It Retail Sameer Ahuja
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[Retail and CPG] [Sameer Ahuja] Industry Overview •
Retail Sector is segmented into Grocery, Specialty , Pharma & Multi-Channel Retailing, Apparel & Footwear, Food & Beverage, Home & Personal Care and Wholesale Distribution industries.
•
Major IT Drivers affecting the domain o Radio Frequency Identification(RFID) : Real time inventory management o Master Data Management : Data accuracy and inventory management o Point of Sales Solutions : Customer interaction and service o Merchandize Optimize Solutions : Processes and tools to enable effective customer-centric merchandising o Supplier Collaboration : Supply chain visibility o Enterprise Performance Management : Helps in making key business decisions
Market Overview:
1
a) Global •
Accenture Analysis : Software will attract the largest share of the forecast spending by retail companies, growing from $4,581 million in 2001 to $9,330 million in 2006.
•
Accenture Analysis : IT spending in retail to increase with a CAGR of 67% from 2004-2010
•
According to NRF Retail IT and Budgeting Study, the retail industry will spend $7.4 billion on technology in 2006 — an 11.5 percent increase over 2005, which was already up 10 percent from 2004
•
The traditional measures of value –choice ,quality ,convinence and low price are assumed by consumers , who are now become more focused on reducing the time ,effort and risk associated. As a result retailers are facing challenge to personalize interactions with their customers. Other challenge include planning of logistics and supply chain network
•
RFID spending at U.S. retailers will grow from $91.5 million in 2003 to nearly $1.3 billion in 2008
b) India •
The Indian retail industry, estimated at US $325 billion in 2006, is one of the fastest growing sectors of the Indian economy
2
•
IT revenue from the Indian retail segment measured US$ 253 million in 2006 and is expected to grow to US$1.07 billion by 2010, with a compound annual growth rate (CAGR) of 44%. This was announced by Springboard Research, in the results of its research report detailing IT spending and market trends in the Indian retail industry.
•
Traditionally dominated by small, family-owned retail shops, the industry is making a move to a more modern and organized retail industry structure. Thanks to a healthy economy and rising household incomes, organized retail is emerging as a rapid growth industry in India.
•
As the current economic boom in India spreads to Tier II and Tier III cities and towns, reaching out to prospective consumers in these cities is high on the agenda of most retail companies. Retailers consider market presence in these cities and towns key to their growth and profitability. As such, many retail companies are investing in technology that will help support their expansion into these new markets.
•
At the moment, there is a need for operational solutions, such as Point of Sale (PoS), Merchandise Management System (MMS), and merchandise planning to run the business.
•
Established retail players of the country such as Pantaloons of Future Group, Shoppers Stop, and Spencers are among the first big retail houses that have already deployed fully integrated core ERP applications. Few of them have even initiated the pilot phase of next level IT deployments such as Radio Frequency Identification (RFID), customer relationship analytics, etc
•
SAP was identified as the leading primary influencer in terms of solutions investments, followed by Microsoft.
•
Satyam Computer Services, a global consulting and information technology services company, has recently entered into an alliance with US-based JDA Software group, provider of supply and demand chain solutions to provide comprehensive solutions to the customers.
•
Only a handful of organized Tier 1 retailers are investing in technology to capitalize on the retail boom in India .Moreover, as labor is cheap, even the use of technology in the Indian retail market is limited to areas such as in-store, merchandising, financial and accounting
c) Singapore •
SMALL and medium-sized enterprises (SMEs) in the retail sector in Singapore are likely to spend up to US$240 million (S$364 million) on IT related investments this year, which is about 10 per cent more than
3
what they did in 2006, according to the latest report by Access Markets International (AMI) Partners •
Some of the key concerns that emerged from the retail mid-market companies were issues relating to managing customer loyalty, maintaining product prices and management of personnel.
