Technology Enabled Efficiencies for Retail

“Technology can not root transformation but definitely accelerate the process of transformation”. The sea change in the way the retail business is carried out in the past from the days of barter to traditional retail formats till now when we see established format, one may notice the role of technology and how technology has speed up the process transformation the last decade. In future a retailer needs to accelerate the change process and one sure ways of success is adoption of right technology. Technology has enabled businesses and consumer to build efficiencies on the basis of the ability to receive and transmit data at a faster speed. This information has today become critical for achieving efficiencies in all aspects of retailing. Inventions in various fields have created numerous opportunities for retailer to make that as a part of innovation process that is profitable proposition for customer as well as the firm. Technology will encourage the smart shopping. This paper discusses various technology driven applications and processes that are used by the retailing and some insight into the technology for the future.

Radio Frequency Identification (RFID)                                                    

Radio-frequency identification (RFID) is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders. The technology requires some extent of cooperation of an RFID reader and an RFID tag. By the year 2010, RFID tags will be attached to most of the consumer products, turning ordinary products into smart products, the most important concept of the store of the future. RFID not only help retailer manage inventory, but also help increase sales. e.g. At Prada’s, Newyork store, the RFID tags on the clothing is scanned at the doorway. The scan activates a video screen in the changing room that displays other clothing and accessories that are complementary to the item the customer chooses.  This feature resulted in an increase in complementary sales at the Prada Store.

Microsoft Tag

Microsoft Tag creates unlimited possibilities for making interactive communications an instant, entertaining part of life. This application transforms physical media (print advertising, billboards, product packages, information signs, in-store merchandising, or even video images)—into live links for accessing information and entertainment online. With the Microsoft Tag application, just aim your camera phone at a Tag and instantly access mobile content, videos, music, contact information, maps, social networks, promotions, and more. It is designed from the ground up for maximum performance with the limited cameras on most mobile phones. Advanced image-processing techniques decode even out-of-focus barcode images, which means Microsoft Tag works with the fixed-focus camera lenses common in most mobile devices. The possibilities are endless for retailers, consider following scenarios:

You go to a store and check out a bathing soap, you see Microsoft tag on the box, you use your Mobile phone Microsoft Tag Reader and you could be shown promotion around the box, you can compare prices with other brand bathing soap with content analysis and of course benefits of each of these.

You go to a store and check out Godrej processed packaged Green Peas and using Microsoft Tag Reader application on your phone you are taken to the Sanjeev Kapoors website and are shown Recipes around the product. You are also shown the nutrition information about the product. This will ensure that you buy other ingredients along with the product for the recipe you

You buy a Laptop from Electronics and see a Microsoft Tag on the backside of Laptop. You click it using Microsoft Tag Reader app on your mobile and voila, you just registered your Laptop. You may also be shown the accessories you can buy for your laptop.

Point of Sale Automation

On it’s packaging, each product carries a barcode, which uniquely identifies it and distinguishes it from all others in a shopping basket. At the checkout, an automatic scanner (slot scanner or handheld reader) reads each barcode on the product. The barcode is decoded to reveal the Article number it represents. This number is passed to a computer, which matches it against a file and retrieves the price to be charged along with a description of the product and related details. Both price and description (and other relevant data) are then printed on the billing receipt.

With the help of barcode technology, retailer can record the identity of every item sold. They can re-order more quickly, reduce their stocks and have financial and marketing information at their fingertips with unbelievable speed, accuracy, and detail. For consumers, it means accurate billing, faster checkouts (and a happy shopping experience).

 With increase in consumer footfalls, retailers are now progressing to use mobile-POS systems. Mobile devices enable shopping clerks to carry these handheld computers in rush time for on-the-spot transactions. Mobile POS devices feature an integrated reader (to scan individual items), MSR (for credit card authorization), and wireless-connected portable mobile printer (to generate bills).

 Digital Signage

Digital signage refers to a variety of technologies used to replace traditional retail signs. Instead of static print signs and billboards, digital signage is composed of electronic signs dispersing content and messages in the most targeted, interactive way.

Liquid crystal displays, plasma display panels and scrolling message boards are a few of the more common in-store devices used to project full-motion video, sound and text. Digital signage enables a retailer to control and display their messages quickly and effectively.

