New store IT infrastructure technologies

Some experiments in Store IT infrastructure

As part of my assignment with a leading hypermarket chain in India, we are exploring ways of using some innovative technologies in the stores to help the business in differentiating the store experience.

One of the areas which we are working on is the ability to connect the various devices in the store – POS, Scales, Kiosks using a network at the least possible cost to reduce the store CAPEX. As part of this initiative I am evaluating couple of technologies – wireless and one new innovative way of networking – running data over power cables. Running data over power cable  is not exactly new but I am using a patented technology by a Bangalore based startup – Unifiedgateways. Unifiedgateways has made this technology truly affordable and very easy to use. Imagine running all your data needs over your electrical cabling all over the store!

We have implemented this technology to network – POS machines, Scales and even streaming video in one of my client stores. In fact in the new store of that particular client this would be the predominant way of networking all the devices all over the store. This has helped us in reaching all parts of the store at the least possible cost. Imagine moving the scales to any part of the store and still being connected to the network or running streaming video on a kiosk anywhere in the store without having a network CAT 5/6 wire for the same. Connecting your security camera’s to the power line and getting connected… This is very useful especially in a store that is large. In this case my client’s has the hypermarket which is a 85,000 sq ft store. 

For the wireless I am working with the leader in wireless networking ARUBA networks. We have one concept 60,000 sq ft store already wireless in India. ARUBA has a robust proven PCI DSS compliant wireless network infrastructure. POS machines and scales are being evaluated on the wireless technology. Having the wireless network in place gives tremendous flexibility to relocate POS machines, Scales, Security, Kiosks in any part of the store. The same infrastructure can also be used for RFID enabled asset tracking.

Currently both these technologies are being evaluated in a concept store. The data over power cable is already stated to be rolled out as a secondary network option in the new 85,000 sq ft hypermarket coming up soon. Based on the production feedback the client would decide to incorporate this permanently in the new stores to come. 

Game Changing Technology

http://www.pranavmistry.com/projects/sixthsense/

I had a chance to come across Pranav Mistry who is a PhD student at MIT labs and his amazing game changing interface work. Pranav specializes in interface creation and if you see the video of his ideas you would find some awesome interfaces.

Using generic gestures to interact with the digital world is surely going to game changing. I see a lot of potential in the retail space if he manages to actually implement it. Also see a lot of application in the supply chain areas on how information is accessed and used.

Lets see how it shapes up and can be incorporated in our systems…    

State of retail systems in India

What next ……

The tier 1 Indian retailers now seem to be settling with their transaction systems or are they??. With SAP, Oracle-Retail, Microsoft Dynamics and JDA being the systems of choice for the tier 1 Indian retailers the last couple of years have been a roller coaster ride. Explosive expansion, aggressive store opening then the reality of vagaries of the economy / business and the subsequent rationalization of retail business in India. This has effected the systems they had initially put into place. Structures which were set up 2-3 years ago like organization structures, merchandise hierarchies, business models – own stores / franchisee stores etc are now completely undergone a change. For example a prominent Indian retailer has hived off its supply chain and logistics division which was internal to a external company. Imagine the disruption in their SAP implementation which had some pre-configured business processes. Another retailer is now concentrating from own stores to franchisee store model and putting in more efforts in promoting their private label products.

What this means is .. most of the business would literally need their systems to be re-implemented. Without which the retail organizations would not be able to effectively use the systems. Areas like product masters, business processes configured, store operations have gone a evolution over the last 3 years need reconfiguration as the initial setups were done in a very different environment.

Will the retailers take the initiative to put in efforts to do this ??? Lets see …

Retail Shrinkage in India

Shrinkage in India

Why the shrinkage?

The shrinkage is not just due to the consumers, most of the shrinkage is in the supply chain. Leakages are due to loose system controls at various points in the supply chain - warehouse issues/receipts, store issues/receipts, store back room issue / returns processes. Also loose physical security at the stores and warehouses contribute to the high level of shrinkages. Also unlike the west which has learnt to securely display their high value SKU's, Indian retailers are still learning better ways to securely display high value SKU's. For example Gillette razors typically have maximum shrinkage possibility need to be secured in a locked display unit and similar. Security devices and video surveillance training needs to be beefed up at retailers as just having video cameras in the stores does not guarantee catching the perpetrator. Further analytical shrinkage analysis using POS data is not yet prevalent practice in India. Thus shoplifters or just unscrupulous employees contribute to the high shrinkage rates. Once retailers start improving their physical security, increased training and analytical fraud detection capabilities, then this rate should come down.

Its not that the retailers are lax about processes, believe me .. I have spent lot of time with many Indian retailers and also retailers from the west. Retailers in India simply don't have the bandwidth, process experience or there is simply lack of trained personnel in the retail industry in India who know retail in the true sense. Most of the management is from CPG/Distribution background where the scale of operations is not like retail.

Most of the retailers are simply still struggling to evolve the right viable business format for the stores in terms of size, assortment width, location, supply chain etc.. All of them are still also struggling to get their basics in place in terms of all processes - in store, merchandising, supply chain, financials, HR etc. This is like being in a startup where there is chaos around but there seems to be a lull in this madness.

The recent recession has given the retailers a chance to look back and take a pause - concentrate on process maturity. This is reflected in the recently published gross margin figures of major Indian retailers which has shown some improvement. This means now the retailers have decided to concentrate on process maturity and this would lead to shrink getting a bit under control by next year.

For example I know of one major Indian retailer who has appointed CA/auditors for each store whose job is to certify each operational individual document like a GRN, Store transfer, Stock adjustment without which the transaction is not accounted for and any discrepancy is debited to the store personnel in charge. This system was recently introduced. I also know of a commercial VP of a reputed retailer in India who was so flustered on his inability to put in controls in place due to simply untrained operations personnel, that he took upon himself to write SOP's for basic processes like receiving and stock transfers and personally monitors exception transaction level reports every day to bring down shrink !

Operational excellence is going to be a key in Indian retailers surviving going forward. Most of the biggies are now realizing what they have got into when they started retail :) Its not a easy business and it needs tremendous process operations excellence to be profitable in this tough business.

Lets hope they survive.....