•
IT managers in these companies are looking to take the next steps in terms of deploying CRM (customer relationship management) solutions, upgrading POS (point of sale) systems, setting up inventory and SCM (supply chain management) solutions and deploying employee monitoring and service quality measurement systems.
d) UAE •
According to IIR Middle East, the organizer of Retail City, current GCC retail space will treble to more than 15 million square meters by 2016, as the burgeoning tourism industry and regional population growth spurs the longer term prospects for the GCC’s retail industry.
•
The justification behind this extraordinary acceleration in retail development is two-fold. Firstly, the numbers of tourists visiting the region is estimated by the World Tourism Organisation to reach 68 million by 2020. Again Dubai has taken the lead with five million visitors in 2005, which will climb to 15 million tourists by 2010.
•
GCC retail Enterprise Resource Planning (ERP) software market is worth US$270 million
•
Paris Gallery, the UAE's largest beauty retailer and arbiter of taste in the region, has announced the roll out of Avaya (NYSE: AV) IP Telephony solutions across its showrooms in the UAE
•
Landsteinar, the retail systems specialist, announced today that it will work with Microsoft Business Solutions to supply a comprehensive solution - including gold and jewellery accounting, store operations and head office management - for Damas, the Middle East's leading quality jewellery company
Major players & their initiatives in the Domain: •
SAP ,Oracle, Sage Group, Microsoft are the key players in ERP market with SAP has revenue share of 40 % in 2006 according to AMR Research
•
POS hardware market continues to be dominated by a few major players like IBM, NCR, Fujitsu
•
The POS software market remain slightly competitive with no one vendor dominating the market. The likes of IBM, Datavantage, CRS,Fujitsu, Triversity have active presence in this space 4
•
Business Objects has recently announced its XI release 2, which will provide retailers options for performance management, planning, reporting, query and analysis, and enterprise information management.
•
Wipro Technologies, the IT services division of Wipro Limited, has announced the launch of three value chain accelerators for Retail technologies in alliance with Microsoft and several other ISVs
•
Chipmaker Intel is working with a consortium, including the Carrefour Group, Metro Group and Tesco.com, to create a forum called the Electronic Product Code Retail User's Group of Europe. The forum, launched Monday, aims to speed the deployment of technologies such as RFID (radio frequency identification) and EPC (Electronic Product Code), which the group believes are superior for managing inventory in distribution centers, in warehouses and on stores' sales floors.
•
Sun Microsystems has said it will pair its RFID software with tracking software from partner Aldata Solutions to help companies track inventories. Sun also said it will soon open an RFID test center, comprised of a 17,000-square-foot warehouse, in Dallas. The company has a similar facility in Scotland
•
IBM has said it is assisting Metro with a similar project, the Future Store Initiative. To get started, 100 Metro suppliers will use RFID tags to identify pallets and transport crates delivered to 10 of Metro's central warehouses and 250 of its stores
My Analysis: Retail is currently the buzz word in countries like India and UAE .In India , as more and more retail stores come in organized sector the scope of IT will be immense. From contact center to Business Intelligence ,from Point of sales to ERP , scope of IT is everywhere in this sector. The biggies (WalMart, Carrefour and Tesco) have already invested huge amounts in RFID solutions. Many retailers are thinking about their strategic IT plans and therefore there is and there will be tremendous opportunities in this sector for technology companies
References: • • • •
http://www.cxotoday.com/India/News/Indian_Retail_to_spend_US_107_billion_on_I T/551-80358-908.html http://www.cxotoday.com/cxo/jsp/list.jsp?page=industry_news_cathome&cat_id= 1512 http://www.cxotoday.com/India/News/Booming_Retail_Woos_Two_More_Players/55 1-78512-908.html http://news.com.com/2100-1008-5139297.html
5
• • • • • •
http://www.infosys.com/industries/retail-distribution/default.asp http://www.wipro.com/retail/index.htm http://www.emea.avaya.com/gcm/emea/enus/corporate/pressroom/pressreleases/2006/pr-060614.htm http://www.iirme.com/news_details.aspx?newsID=183 http://www.ameinfo.com/41075.html http://digital.asiaone.com/Digital/News/Story/A1Story20070609-13375.html
6
Retail Sector is segmented into Grocery, Specialty , Pharma & Multi-Channel Retailing, Apparel & Footwear, Food & Beverage, Home & Personal Care and Wholesale Distribution industries.