The Digital Sign Network:Creating a digital signage system involves building a network of electronic devices that are controlled remotely from a central location. These devices present information via digital signage software to a targeted audience. Digital signage devices in the network may be plasma or LCD monitors, kiosks, projection displays, HDTVs or other electronic devices.

Using digital signs in a retail environment has many features and benefits not offered by static displays and signage. Dynamic digital signage can grab a customer's attention and influence their purchasing decision right at the point of purchase. It also eliminates the high cost of creating and distributing print ad campaigns. Digital signage is instant and offers the ability to change promotions immediately for various products or particular customers. Another advantage of digital displays over static is that retailers can earn money with their digital signage network by selling advertising space to their suppliers.

Whether it is intended to build a brand, influence customer behavior or simply provide information, the dynamic visual experience created by digital signage should ultimately increase sales. In order to achieve that goal, retailers will need to design the appropriate system.

Soft Safety Tags

This technology is being used by most of the retailer for garment merchandising today. This technology reduces labor time for retailers and reduces the damage caused to clothing by hard tags. The new soft tags are paper thin, flexible, and attach to an inconspicuous area on a garment, or can be embedded into the fabric.

While the product protection attributes of the soft security tags are similar to traditional hard security tags, the process of handling them at the point-of-sale (POS) is different. With hard tags, a device at the POS alerts the associate to remove the tag; with the soft tags, however, that same device automatically deactivates the soft tag, which remains in the garment, eliminating a step.

Soft tags are mostly attached in the sewing operation and withstand processes like garment dyeing and acid washing. The tags must also stand up to processes after the garment reaches the consumer's hands, such as machine washing and dry cleaning, without breaking apart and possibly damaging the merchandise.

Benefits

• Less damaging to garments that traditional tags
• Provide increased security
• Discourage black market sales of designer merchandise
• Require less sales associate labor

 Multi media Kiosk

Multi media kiosks are a versatile way to extend customer service and marketing efforts. A multi-media kiosk that provides customers with access to information needed to plan an entire party. Using touch screen technology, customers can compile a list of items, including prices, which need to be purchased. They can also receive information on where to find the items in the stores where these kiosks are located.

Further advances in kiosk technology allow for access to the company's web site and other specially selected sites. In addition, large flat screen kiosks can double as in store signage for special promotions, price updates (if connected to a corporate host), and new products.

Benefits

• Can be a point of differentiation for store
• Increased promotional/marketing opportunities
• Increased customer service

Virtual Showroom

Instead of walking around a showroom floor, customers will be able to view computerized images of room interiors and furnishings. The technology has the potential to offer thousands of home-decorating items that cannot be displayed on the retail floor.

The system replicates the exact dimensions of rooms, as specified by customers, and incorporates images of products the customer is considering. It provides a computer generated, three-dimensional, image of how the room would look with the planned additions. Customers can mix-and-match different colors, styles of wood, and patterns for the kitchen, bath, bedroom and great room.

With the aid of this new technology, to provide an environment where a store can truly collaborate with its customers. It makes buying accessories and furnishings much easier because it eliminates a great deal of the guesswork. If customers do not know the dimensions of their rooms, one can have some typical room layouts that can be used to give the customer a general feel for how a new cabinet or fixture would look. Furthermore, the technology offers the opportunity for other exciting retail applications. It could be used to put together a digital outfit, allowing the customer to experiment with different shoes and accessories.

Benefits

• Can display more options that on an actual show floor
• Eliminates need for customer guesswork
• Fewer customer returns
• Increase in customer satisfaction
• Creates increased sales opportunities (a customer interested furniture may become interested in window treatments)

Neural Networks

A neural network is an information system that recognizes objects or patterns based on examples that have been used to train it. Each training example is described in terms of a set of characteristics and a result. Neural networks often do well with identification and discrimination tasks even when some information is missing because they operate by applying numerical weights to many different characteristics. In its learning phase the neural network uses statistical methods to optimize a set of internal weights that relate each inputs to each of the possible results. This is a numerical attempt to mimic the typical human ability to recognize and relate various variables and its impact on the output.

