With the advent of the retail boom, global technology vendors are quickly getting into the marketplace with solutions that claim to make retailers’ lives simpler. SOA is being preached, the benefits of RFID are being marketed, and business intelligence vendors are demonstrating software capabilities. However, is there really a reason for a CIO to go out shopping?

Biztech2.0 recenty spoke to Arun Gupta, CIO, Shoppers Stop, and Chinar Deshpande, CIO, Pantaloons, and discussed some of the issues that modern retailing has been facing. Arun Gupta was previously working as a CIO for pharmaceutical giant Pfizer.

Welcome to the Age of Modern Retailing

Retail is a customer focused business. Retailers need to put in great efforts to really know their clients. Adapting to customer needs in a very limited period of time is also of crucial importance. Hence this industry lays great emphasis on quick delivery of customer focused services (offers, promos, etc).

Elaborating on some of the differences between retail and pharmaceutical with regards to technology, Arun Gupta said, “Core systems within an enterprise stay the same across almost all verticals. However, the requirements of the two industries are quite different. Pharma relies heavily on field representatives distributing samples of new products, hence, this there is a greater emphasis on mobilising the workforce.

Retail constantly benefits from information collected from customers’ transactions. Hence requirements of retail, technology wise would encompass business intelligence, data mining/warehousing, and other similar technologies. Using these, retailers can constantly benefit from newly observed trends based on user purchases.

The Rise of SOA

Chinar Deshpande believes that retail systems now need to be configured such that they can deliver a great amount of flexibility and scalability. This is where SOA comes into the picture.

Both Deshpande and Gupta agreed that although SOA seems enticing, there is no real need for it – yet. “Global retailers (enterprises) are excited about SOA, namely because of the fact that they have so much legacy. However if you look at the scenario in India, we’re just starting out. We don’t have legacy to be worried about. However, this is obviously subject to change, and we will start seeing the benefits of SOA when there is really something to work with,” mentioned Gupta.

“SOA basically consists of a set of loosely coupled elements. Now when you have a situation like ours, when the systems are so tightly integrated, SOA requires the loosening of these systems, so that  they can work in a more flexible manner. This is one of the problems I see with this philosophy as of now. However, I do feel that it has a lot of clear cut potential, but then again, there is a time and place for everything,” mentioned Deshpande.

Any Takers for RFID?

An upcoming technology that is gaining popularity with many retailers worldwide is RFID. Although RFID is currently being used by major retailers such as WALMART, Deshpande and Gupta feel that it will still take some time before this technology can be fully made use of.

“RFID is a great technology, and its not like it’s new, it’s been around for about 20 years, but true benefit can be achieved on a volume basis. Stores like WALMART, deal with products at a much larger scale, and in their case, RFID gives them true business benefits. We’ve still not been able to achieve such scale, which is why we’ve not been able to devise a suitable ROI model,” said Gupta.

Retailing at the next orbit

Gupta and Deshpande also spoke about “retailing at the next orbit”. According to Deshpande, retailing at the next orbit is aimed at providing customers with a whole new shopping experience. “The idea is to enable more information exchange between the customer and the retailer. In this way, retailers will be able to provide customers with personalised offerings as opposed to customised offerings, which generally appeal to specific group of customers.”

However, extracting customer information could prove to be one of the challenges. “Customer’s are bound to be apprehensive while sharing details. It is of prime importance for retailers to first gain their trust. Once this is done, a big part of our job will be complete,” explained Deshpande.

Industry level challenges

Gupta regards employee attrition as his biggest challenge. Considering that retail market is getting aggressive, retaining the right talent is of crucial importance.

For Deshpande, it is vital to bridge the gap between business decision makers and technology decision makers. The Indian retail market at this point is extremely dynamic. As a result, by the time a certain technology initiative is completed, the business has grown so much that everything needs to be planned out again.

Future Plans

Arun Gupta’s future plans encompass mining transactional data, in order to gain more insight on customer needs. “We have been mining transactional data on a limited scale in the past, however, we’re going to take this initiative further and adopt business intelligence as a discipline.” Apart from this, Gupta is also looking to optimise his promotion process, and supply chain.

Deshpande on the other hand, is currently working on bridging the ‘gap’ that exists between business decision makers and technology decision makers. Although the gap may never stop fluctuating, Deshpande wants to balance it just enough to ensure smooth functioning. Bridging this gap will allow business and IT to work together in a more streamlined fashion, rather than having technology as just another asset that can be used only when required.

Verdict

CIOs expect retail to reach new horizons, given the opportunity, and the presence of multiple technology vendors. Numerous small time retailers are also making a mark in the market.

Deshpande believes that if smaller retailers use technology right from the beginning, they can achieve great milestones. However, he is against unnecessary expenditure on irrelevant technologies.

“Smaller retailers need a basic technology implementation just to get their operations started. They can think about the larger core applications once they’ve achieved a certain amount of maturity in the market, and once the primary goal is to increase market share,” Deshpande concludes.