Modern Retail On Traditional Formats Scm Applications Marketing Essay

Modern sell On Traditional Formats Scm Applications Marketing moveIndian sell pains has ever so turninged an of import business routine in improving the GDP maturation rate and lifestyle of the country. The diligence which handed-downisticly comprised on mom and popping stores dissipate hither and in that respect is in the revolutionary phase in the present era. The panache sell is done has come a recollective personal manner with the emergence of organized or sophisticated sell step uplets. in that respect be big players deal Big Bazaar, Spencers and Vishal Mega Mart to name a few who give birth changed the casing of sell in India. These innovational sell outlets afford enormous financial and technological support as compargond to the traditional and unorganised sell outlets. An start out is make in this paper to determine the evolving set ups of mod retail and to spot their impact on the traditional dissemination partners manage retail me rchants and distributors. This paper in addition throws light on the contribute mountain place focusing tools enjoymentd by the recent retail outlets through and through issue analysis.Impact of Modern sell on Traditional Formats SCM ApplicationsAbstractIndian retail assiduity has always played an authoritative role in improving the GDP growth rate and lifestyle of the country. The industry which tradition exclusively toldy comprised on mom and pop stores spread hither and thither is in the revolutionary phase in the present era. The way sell is done has come a long way with the emergence of organised or modern retail outlets. T here(predicate) ar big players c atomic number 18 Big Bazaar, Spencers and Vishal Mega Mart to name a few who pass water changed the face of retailing in India. These modern retail outlets shake off enormous financial and technological support as comp bed to the traditional and unorganised retail outlets. An attempt is made in this paper to schooling the evolving formats of modern retail and to know their impact on the traditional statistical statistical distribution partners resembling retailers and distributors. This paper similarly throws light on the preparation bowed stringed instrument management tools apply by the modern retail outlets through case analysis.Introduction to Indian sell IndustryIndian retail industry, the industry which stands second in hurt of employment generation after commercialize-gardening is undoubtedly characterized by the widely dispersed retail outlet find at each nook and corner whether its urban India or rural. It is the industry which is un analogously cognise for its unformed formats. Paanwalas and kiranawallas, street hawkers present everywhere be the non-homogeneous firms operating hither and thither and occupying the basic require of the general public and creating a means of earning livelihood for some. In India, the retail industry is crossways-the-boardly d ivided into the organized and unorganized sectors. The total market in 2005 stood at Rs. 10,000 trillion, accounting for about 9-10% of the countrys gross domestic point of intersection (GDP). Of this total market, the organized sector accounted for Rs. 350 billion (about 3.5 % of the total) of the total revenues. According to AT Kearney, the organized retailing industry is pass judgment to cross Rs. 1000 billion revenue mark by 2010. Traditionally, the retail industry in India comprised of immense, mean(a) and s piazza grocery stores and drug stores which could be categorized as unorganized retailing. Most of the organized retailing in India had recently started and was mainly hard in metropolitan cities. Within a short span of 5 years retail sector in India has witnessed owing(p) changes mainly on account of a gradual increase in the disposable incomes of the meat and upper-middle class households. In arrange to reap the benefit of exploitation prudence more and more co rporate houses including oversized real estate companies ar coming into the retail business, nowadays or in nowly, in the form of mall and shop center builders and managers, hence the sea change in retail sector is spicyly evident.Indian Organized retail heavens and the study PlayersThe Industrial Policy Resolution, 1991 has minded(p) a hot tool known as LPG i.e. Liberalization, Privatization, and Globalization which resulted in several structural and demographic changes of the Indian Economy. These changes marked the beginning of the recent era of Retailing in India and helped the retail industry to grow. Besides this last decade has witnessed the growth of GDP at the rate of 6.6 per cent, resulting in increased income levels and high purchasing power for the population. though the early signs of organized retail were visible even in the seventies when Nilgiris ( nutrition), Viveks (consumer invariables) and Nallis (sarees) started their operations but the retail still had a long way to go. While these retailers gave the necessary ambience to customers, little effort was made to inject world-class customer care practices and improve operating