In this case neural marketing is used to evaluate consumer expectations and simulate a response to those expectations by adjusting components of the marketing mix. Data available for each store includes:

• Selling square feet
• Inventory
• Unit sales volume
• Sales personnel information
• Competition factor
• Local advertising expenditures
• Promotions

Using these variables a network can be trained and then used for sales forecasting. Clearly neural networks have an ability to understand relationships in a data set. This can be made use of in numerous ways. Prerequisite for accurate results is efficient Management Information Systems (MIS).

Personal Shopping Assistance (PSA)

The Personal Shopping Assistances (PSA), which are small tablet computers clipped to shopping cart, are activated with a loyalty card. A customer can simply find the products that he/she needs by typing out the words on the touch screen. He would be then directed to the correct aisle – floor plan included. Regular purchases show up on a favorite list, with price and location. Special offers are flagged up as the customer moves from one section to another. This technology also enables the customer to write out the shopping list online – at home or work – and soon it will be automatically downloaded to the PSA. The integrated scanner provides a running total of the shopping and fast track treatment at the checkout. This is future store initiative of METRO Group. This initiative is a cooperation project between METRO Group, SAP, Intel, IBM and T systems.

Conclusion

Technology will no doubt play a key role in creating future successes. Using the technology to collaborate with suppliers to make supply chain more agile in response and more efficient. Use technology to empower customer may be the new business reality for retailer. There is a need to understand the requirement and adopt appropriate technology solution to create sustainable efficiencies.

Wheel of Marketing

Understanding of the terms core competency, competitive advantage, unique selling proposition (USP) and unique consumer perception (UCP) and the relationship between them is very vital for the marketer. Let us understand the terms and marketing cycle with reference to these core concepts

Core Competency

An area of specialized expertise that is the result of harmonizing complex streams of technology and work activity. e.g. Innovation, R&D, Mass production usage of technology, reliable process. The core competency of Reliance Group is building the record capacities in record time. Organizations need to understand what they are good at or the exceptional skills that they possess. That becomes core competency of the organization. It is not enough to be best in this area of specialization to consider that as core competency, one should be excellent at the same.

Competitive Advantage

Competitive advantage is a position a firm occupies against its competitors. A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms. Basic Competitive Advantage is cost leadership, product differentiation and focus.

Core competency creates competitive advantage for organizations. As mentioned earlier core competency of Reliance group (Capacity building) gives then cost leadership advantage to them. Similarly reliable process has given competitive (Product/service Differentiation) edge to the Mumbai Dabbawala’s over its competitors

Unique Selling Proposition (USP)

The proposition must be one that the competition either cannot, or does not, offer. It must be unique either a uniqueness of the brand or a claim not otherwise made. e.g. Head and Shoulders – Dandruff remover, Volvo – safe drive, Armani’s – Status and design, Fedex – Overnight delivery of parcel. USP is elaborate form of competitive advantage to create distinct image in the minds of the consumer (positioning) which is easy for consumers to understand. Strong USP would ensure brand recognition and brand recall.

Unique Consumer Perception (UCP)

Our perception is an approximation of reality. It is based on stimuli to which we are exposed to. Marketers try to create a positive perception about the brand or company through USP. Unless the UCP is created brand awareness and brand recall is not possible to achieve. In case of Mumbai Dabbawala’s UCP is reliable service.

Consumer expectations are based on unique perception about the brand or the company. After availing the service or buying the goods consumer compares the expectation with performance and that decides whether consumer is satisfied with the same.

Hence any flaw in the process of understanding core competency, creating competitive advantage, communicating USP and in turn creating UCP may lead to failure of the marketing system 

Drivers of Retail Change in India

Retail is the new buzzword in India. Buying ritual has become shopping experience. It is a celebration and entertainment. Lifestyle is changing rapidly. The concept of value for money is gaining importance. The information that the Indian consumer has access to is immense which leads to the freedom of choice and in turn the demand for the differently organized retail formats. The traditional way of retailing is also organized but differently organized. The changing income profiles, change in consumption patterns, changing demographics, diminishing difference between rural and urban India demand the change in the way the retail business is carried out in India.

We all witness to the change in retail in the country. The local Bania has gradually transformed himself into a small supermarket. This change is not only restricted to metros but has rapidly spread over to a smaller cities and towns. The reason for this change is due to the most important element in the whole process i.e. the Indian consumer.

