“Getting IT right” – Emerging Retail

The retail sector in India is estimated at USD 500 bn (source: Deloitte – Jan 2013).  92% of the sector is emerging retail; with 8% penetration of modern retail formats.

Emerging RetailShopping habits have evolved to encompass traditional vendors and modern trade formats. At the same time, the smaller retailers have also begun to use technology  – either to aggregate purchasing power, or to provide better customer service.

Emerging_Retail_2

The table below provides a comparison of emerging v/s organized retailers – their reach and technology habits

Emerging_Retail_4Also – the complexities faced by emerging retailers are different depending on the category of merchandise sold.  For examples kiraana’s have to deal with complexities of a large assortment, credit sales, home delivery requirements of customers, and customer returns. Some of the larger ‘organizing’ retailers in this category also have to handle the relationship dynamics with consumer product companies – to achieve parity in promotions with larger retailers.

Similarly, for apparel retailers – complexity stems from the fact that merchandise is seasonal, and the customer requirement for a large range and variability in sizes and shades. Food service retailers have to work around complexities associated with wastage, and procurement of materials.

Technology adoption ‘value chain’ for Emerging Retailers:  The graphic below shows a conceptual roadmap for technology adoption among small emerging retailers; as retailers grow in size and reach, they adopt differing segments of technology.

Emerging_Retail_3

Points to ponder:

For technology providers, emerging retail  can be a large opportunity – provided their offerings address the following:

  • Cultural barriers:  Any first time adopter of technology will require higher hand-holding  – in addition, there may be a language barrier which needs front end screens to translated into local languages. Other aspects could also be a lack of basic infrastructure –  in terms of internet connectivity and power – these are structural and could render some micro-markets out of the reach of  technology providers.
  • Fear of technology failure: Linked to the above factor of cultural barriers – there may be a tendency to blame technology for failure.  This would mean that technology providers would have to become ‘partners’ and adopt a solutions mindset.
  • Pricing:  Pricing models need to be flexible. While SaaS costing structures have been designed for smaller retailers – it may not be possible to recoup associated costs around training / hand holding.

The following two tabs change content below.
Vinay Hinge

Vinay Hinge

Vinay Hinge is a retail consultant based out of Mumbai. He is also a co-founder of Independent Consultants Exchange. He is an author of Handbook of Retail IT, the only title of its kind. Vinay works with several emerging retailers and mentors a few start-ups in consumer engagement domain.
Vinay Hinge

Latest posts by Vinay Hinge (see all)