efficiencies. Moreover, most of these modern developments were restricted to south India, which is still regarded as a Mecca of Indian Retail. order around in Indian retail has taken place in various phases and the journey is still in continuation. Notable among the early entrants were players like Shoppers damp, Pantaloon, Ebony, Foodworld, Subhiksha, etc. Thus one give notice easily make out that the major players of organized retail sector in India are run across 1The StudyResearch ProblemThe aim of this paper is to study the emergence of modern retail and its impact on traditional acquit partners like retailer and distributors. The research problem can be hypothesise in terms of following questions What are new retail formats? What supply chain management tools are occupied by modern retail? Wha t impact these outlets bequeath have on retailers and distributors? The go forth answers to these questions, the objectives of the study areTo study the emerging retail formatsTo study the impact of modern retail outlets on the traditional distribution administrationTo study the variety of SCM tools employed by the modern retail formatsTo analyze the role of SCM application in modern retails formatsResearch MethodologyTo gather the required study for this study, both secondary and primary source of entropy was used. Active primary information was collected from the retailers and distributors in both the cities through structured personal inter stares. The information other than this was collected through traditional secondary sources like journals, news articles, websites and books.The scope of the study is limited to the two cities Moradabad, Uttar Pradesh and Delhi, India. These cities differ in terms of their population, demographics, size and volume of business and the m arketing strategies used by the non-durable and durable goods manufactures in two different cities. Further they are un-researched in this aspect. model profile of respondentsThe data was collected from the various types of retail formats dealing in consumer non-durable and durable goods like tooth paste, soap, chocolates, cold drinks, refrigerators, mobile phones and televisions. The inclusion criterion was the availableness of the harvest-festivals chosen for the study. Following tables describe the sample profile try on of Dealers/Retailers ingest DescriptorsProfile of Durable Goods DealersProfile of Non-Durable Goods RetailersSample Size (N)50 Retailers/Dealers50 RetailersAreaMoradabad and DelhiMoradabad and DelhiRetail FormatMulti Brand Outlets, Exclusive andDealers cum distributors planetary Store / Provisional store Confectionary Store, Supermarket, and surgical incisional StoreInclusion Criteriaavailableness of Products accessibility of ProductsTable 1.1Sample of Distributo rsSample DescriptorsProfile of DistributorsProfile of DistributorsSample Size (N)30 Distributors15 DistributorsAreaMoradabad and DelhiMoradabad and DelhiBrandsHUL-5, Godrej-3, Cadbury-4, Pepsi-4, Coke-4, ITC-5, Pillsbury-3, Nestle-2Sony-1, LG-2, Samsung-2, Nokia-2, Motorola-2, Neelkamal-2, Supreme-2 and Whirlpool-2Inclusion CriteriaAvailability of ProductsAvailability of ProductsTable 1.2Emerging Retail Formats in IndiaIndia is watching resurgence of Retail sector whereby it has grown from the traditional Mom and Pop stores present here and there in the neighbourhood catering to the convenience of the consumers to the emergence of shopping centers mainly in urban centers with facilities like car parking and eventually growth of modern retail formats like hyper and super markets trying to provide customer with 3 Vs- Value, Variety and Volume (Lakshmi Narayanaswamy, Mudit Sharma,). A brief rendering of the various modern formats of retailing emerging in Indiai. MallsMalls are an fo rthcoming trend in retail market. They form freehandedst share of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an merger of output, service and entertainment all chthonic a common roof. Examples hold DLF City Center, The Metropolitan and Big Bazaar around Delhi, Crossroads and R-Mall in Mumbai and Spencers in Chennai are revolutionizing the way middle class Indian consumers shop. These malls have very efficient and powerful supply chains which ensure intersection point availability and tracking of the reaping is feasible easily.ii. Specialty StoresA curiosity store concentrates on a limited number of complementary production categories and provides a high level of service in an area typically under 8,000 square feet ( impose, Michael 2006) compasss such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG s Music World and the Times Groups music chain Planet M, are focusing on specific market segments and have established themselves powerfully in their sectors. Since this format has less diverse product range consequently it is comparatively easy to manage supply chains.iii. Discount StoresAccording to Levy and Weitz a Discount Store is a retailer that hold outs a broad variety of switch, limited service, and low prices. Discount stores offer both clandestine labels and national brands, but these brands