Population

The size of population in India has always made it a large market. 1.10 billion People and almost 40 % of the population is youth which makes it more lucrative market. Aspiration, wants of these people thought are different but it definitely creates the opportunities for the retail trade which keep growing every day. One more aspect of this population is that the 26 % of the population is still below the poverty line but still catering to the basic needs of these people (As per the Maslow’s Hierarchy of Needs) is daunting  task which creates enormous opportunities for retail.

Changing Income Profiles

The definition of income classes vary from one study to another. According to NCAER the average middle class family’s disposable income rose by more than 20% from 1993 to 2006. The middle income and the upper income categories are likely to witness the most significant expansion in the coming decade. The upper and middle class are likely to increase their share in the population from 19.6% in 1995 – 1996 to 42.6% in 2009 – 2010. , a substantial increase, while the middle income group likely to witness an increase from 32.9% to 39.8% in the same period.

Diminishing difference between Rural and Urban India

Rural India amounts to 70 % of India’s population and this itself offers a tremendous opportunity for generating volume driven growth. It is interesting to note that LIC sold 50% of its policies in Rural India in year 2005-06. Of the over two million BSNL mobile phone connections more than 50 % are in small towns and villages. This kind of phenomenon is evident in all type of products and services. So the diminishing difference between the Rural and Urban India is pretty evident. This makes it easier for the marketer to develop and market new goods and services for the Indian consumer.

The rise of the self-employed

Rural India has always been largely self-employed. But now the proportion of the self-employed in urban India has risen to 40% plus, replacing the employed salary earner as the new 'mainstream market'. A Hansa Research Group (HRG) study shows that even in the 'creamy layer', comprising the top two social classes in towns of 10 lakh plus population in urban India, 40% of chief wage earners of households are shopowners, petty traders, businessmen and self-employed professionals.

Unlike the salary earner, the self-employed use products much more to signal success and are also fast adopters of any productivity tools, like cellphones and two-wheelers, that can help them earn more.

Striving

Most Indian consumers, whether rich or poor, want to get ahead in a hurry. From being destiny-driven and resigned, they are now destination-driven and striving to grasp opportunities to earn more in order to construct a better life for themselves and their children. If one were to segment the country into the Arriving, the Striving and the Resigned, the proportion of Resigned has definitely decreased and become geographically concentrated, rather than well-dispersed, as it was earlier.

The rise of the woman

Like the self-employed, women too are saying "I can and I will," and emerging as partners in family progress. Not so much from earning the second income (a mere 23% of Indian households have working wives and that proportion decreases as incomes increase) but by being CEOs of households and intellectual nurturers of their children.

Consumer India

The Indian market is a collection of unique little markets, each with its own values. The forces acting on these little India's trigger different changes for each. There is a rural India in Urban India and rural India in urban India. A rural district in state of Maharashtra is a big market for luxurious cars.

Better connectivity and communication, and the literacy leap, are together increasing the aspiration of the Indian consumers at every level. The reason why these changes drive aspiration is lucidly explained by the well-known anthropologist, Arjun Appadurai, of Yale University: "Imagination is not about individual escape. It is a collective social activity. Informational resources are needed for people to even imagine a possible life, weave a story and a script around themselves, and place products in emerging sequences. Imagination may not always lead to action, but it is a prelude to action."

Most Indian consumers, whether rich or poor, want to get ahead in a hurry. From being destiny-driven and resigned, they are now destination-driven and striving to grasp opportunities to earn more in order to construct a better life for themselves and their children. If one were to segment the country into the Arriving, the Striving and the Resigned, the proportion of Resigned has definitely decreased and become geographically concentrated, rather than well-dispersed, as it was earlier.

That's why, the size and opportunity of the Indian market is not a simple find. Therefore, the question that businesses need to answer is: "What is my target India?" Understanding the target segment is very important while doing business in India so that the product offering is made suitable for the consumer. Changing markets needs new basis of segmentation rather than usual income segmentation or rural/ urban segmentation. For example there is huge market of well being, youthfulness and strivers ready to be exploited. The focus should be on utility of the products to the consumer, usage pattern, drivers of buying behavior needs to made basis of segmentation and then the products to be developed accordingly.