•
Major IT Drivers affecting the domain o Radio Frequency Identification(RFID) : Real time inventory management o Master Data Management : Data accuracy and inventory management o Point of Sales Solutions : Customer interaction and service o Merchandize Optimize Solutions : Processes and tools to enable effective customer-centric merchandising o Supplier Collaboration : Supply chain visibility o Enterprise Performance Management : Helps in making key business decisions
Market Overview:
1
a) Global •
Accenture Analysis : Software will attract the largest share of the forecast spending by retail companies, growing from $4,581 million in 2001 to $9,330 million in 2006.
•
Accenture Analysis : IT spending in retail to increase with a CAGR of 67% from 2004-2010
•
According to NRF Retail IT and Budgeting Study, the retail industry will spend $7.4 billion on technology in 2006 — an 11.5 percent increase over 2005, which was already up 10 percent from 2004
•
The traditional measures of value –choice ,quality ,convinence and low price are assumed by consumers , who are now become more focused on reducing the time ,effort and risk associated. As a result retailers are facing challenge to personalize interactions with their customers. Other challenge include planning of logistics and supply chain network
•
RFID spending at U.S. retailers will grow from $91.5 million in 2003 to nearly $1.3 billion in 2008
b) India •
The Indian retail industry, estimated at US $325 billion in 2006, is one of the fastest growing sectors of the Indian economy
2
•
IT revenue from the Indian retail segment measured US$ 253 million in 2006 and is expected to grow to US$1.07 billion by 2010, with a compound annual growth rate (CAGR) of 44%. This was announced by Springboard Research, in the results of its research report detailing IT spending and market trends in the Indian retail industry.
•
Traditionally dominated by small, family-owned retail shops, the industry is making a move to a more modern and organized retail industry structure. Thanks to a healthy economy and rising household incomes, organized retail is emerging as a rapid growth industry in India.
•
As the current economic boom in India spreads to Tier II and Tier III cities and towns, reaching out to prospective consumers in these cities is high on the agenda of most retail companies. Retailers consider market presence in these cities and towns key to their growth and profitability. As such, many retail companies are investing in technology that will help support their expansion into these new markets.
•
At the moment, there is a need for operational solutions, such as Point of Sale (PoS), Merchandise Management System (MMS), and merchandise planning to run the business.
•
Established retail players of the country such as Pantaloons of Future Group, Shoppers Stop, and Spencers are among the first big retail houses that have already deployed fully integrated core ERP applications. Few of them have even initiated the pilot phase of next level IT deployments such as Radio Frequency Identification (RFID), customer relationship analytics, etc
•
SAP was identified as the leading primary influencer in terms of solutions investments, followed by Microsoft.
•
Satyam Computer Services, a global consulting and information technology services company, has recently entered into an alliance with US-based JDA Software group, provider of supply and demand chain solutions to provide comprehensive solutions to the customers.
•
Only a handful of organized Tier 1 retailers are investing in technology to capitalize on the retail boom in India .Moreover, as labor is cheap, even the use of technology in the Indian retail market is limited to areas such as in-store, merchandising, financial and accounting
c) Singapore •
SMALL and medium-sized enterprises (SMEs) in the retail sector in Singapore are likely to spend up to US$240 million (S$364 million) on IT related investments this year, which is about 10 per cent more than
3
what they did in 2006, according to the latest report by Access Markets International (AMI) Partners •
Some of the key concerns that emerged from the retail mid-market companies were issues relating to managing customer loyalty, maintaining product prices and management of personnel.