are typically less fashion-oriented than brands in division stores. The throw out stores or manufacturing plant outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess inception left over at the season. The product category can range from a variety of perishable/ non perishable goods. The coverage of products in this miscellany of format is quite extensive and the subscribe to fluctuation is also high thus if offers challenges in man aging supply chains effectively.iv. Department StoresLevy and Weitz de charmings Department stores as the retailers that carry a broad variety and deep assortment, offer some customer services, and are organized into separate departments for flourishing production. These are the large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. They can be advertize class into localized departments such as clothing, toys, home, groceries, etc. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest victory is K Rahejas Shoppers agree, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called pulley-block. It is one of the most complicated retail formats catering to the most alter set of consumer needs. It becomes very difficult to manage the inventory of so many products and brands.v. Supermark etsAs defined by Food Marketing Institute Supermarket is self-service food store with grocery, meat and produce department and minimum one-year gross revenue of 2 million. In India, there is growing number of such stores especially in metros and big cities (Anjali, Gupta 2006). These are turn up in or cuddle residential high streets. These stores today contribute to 30% of all food grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food grocery and personal sales.vi. Hyper MarketCombination food and drug stores fairish 4,600 square meters of selling space. Hyper markets are even larger, ranging between 7,400 and 20,400 square meters. The Hyper markets combines supermarket, discount and warehouse retailing principles. Its product assortment goes beyond routinely purchased goods and includes furniture, large and small appliances, clothing and many items. The basic approach is bulk display and minimum handling by stores personnel, with discounts offered to customers who are willing to carry voiceless appliances and furniture out of the stores. Pantaloon Retail India Ltd. (PRIL) is now emerging as Indias runner Hyper Market chain. Modeled on the lines of global Hyper Market Chains like Wal-Mart, the Big Bazaar will product line several product categories.vii. devisal StoresThese are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are unremarkably abrupt for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.viii. MBOsMulti Brand outlets, also known as family Killers, offer several brands across a single product category. These usually do salubrious in busy market places and Metros.Supply Chain Management Tools Employed by Mode rn Retail FormatsThe rate at which transformation is taking place in Indian Retail Sector is unprecedented the entire retail sector is under acquittance sea changes. The organized retail sector is no doubt having a long ocean of opportunities in summit of it but it possesses received challenges too. The task of an effective and efficient retailer is to satisfy the customer at the right time with the right product at the right cost, all the time. The challenges that a retail organization faces are many like huge stock-keeping units (SKUs), seasonal variations of product lines necessitating the introduction of new SKUs, complex tax structures, the sheer geographic spread of the country, changing consumer demands, etc. This level of efficiency calls for retail mechanisation and coordinated supply chain management on the part of retailer and a retail organization has to plan to make this system work mightily and try to satisfy the needs of every customer without fail.The discover y of machine-driven identification technologies has been a boon to retailing they were initiatory introduced globally in the 1960s to assist logisticians identify products in the supply chain. Following are the recent developments in the technologies to trace the goods in the supply chaini. Barcodes Multi-dimensional barcodesCorporations have become obsessed with driving down logistics-related costs, including conveyance of title and depot. In order to facilitate the action of goods in transit and to reduce the cost of transportation and to ease the knead all most all items in a distribution warmheartedness are marked with UPC barcode. In fact, Walmarts buying office has a sign reading, If Your Product Doesnt Have a Barcode, Dont Bother to amaze a Chair in Our Waiting Room. Even in India the Retailers in organized sector are beginning to barcode all their products organizations like Foodworld (RPG Group) and Shoppers Stop (Raheja Group) have urged their vendors to supply me rchandise only with standard barcodes.ii. RFIDRadio oftenness Identification (RFID) is an early technology starting to emerge. In order to cut off the pilferage of goods in over crowded retail stores this technology plays a outstanding role. It