Rationalizing the Dreams

Managing growth is more difficult than managing the downturn. In these difficult times of economic slowdown one has to rationalize the dream to remain competitive. Rationalizing the dreams is also important when you are growing as well. A cautious start in terms of investment, selection of markets, product mix etc could save the marketer from go error which would lead to undesirable results.

Think big, dream big, aim for high is something that we keep reading and listening. There is no harm in thinking big, dreaming big but one also needs to understand where to stop if things do not happen accordingly. Once needs to learn to accept the failures and get on with the life.  One should be able to transform the dream into vision and mission statements and this mission statement should in turn be divided into short term goals. The most important thing is; all this should be measurable and achievable.

Rationalizing the dreams does not mean being pessimistic but being realistic. Understanding what the core competency is? And capitalizing on the same rather than trying to work upon the something very new. A very few corporations have been able to successfully diversify their businesses. Others failed drastically. Dewoo is very fine example of the same. Such was the failure of the Dewoo that they could not even retain their core business. It was a result of Dreaming unrealistically big. There are many of such examples in the past.

In the last few months’ retail investors have lost huge capital in stock market, everything was fine till the market started showing downward trend. People who lost money expected unrealistic profits and in the end traped in to the “Chakravyuv” (a trap). This is one more incident of not rationalizing dream.

We see lot of companies, people coming up very fast the limelight and become the talk of the town but most of times these do not able to manage the growth and then become extinct in no time. This is also due to unrealistic expectation and unrealistic growth.

One needs to accept the facts, have trust in own and organization abilities and clear idea about one’s reach so that the threat of becoming extinct can be avoided. Rationalize your dreams to survive, compete and then conquer.

Small is Big in India

India is complex market to understand. What works elsewhere not necessarily work in India.  Kellogs and KFC are just some of the examples. Then what works here? Shampoo sachet, Nokia1100, Subhiska super market, tier II and tier III cities. What is common among the all? All these are small.

Shampoo sachet was introduced in Indian market to capture the party pack market. People in India do not shampoo every day. It is used on occasions or week ends. So buying 60 ml pack of shampoo for Rs. 70 is definitely not wise decision for a consumer to make. The solution came in the form of sachet. There was always a demand for shampoo; there was a need for that demand to be exploited by removing the bottlenecks that prevented this demand to be visible. What worked in this case was small. Now there is huge market for these products. Consumption of shampoo has gone up by almost 25 % after the introduction of the sachet. Same case is with some other products like Rasna, smaller chocolates, tooth pastes etc.

As far as low priced products are concerned; there are lots of success stories e.g. Nokia 1100, Deccan airways (now Kingfisher Red), Reliance cellular services and many more. Most of these products and services are very successful due to the lower pricing strategy. As far as core benefits are concerned there is no compromise at consumer end but giving up additional benefits at additional price was acceptable. Again what worked was small in this case it was price.

Marketers today are talking about rural market, tier II and tier III cities. The next destination for corporate India is rural India. Even today 65% of India stays in Rural India.

Same case is with the smaller formats in retail. When we compare various retail format (Supermarket, Departmental Store, Exclusive Showrooms, Hypermarkets) in India with that of international counterparts we notice one major difference and that of size. e.g. average size of hypermarket in Europe or US is about 200,000 sq. ft. whereas average size of hypermarket in India is 85,000 sq. ft. This again proves the hypothesis that what works in India is small.

A marketer needs to understand one thing that “Small is big in India”

Feel Good Syndrome

I remember Mr. P. Chidambram’s statement; then finance minister immediately after the debacle of Lehman Brothers and US market collapse. He said that India is decoupled and isolated from the recession fear in US and global financial crisis, our economic will still grow at the rate of about 9%,we have our fundamentals intact and so on so forth. But we all have witnessed what happened thereafter. Indices have gone down almost by 100 %. We started the feeling the heat, slow down in industrial output, job market going down, retrenchment news started coming from different industry, talk about small industry getting into trouble, liquidity crunch. We have hardly heard any good news in the last three to four months on economy front. Was this impact not anticipated? Or it is just the feel good syndrome that we Indian have always been suffering. Even today when we listen to the experts they all still talk about the situation being better than others around the world.

