level action plans have been drafted and deployed at various level of governance aligned with the eight National Missions. “India has announced a domestic goal of reducing the emission intensity of its GDP by 20-25 per cent of the 2005 level by 2020. This will be achieved through a multi-sector low carbon development strategy,” says Ms Arora.

Woodland’s concern for the planet

• Use of recycled paper for the packaging and carry bags
• Electronic billing, publishing and communication to minimise use of paper and energy
• Associated with WWF Earth Hour campaign, UNICEF Wash Program
• Under Proplanet banner conducting youth oriented activities to spread awareness about environmental issues
• Rewarding customers who are using green products such as a solar heater.

Religare Healthworld slashes the use of paper

• Switch to CFL and LED lighting systems
• Carton reusing policy – to ensure that packing is recycled for material dispatches
• Replacing plastic loyalty cards with a robust IT/mobile phone based system, thus saving on energy used for printing loyalty cards
• SMS/Web based feedback system which has resulted in lesser consumption of physical paper

Eco-friendly approach by Yum! Brands

• Have been strategically developing suppliers in India to grow local expertise and experience, and improving industry standards by transferring know-how from Yum!’s international supply base.
• With one year of operations of the Besant Nagar store, Yum! has been successful in saving 42% of potable water, using fixtures designed for lower water use and combined with the reuse of rejected water from RO in toilet flushing. These savings are based on LEED baselines and have been accepted by Green Building Certification Institute (GBCI)
• Besant Nagar store also saves 22% electrical energy through initiatives like high efficiency air-conditioning, ventilation; use of reflective paints and double glazing, lighting with low-power LED bulbs, harvesting sunlight to reduce artificial lighting and using solar energy for heating, amongst others. This store was built with locally sourced, environmentally friendly construction and paint material.

The Body Shop way to sustainable causes

• Primary suppliers for products and shop fittings must comply with the Ethical Trade initiative – including fair rights for workers in supply Chain.
• The new ‘Pulse’ store shop fit is sustainably sourced and made from FSC (Forest Stewardship Council).
• 46% of the products have PCR (Post Consumer Recyclate) packaging
• Sourcing 100% of wooden accessories through FSC sources
• “Wood Positive” – an initiative that calculates paper and card usage in the international supply chain, and replants the equivalent amount plus an extra 10%.
• Has own foundation which has supported over 2500 initiatives around the world in human rights, animal welfare and protecting the environment
• Products are 100% vegetarian, and the company recently won the “International Sustainability Brand of the Year” with the Business In The Community
• Cruelty-free campaign in partnership with Cruelty Free International to help promote the ban of animal testing around the world

Sustainability gifts every 11th store “free” – to Mahindra Retail

• Overall energy spends down by 15% by using LEDs lights
• Reducing emissions by changing air conditioning filters regularly;
• Reducing carry bag usage
• Reducing travel by using video conferencing
• Reducing resources by reusing and resizing building fixtures, thereby saving 18% of maintenance costs.

Energy Efficiency helps save Rs 6.8cr per annum for Shoppers Stop

• Saving 60 lakh units of power using energy efficient lighting and by working with the mall developers to maximise natural light. This equals to Rs 6.8 crore per annum, which is a cost of a one store.
• Rainwater harvesting / storm water drainage based reuse of water resources for air conditioners.
• Focusing on recycling paper saving 84 mio pages to date through initiatives

RAI: An overview of GT Nexus’s cloud based solutions.
T.S: GT Nexus delivers a “social media” model to the retail supply chain. It is a cloud-based platform that connects all of the necessary trading partners in one place. When orders are placed or adjustments are made, everyone sees the latest version. By connecting everyone into a single network, GT Nexus enables multi-level collaboration and visibility to support smarter decisions and programs designed to reduce costs and improve performance. Today, more than 25,000 businesses move more than $100 billion worth of goods on the GT Nexus platform each year.