is expected that in coming few decades, RFID will directly conjoin physical products to logistics systems as the only truly automatic identification technology. This technology helps to track the product and customers use pattern even post-purchase. P G currently tags (RFID) a small number of cases and pallets of products as part of a trial with Wal-Mart stores in USA. The company is focusing on the supply chain and has not even begun to think about whats exhalation to happen to the items post-sale.iii. Retail SoftwareMost retailers in the organized sector in India have to use retail computer software in their back end and front end operations and are constantly looking to upgrade their systems as they evolve. To help this growing ret ail sector make believe the best, many Indian software companies have developed software packages to suit the different and varied requirements of these retailers. Among the few who are in. the market is Chennai-based Polaris Retail InfoTech Ltd, a infantryman of Polaris, which has entered the market with its software, Retail Excel. Reputed organizations like Wipro Infotech, Tata Consultancy Services and NCR Technologies have created robust, retail automation software. The Chennai-based T.V. Sundaram Iyengar Sons are currently test-marketing their new point-of-sale system for small and strength retailers in grocery and other related segments. The Bangalore based VMoksha Technologies has developed software for the retail segment while Pune-based Zensar Technologies has tied up with the RPG group for retail software. The list of that developing retail software is growing by the day. on that point are many other packages like MS Retail, Shopper, Retail Pro, Retail Magik, etc. th at help enable the fast implementation of retail automation in India available in the market. Not to mention large ERP packages like IDA, SAP Retail, BAAN, Island Pacific, etc.Analysis and FindingsImpact of Modern Retail Outlets on Traditional Distribution SystemThe number of modern retail outlets is growing day by day. The customers show shopping pick outence for these outlets but the finale to which they will influence the traditional retail is uncertain. There are certain categories of products which customers prefer to shop from the modern retail outlets. While the customers still prefer neighbourhood retail stores for their daily groceries and requirements. The analysis of the data collected from traditional channel partners isThe data was collected by the traditional retailers dealing in non-durable products in Delhi and Moradabad to know the impact of modern retail on their business. It was observe that in Moradabad 70% of the retailers feel that the impact of modern retai l formats will be important and they too need to work on their formats to meet the customer and companies requirement. Other 20% tell it is leaving to have median(a) influence on their business and it can be cope-up whereas 10% retailers were of the view that it will not have influence on their business. They also opined that they are in operation from last so many years and facilities like home rake and credit which they provide to their customers are not provided by these new formats. While retailers in Delhi were of different opinion, 15% retailers pointed out that modern format have already influenced their business highly and their sales have lessen by 50% and other 40% said that the influence is important on their business and they need to react accordingly. Around 40% retailers said that it is having average influence whereas 5% retailers located in the residential areas said that the influence of the modern formats is unimportant for their business.Figure 2The data coll ected from the durable products dealers also reveals the mixed response towards the growth of modern retail outlet. In Moradabad 70% of the dealers said the impact of modern retail will be important and they too need to work on their formats to meet the customers expectations and companies requirements. Other 30% retailers were of the view that the facilities like home delivery and credit which they provide to their customers will help in marginalizing the impact of new formats. While dealers in Delhi were of different opinion, 15% dealers pointed out that modern format have already influenced their business highly and their sales have decreased by 50%. Other 40% said that the influence is important on their business and they need to react accordingly whereas 5% retailers located in the residential areas said that the influence of the modern formats is insignificant on their business.Impact of Modern Retail on Traditional Retail Outlets0%10%20%30%40%50%60%70%80%HighlyImportantImport antAverageUnimportant brilliancePercentageMoradabadDelhiFigure 3Apart from retailers, modern retail outlets also have influence on the distributors. It was observed from the data collected by the non-durable distributors that 70% distributors of different non-durable brands under analyseation said that the impact of the modern retail formats on their business is going to be moderate as they are the one