We are a great country; we are a nation with great talent, great culture, great values and great history there are no two things about it. But if something is good that needs to be appraised by others; in our case we only blow our trumpet. My view may sound pessimistic but I think that there is a need to think about it. The above mentioned incidence is not an isolated case. Even recently when Satyam scam came in light, we passed immediate judgment that this is just an isolated case and then followed the news of five IT majors blacklisted by world bank. In the past also an incumbent government lost an election due to the same feel good syndrome. After Mumbai terror attacks, there were talks about resilience of people of Mumbai. We are forgetting the fact that Mumbaikar today is not resilient by choice but by force. For a Mumbaikar it is question of his bread and butter. Same is true about other terror attacks in the last two decades or so, most of the time we see that there is system failure but we are still not ready to accept that there is something wrong in the intelligence information gathering or communication between various security agencies.

I think it is good to be optimistic and we must be proud of our strengths, at the same time we need to learn to accept facts. There are lots of things that we are not good at, lot of things we need to improve. That is only possible when we start accepting things as it is and act accordingly in the best interest of the nation. If we do so the whole world will look at us as a great nation and we do not need to blow our trumpet. Let us get out this feel good syndrome.

Quality for Marketer

One of the most difficult questions for me to answer for last so many years has been: What is Quality? There are hundreds of definitions given by the various books on Quality Management; each one sounds perfect in the given context but generalizing the term is very difficult. Quality is a subjective matter, but very important for any organization to survive and make a mark in the fiercely competitive market. A producer and a customer can view quality differently.  Some of the technically best products may not be commercially successful and vice a versa. For example if you ask people about best wheeler available, you probably get as many answers the no of bikes available. It is very difficult for a marketer to decide what is quality?

Quality needs to be defined in a producer and customer context differently. Let us look at some definitions

Business has tried to define quality in a producer-consumer context, with the following variations:

1.     ISO 9000: "Degree to which a set of inherent characteristic fulfills requirements." The standard defines requirement as need or expectation.

2.     Six Sigma: "Number of defects per million opportunities." 

3.     Philip B. Corsby: "Conformance to requirements." The difficulty with this is that the requirements may not fully represent customer expectations.

4.     Noriaki Kano and others, presenting a two-dimensional model of quality: "must-be quality" and "attractive quality." The former is near to the "fitness for use" and the latter is what the customer would love, but has not yet thought about. Supporters characterize this model more succinctly as: "Products and services that meet or exceed customers' expectations."

5.     Rober Pirsig: "The result of care."

The best definition is given by Dr. Joseph Moses Juran. He was a 20th century management consultant who is principally remembered his work on Quality and Quality Management, writing several influential books on those subjects. He says quality as “fitness to use” and fitness is defined by customer.

This definition is best suited for marketer to understand the term. Here marketer needs to understand what is a best solution to the target customer problem? May not necessarily be the best in terms of technology. e.g. the immensely popular product of the past in two wheeler category  ‘Bajaj scooter’ was not the best technical product but successful as it was for fit to use for its target market. Understanding the target market and what would be suitable for the same is the key for successful launch of new quality product.

Word of Mouth - An Effective Ad Tool

Positive word of mouth publicity is very important of any product to succeed in the market. To take advantage of the same one needs to understand why do people talk about the product and in turn influence the buying behavior of reference group. There are few reasons why I think people are interested in talking about the product.

1.      As a natural tendency of human being every one likes to give a suggestion to others. When they like the product and happy with product performance they want to inform others, in turn spread positive word of mouth for the product.

2.      People like to show off their knowledge to others. This is one of the reasons even if the product is not bought or used, people talk about it. e.g. all the people talking about Mercedes or Bentley it is not necessary that own one. It is quit possible that they have not seen it ever, but they talk about the same.

3.      People like to associate themselves with certain product. Some products are considered as status symbol and prestigious, so when you own one you will talk about the same and inform people that you own the product. People are actually talking about themselves but end up advertising the brand.

4.      People also talk about the product that they buy to check whether their decision of buying the product was correct, and some one has bought the same product for the same price. This is result of post purchase dissonance when customer is not sure about the performance of the product.

Marketer needs to have product which lives up to the customer expectation, brand which is considered to be the prestigious or best in terms of quality and the product which suffers no post purchase dissonance to take advantage of the positive word of mouth publicity, which is free of cost and needs very little marketing effort by the marketer