•
IT managers in these companies are looking to take the next steps in terms of deploying CRM (customer relationship management) solutions, upgrading POS (point of sale) systems, setting up inventory and SCM (supply chain management) solutions and deploying employee monitoring and service quality measurement systems.
d) UAE •
According to IIR Middle East, the organizer of Retail City, current GCC retail space will treble to more than 15 million square meters by 2016, as the burgeoning tourism industry and regional population growth spurs the longer term prospects for the GCC’s retail industry.
•
The justification behind this extraordinary acceleration in retail development is two-fold. Firstly, the numbers of tourists visiting the region is estimated by the World Tourism Organisation to reach 68 million by 2020. Again Dubai has taken the lead with five million visitors in 2005, which will climb to 15 million tourists by 2010.
•
GCC retail Enterprise Resource Planning (ERP) software market is worth US$270 million
•
Paris Gallery, the UAE's largest beauty retailer and arbiter of taste in the region, has announced the roll out of Avaya (NYSE: AV) IP Telephony solutions across its showrooms in the UAE
•
Landsteinar, the retail systems specialist, announced today that it will work with Microsoft Business Solutions to supply a comprehensive solution - including gold and jewellery accounting, store operations and head office management - for Damas, the Middle East's leading quality jewellery company
Major players & their initiatives in the Domain: •
SAP ,Oracle, Sage Group, Microsoft are the key players in ERP market with SAP has revenue share of 40 % in 2006 according to AMR Research
•
POS hardware market continues to be dominated by a few major players like IBM, NCR, Fujitsu
•
The POS software market remain slightly competitive with no one vendor dominating the market. The likes of IBM, Datavantage, CRS,Fujitsu, Triversity have active presence in this space 4
•
Business Objects has recently announced its XI release 2, which will provide retailers options for performance management, planning, reporting, query and analysis, and enterprise information management.
•
Wipro Technologies, the IT services division of Wipro Limited, has announced the launch of three value chain accelerators for Retail technologies in alliance with Microsoft and several other ISVs
•
Chipmaker Intel is working with a consortium, including the Carrefour Group, Metro Group and Tesco.com, to create a forum called the Electronic Product Code Retail User's Group of Europe. The forum, launched Monday, aims to speed the deployment of technologies such as RFID (radio frequency identification) and EPC (Electronic Product Code), which the group believes are superior for managing inventory in distribution centers, in warehouses and on stores' sales floors.
•
Sun Microsystems has said it will pair its RFID software with tracking software from partner Aldata Solutions to help companies track inventories. Sun also said it will soon open an RFID test center, comprised of a 17,000-square-foot warehouse, in Dallas. The company has a similar facility in Scotland
•
IBM has said it is assisting Metro with a similar project, the Future Store Initiative. To get started, 100 Metro suppliers will use RFID tags to identify pallets and transport crates delivered to 10 of Metro's central warehouses and 250 of its stores
My Analysis: Retail is currently the buzz word in countries like India and UAE .In India , as more and more retail stores come in organized sector the scope of IT will be immense. From contact center to Business Intelligence ,from Point of sales to ERP , scope of IT is everywhere in this sector. The biggies (WalMart, Carrefour and Tesco) have already invested huge amounts in RFID solutions. Many retailers are thinking about their strategic IT plans and therefore there is and there will be tremendous opportunities in this sector for technology companies
References: • • • •
http://www.cxotoday.com/India/News/Indian_Retail_to_spend_US_107_billion_on_I T/551-80358-908.html http://www.cxotoday.com/cxo/jsp/list.jsp?page=industry_news_cathome&cat_id= 1512 http://www.cxotoday.com/India/News/Booming_Retail_Woos_Two_More_Players/55 1-78512-908.html http://news.com.com/2100-1008-5139297.html
5
• • • • • •
http://www.infosys.com/industries/retail-distribution/default.asp http://www.wipro.com/retail/index.htm http://www.emea.avaya.com/gcm/emea/enus/corporate/pressroom/pressreleases/2006/pr-060614.htm http://www.iirme.com/news_details.aspx?newsID=183 http://www.ameinfo.com/41075.html http://digital.asiaone.com/Digital/News/Story/A1Story20070609-13375.html
6
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