who supply to these formats. But other 20% said that the big modern retail outlets make purchases directly from the companies thus their will be significant impact. While other 10% feels that the impact is going to be high.Figure 4Majority of the distributors dealing in consumer durable goods like Mobile Phones said that the impact of modern retail is going to be high because outlets like Big Bazaar, Subhiksha have already started procuring directly from the companies and they pass on the margins to the customers. While for products like CTVS, refrigerators and moulded furniture the impact is going to be moderate and distributors can provide better geographical coverage and inventory turnover. They also shared that may be in near future, the companies seeking advantage of reduction the distribution margin through direct supply to these outlets can lead to have moderate impact on their business.Impact of Modern Retail on Durable Goods Distributors0%10%20%30%40%50%60%70%80%90% very(prenominal) HighHighModerateLowVery LowDegree/ProductsResponsesMobilesT.V./Refrigerators Moulded FurnitureFigure 5Case-Study Analysis of SCM Applications in Modern Retail-(a) TANISHQTanishq is a division of Titan Industries Ltd, Indias largest jewelry maker. It is Indias only fine jewellery brand with a national presence, and an acknowledged leader in the branded jewellery market. Tanishq is sold exclusively through a company- reign overled retail chain with over 60 boutique stores spread over 39 cities. This network is supplied and supported by a network of 32 CFAs (Clearing and p romotional material Agents). With the network of boutique stores poised to grow, the Tanishq management had to increase visibility along the supply chain, CFAs and boutiques across the country. The Tanishq group picked Wipro Infotech, Indias premier IT solutions company, to put together the solution. The Wipro Infotech team designed a web-based solution, Goldmine, to facilitate the flow of information between various distribution entities. Goldmine offers a programme for the sales, management and factory teams of Tanishq to admonisher discern activities and parameters along the distribution chain. It also serves as an integration platform to pull together existing information systems in the company such as SAP/Oracle, DOS-based point-of-sales systems in boutiques, without modifications. Wipro Infotech developed the solution using the .NET model with an ASP .NET presentation layer.Challenges addressed The most significant supply chain management issues addressed by Tanishq are i n the areas of reducing bike time, increasing efficiencies and reducing costs in the areas of tracking movement of goods and sales indenting, order status, sales visibility, communication (reports) and exception reporting.Goods in transit The new system provides details of goods that have been dispatched from the factory to the CFA and whence to the boutiques. This functionality also enables tracking of stock return cases from the boutiques to the CFA. And from there on to the factory. This helps the organization track goods in transit and monitor loss of goods effectively if any.Indenting The ordering of goods by the boutiques is automated. They can refer to online product catalogues and price lists before placing orders. Goldmine enables online indenting for replenishment, shop-specific indenting as well as customer-specific indenting. Such online indenting is based on norms set by the administrator for each variant. Hence, the company can enforce prudent credit norms through G oldmine at the point of-sale system. Say a boutique has a great track record, selling Rs 20,00025,000 worth of bangles, but not up to the Rs 50,000 level it had reached in the past, the company can set prudent indenting levels for metallic for that boutique. This information is transmitted to the point-of-sale system via Goldmine and is actually enforced. Previously, under the manual system, the company had no means of systematic enforcement of such norms. . hostel status This functionality provides visibility on the status of orders placed by boutiques. This is made possible by the daily synchronization between the Oracle system at the factory and the web-based solution. Boutique users no longer have to locate emails or call up anyone to find out the status of their orders. They get it at their own convenience from Goldmine.Sales visibility With sales information flowing in from the boutique into Goldmine, visibility of sales from each boutique is improved. Management can now tra ck the effectiveness of marketing programmes and promotions at the boutique level, according to category and price band. Bestseller information for all boutiques is currently available on demand.Communication and exception reporting Goldmine provides a platform for dissemination of information through content uploads, bulletin boards, and so on. Information on local gold rates (the most important component of material cost), market information, promotion scheme details and product catalogues are transmitted in real time. The company has over 40,000 product variants, so this system capability is crucial. The system also provides for discussion on queries raised by users at the boutiques for producing and modifying new and existing products. Discussions between factory users and boutique users are tracked and an escalation mechanism with alerts is in place in case queries are not handled promptly.Future plans As Goldmine builds up the supply chain database, Tanishq intends to build a data warehousing application enabled with advanced data mining using SQL server. This will facilitate the use of relevant business intelligence in real time in the boutiques during a customer touch. Market leader Tanishq will set its benchmarks in retail automation and its applications for many in the industry to follow in future.