RAI: How does the solution creates cost efficiency in the supply chain?
T.S: GT Nexus delivers efficiency in the following ways:
Efficiency savings by eliminating paper and automating processes
Working capital savings by extending payment terms with their vendors
Cost of goods savings through early payment discount programs
Bank line savings by eliminating letters of credits
Inventory cost savings by enabling direct shipments and mark-for-store goods

RAI: How much can an Indian retailer expect to save by implementing GT Nexus’s solution?
T.S: GT Nexus offers standardized, streamlined and automated workflows for information exchange on a digital cloud platform, making the supply chain paperless. This helps to improve visibility, productivity and accountability in the supply chain and improves the level of trust and understanding between the retailer and its trading partners. Although our global benchmark saving is typically 1-3% of the procurement volume, we believe we can improve on this for Indian retailers. Since majority of modern retailers in India are yet to be profitable this can be a huge saving on the bottom line, especially when coupled with the double digit top line growth they are experiencing.

RAI: How different does the solution need to be for India vis-à-vis other international markets? What model of collaboration will work for India?
T.S: The costs and challenges associated with labor are major concerns for Indian retailers. Getting people with the right skill sets and retaining them is becoming increasingly difficult for many companies. Human errors, processing delays and lack of consistency are other common drawbacks – the result of prevalent manual labor processes. Automating manual, repetitive tasks in areas such as procurement, PO amendment and invoice settlement can significantly improve efficiency and productivity for Indian retailers.

The apparel and garment industry in India can benefit from not only our solutions but industry expertise. Brands and retailers operate complex supply chains. With the recent factory disasters in Bangladesh, a microscope has been placed on supply chain practices. It’s more important than ever for retailers to be connected with all of their trading partners in a collaborative environment that provides visibility into all of the materials, goods and parties throughout the product lifecycle. It’s important for brands to know that goods are being created in safe factories that don’t harm the environment or workers. On top of this, retailers need to deliver goods efficiently to consumers to meet demand. This places even more importance on supply chain visibility and agility. To maintain this level of supply chain visibility, retailers need to operate their business as a supply network, where everyone is connected and collaborating in one place. GT Nexus’s cloud software can have a major impact here. This is where the entire value chain can be connected using just an internet browser – and all parties are updated instantly if a change occurs.

RAI: What’s in it for the vendor, why should they adopt your solution?
T.S: In the past, global retailers were famous for pressuring suppliers for the lowest possible price. In addition to cost, companies in consumer goods and manufacturing extended payment terms on suppliers – sometimes from 30 or 60 days out to 90 days or 120. There’s danger here. Once companies get into a mindset of thinking only of their own working capital, they lose sight of the big picture and create havoc in the supply chain. The result of actions to improve their own situations, such as payment terms extension, often puts pressure on trading partners, creating risk and resulting in failure to deliver on goods or services.

Taking a step back and looking at the big picture is important. All Retailers want to pay later and better utilize capital, as opposed to tying it up in inventory. Suppliers want to get paid as quickly as possible and with the lowest associated costs. The two sides have conflicting interests – and it’s often said that one party is the winner and the other the loser in a transaction. But that shouldn’t be the case.

If optimizing working capital stresses a retailer’s vendors, then it is essentially strangling its own supply chain – forcing vendors to take a hit on margins or increase their prices. GT Nexus helps retailers think holistically about the supply chain and work toward ways to better collaborate across all parties can pay heavy dividends in the long run. For example, GT Nexus facilities early payment programs that enable suppliers to get paid in just a few days in exchange for a slight invoice discount.

Nearly all vendors using our platform describe their experience using GT Nexus in the following way: “At first we had doubts and concerns about this system, but once we realized how easy it is to use and the benefits it provides we have no hesitation in recommending it to other suppliers or even other retailers”.

RAI’s Supply Chain Summit 2013 was about sustainability, collaboration, out-of-the-box thinking and pushing the envelope of Indian supply chain industry to world class standards. STOrai highlights key conversations:

“Moving Towards a World Class Supply Chain” was the theme of Supply Chain Summit 2013.

Meeting the expectations of the multi-channel consumers for speed and convenience is forcing many retailers to revamp their supply chain models. The Summit focused on how Indian Retailers are optimizing their supply chains for the customer.

The Summit was organized in partnership with the European Union, under the SWITCH-Asia project. The project is aimed at Sustainability in Consumption and Production (SCP) and uses forums such as RAI’s Supply Chain Summit to target Retailers, and their vendors to adopt sustainable practices in supply chain management.

Event Highlights:
Panel discussions on Sustainability, Managing Perishable Food Chains, Collaboration models, and handling Transportation / Logistics Costs.

Release of the RAI-E&Y report on “Movement of Goods” which profiled the supply ecosystem in India and RAI-Symbiosis Center for Management report on Supply Chain 2013.  The latter profiled the supply chain of 50 participating retailers.

Presentation by the Dabbawalla foundation – on how they achieve 99.9% accuracy, across the 3 mio meals delivered daily, and their innovative “Share” initiative, which ensures that food is not wasted.

Presentation on AMUL’s supply chain design – which delivers 20 mio liters of milk everyday, across the country.

The event started with a prestigious key note speaker Dr. Arno Schaefer, Minister Counsellor, Head of Cooperation, EU Delegation to India, who opened the event by presenting his view on the Indian retail industry and also talked about the EU’s Switch Project. The project focusses on creating awareness about the levers for sustainability in the supply chain – in the food and beverages category and targets retailers and their vendors in its awareness to get the industry to adopt sustainable practices.

The event also witnessed five engrossing panel discussions. Snippets of the conversation are as follows.

Emergence of omni-channel retail has given rise to complexities in supply chain management. The session “Accelerating Availability: Supply Chain Solutions” explore the different aspects of SCM in the context of omni-channel retail. The session was moderated by Anant Mahale, Director, Intouch Rewards and the eminent panelists were Shohaib Ahmed, President, Tally Solutions Pvt Ltd; Kannan Soundarajan, CFO, Arvind Lifestyle Brands and Arvind Retail Ltd; Samson Samuel, COO, Contract Logistics & CIO, Future Supply Chain Solutions Ltd; Somick Goswami, Director-Consulting PWC;  Tony Low, MD & Sr VP, Asia Pacific GT Nexus; and Veneeth Purushotaman, CIO, Hypercity Retail.

Where do the challenges lie?

Mr Samuel talked about complicated inventory management, whereas Mr Goswami pointed out the problem in prioritizing the movement of a particular stock and the disparity between order exposure and order fulfillment. A customer walking-in and walking out without any purchase is an opportunity loss or loss of cost, viewed panelists.

Dealing with return inventory

Though omni-channel retail increase the risk of return inventory Mr Purushotaman commented that online retail is one effective channel for selling return inventory at marked prices thus enabling liquidation of stocks.

All the panelists agreed on the point that customers are the key stakeholder of omni-channel retailing and post-sales services have to be enhanced for betterment shopping experience.

Collaboration with vendors

Trust factor plays an important role here. Absence of trust among retailers and vendors causes absence of visibility. But Mr Soundarajan feels that SOR (Sell Or Return) model brings in visibility.

Importance of GST

For inventory distribution there is an urgent need for the deployment of GST. Effective network model or spoke and hub model is only possible when GST is in place. Mr Soundarajan highlighted the dearth of good logistics companies and space enough to build up warehouses and distribution centres.

Transportation Management

All the panelists lamented on lack of uniform regulatory policies for the movement of goods across the country. These are basic fundamentals which are not in place and despite having technologies, such problems can ruin the retail sentiment, viewed the panelists.

Budget constraint

In the context of slow economic growth, the retailers are feeling the heat and unanimously agreed that there’s a restricted technology adoption for budget constraint.