(b) SHOPPERS STOPShoppers Stop has implemented the US-based retail ERP system JDA. JDA facilitates the integration of all retail functions in Shoppers Stop efficiently.Efficiencies in the buying process It is JDAs merchandise management system that now performs the buying process and merchandise management control practices. Pursuant to range width and assortment plans, purchase orders are issued to suppliers through the central merchandising function. The actual delivery of stocks is then controlled on a each week basis through the delivery authorization process mechanism. The delivery authorization number acts as a tool to control the overall inventory p osition. The delivery authorization is issued to vendors on a weekly basis based on the previous weeks actual sales and on the forward sales plan (forecast). The vendors then despatch the goods to the distribution centre based on the purchase order and delivery authorization. Every distribution centre gets a copy of the delivery authorization issued for the week. At the distribution centre support is provided by the warehouse management system (WMS) of JDA, which manages the warehousing function most efficiently.The challenges at Shoppers Stop are the spread of the 14 stores across the country in varying large sizes, ranging from 25,000 sq ft to 55,000 sq ft, the large SKU base, etc. Also, it has more than 300 suppliers who supply stocks to three distribution centres, which then redistribute merchandise to the 14 stores. Variety, colour and size of merchandise play a very important role in delivering a great shopping experience to the customer.Profitable growth Shoppers Stop views S CM as an enabler of paying growth it firmly believes that ERP, if used well, can cut costs greatly by reducing cycle times and inventory levels. One of the key drivers of the profit-driven operation is the significant development in the retailer-supplier information integration in the supply chain the emergence of retailer control over the movement of suppliers goods into the retailers distribution centres. This has led to more complex relationships involving suppliers, third-party distributors and retailers through supplier-retailer collaboration where major suppliers and retailers have the opportunity to exchange timely information on consumer demand and put into practice the most appropriate product flows.SCM at Shoppers Stop SCM at Shoppers Stop coordinates and integrates all activities associated with moving products, services and information into broadloom processes linking all the partners in the chain, including the various departments, vendors, transporters and other ser vice providers. The system facilitates double-dyed(a) supply chain coordination with an able information system that controls all SCM activities. SCM at Shoppers Stop begins and ends with the customer. The guiding philosophy is to improve the organizations performance by managing constraints and uncertainties indispensable in the earlier system. The focus is on using new tools and techniques. The first step in SCM is merchandise planning and sourcing.In Shoppers Stop, SCM is seen from a strategical perspective rather than just as an operational issue. Core supply chain issues such as month-end sales peaks, forecasting inaccuracy, constraint-based planning and so on continue to create problems for Indian retailers even after ERP implementation. many another(prenominal) organizations implemented SCM as a tool to contain costs. and identifying means for reducing pressure on margins due to competition. The mindsets of organizations underwent a transformation when they accepted to co nsider the use of such integrated SCM from end-to end. The first step in SCM is merchandise planning and sourcing. The range width and assortment planning process is used to develop meaningful sales and space plans. The planning process starts six months before the actual beginning of the season to fill an agreed add up of footage with a product that matches customer demand. The challenge is to develop a fit range which provides the appropriate mix of colour, price, styling and fabric so that the customer is given the best possible choice at all times. Also on the agenda is having a mix of own-label products and brands in such a way that it aligns with the companys strategic goal of increasing own-la