Netting profits

Based on the popular belief that customers are constantly shopping for better experiences, retail organisations across the globe are investing in best of breed technologies to understand their customers’ preferences. This could potentially change the retail game in both the short and long terms, Pallavi Sharma finds out.

Retail technology is not what it used to be. The widespread use of wireless technology across the consumer arena, coupled with the increased adoption of advanced technology to automate business processes and reduce human effort and errors has transformed the way business is done.

“Retail owners can make use of channels like the internet to launch online shopping experiences saving on costs associated with setting up and managing a new store or branch. This way they can expand business and cater to a larger audience. Retail businesses are also heavily investing in smart digital advertisements on social networks and through their own Web pages,” explains David Catania, CEO, Philip Toledo Limited (PTL).

The retail sector has garnered both advantages and challenges from the growth of this technology; the Internet has led to a convergence of worlds bringing both the customers and the competitors much closer. Combined with the increased use of social networks and mobile applications to promote business, the IT teams within the retail organisations find themselves at the very centre of all the action.

Shadi Al-Fraijat, retail solutions business manager at HP Middle East believes that external trends like the use of credit cards for payment-instead of cash payments- has also led to increased demand on IT to provide the necessary security applications to store and protect the customer’s financial information.”

Naturally, the changing nature of business and the constantly changing technology places IT teams at the crux of the matter both to select the right applications to enhance business processes and manage these applications to guarantee their functioning.

Deepak Kalra, group IT manager at Al Safeer Group says, “The retail sector requires a very strong infrastructure that enables the 24/7 functionality of operations because retail managers require a minute by minute visibility on transactions, to align sales with stock purchases and account for daily turnover and profitability. This also means that we need effective IT teams that are available all through the day and all round the year.”

Madhav Rao, CIO of EMKE group, which operates the hugely popular hypermarket chain Lulu, agrees on the subject of the dynamic infrastructure demands within the retail sector, “The continuous customer movement across branches and sub offices necessitates the need to share information regarding offers, stock availability among other elements across store locations. Therefore, the retail industries require an infrastructure that provides applications embedded with mobility which also means we need teams skilled enough to manage and operate these dynamic applications.”

Decision makers believe that the merging of business processes and technology makes IT an essential strategic business operation within retail industries. An intelligent IT infrastructure in the retail environment gives managers a better view of operations and a better grip on management, they know the popularity of products, the availability of stock, procurement and merchandising options and the minute to minute sales across stores and branches.

For the effective deployment of the latest technologies, IT decision makers believe that IT professionals and senior management must evolve into a combination of business analysts, project managers, contract negotiators with a business intelligence mindset and a keen knowledge of the business. They must understand how the technology would operate separately and how it would operate when integrated to benefit the organisation.

“Once the right infrastructure and application is selected based on durability and strength of the vendor, the solutions that measure KPIs must be interfaced with other integral functions like accounting, sales/ purchase ordering, management systems, customer relations etc,” explains Catania.

Breaking barriers

Most IT professionals in the retail sector feel that the most notable challenge when deploying the latest technology is associated with change management. “Many technologies come with a steep learning curve and most often users don’t understand the need to unlearn knowledge acquired on legacy systems that seemed to be doing the job,” he adds.

According to Kalra, the best way to address this challenge is through detailed and intensive training
sessions, “When deploying the ERP system at our organisation, the entire company was transformed into a training house and we spent about two to three training sessions on a single module of the
ERP application. This was done in collaboration with the vendor Oracle and helped us educate the workforce such that they realise the benefits of the implementation from a business perspective.”

David Watt, IT director, Sifico Group agrees, “The deployment of the ERP system was heavily challenged by the users who had to unlearn their knowledge of the previous system and change the way they operate right down to the way information is captured by the system. It took us about 12 months to get users accustomed to the system and I would say we are still learning.”

Rao believes that the best way to handle change management is throughreiteration training, where business users are encouraged to educate and train employees. “This gives IT implementations a business viewpoint, which most users find easier to understand, especially when you explain to them the ways it in which it will make their job easier or how it may help them achieve their targets.”

The Al Safeer Group also faced a challenge when developing a centralised employee time and attendance monitoring application associated with collating different hardware platforms needed for the effective functioning of the application.

“We faced a hurdle in terms of sharing knowledge with the vendors when bringing together different hardware elements to work with the Oracle database system,” says Kalra. According to him, this challenge can only be addressed through proper communication with the vendor and then thoroughly testing the application in stages before rolling it out to encompass the entire organisation.

Kalra and his team are also working on deploying a GPS system to manage the movement of transport vehicles for each of their seven verticals. “The challenge associated with developing this application is associated with the cost of hiring and managing a separate department required for monitoring the system and so the costbenefit analysis of this implementation doesn’t make much sense,” he adds.

The Sifico Group faced a credible challenge when developing their online store using Magento technology, which basically tracks the movement of stocks across stores/branches. “We had to outsource the development of the online store, because finding people with the expertise to ensure
that the platform is effectively interfaced with our ERP system through the SQL database was a task,” says Watt.

According to him, this is a challenge that most retail organisations face when investing in technology. “There exists a lack in terms of skills availability in the region and so we have to outsource the deployment and management of applications, which in turn leads to delays in responding to queries or errors due to time differences and travel time,” explains Watt.

Many IT professionals believe that this skills gap must be addressed at a national level by encouraging the growth and development of local talent pools within universities and schools in the region.
Personally, from media conferences and other events held over the last few months, I can see that this issue is now being addressed at the grass root level by encouraging ICT education in schools, through the initiatives of organisations like the ICT Fund and BCS- the Chartered Institute of IT in the UAE. It is a matter of time before we see abounding IT talent in the region.

Decision makers also feel that vendors in the region concentrate on a transaction based approach and don’t understand the dynamic requirements of the retail segment. “I am disappointed with the service providers in the region because their ability to provide after sales support is limited. We need to see more solutions based initiatives from the vendor, where they guide and support the deployment of their solution,” says Kalra.

Catania agrees, “Customers in the region are asking for more support from their vendors to give them more value from their investment. End users don’t just want a technical solution, they also want a vendorwho can share industry knowledge andsupport them through the implementation and initial testing phase.”

In particular to the retail industry, decision makers feel that vendors need to spend considerable time understanding the retail business and how the IT infrastructure requirements within this sector differ from those of other sectors so as to be able to develop solution to meet their unique needs.

“At this point, we are witnessing generic solutions that require considerable time and effort on the part of the IT teams to customise to suit the business operations. Vendors need to work on developing solutions that are easily adaptable to varyingoperations within the retail sector. For instance, a warehouse management solutionwill vary across supermarket chains and fashion stores, where one will have to be divided based on durable and non-durable goods the other may need to be segregated based on seasons, colours, sizes etc,” explains Watt.

Undeterred investments

Despite the hurdles, retail organisations are heavily investing in the latest ICT platforms to enhance business performance and information sharing across branches especially in retail chains that encompass two or more countries.

The Al Safeer Group has invested in a private cloud platform where the organisation’s servers are hosted by Etisalat to provision the sharing of MIS reports across their stores located in Oman, Qatar and the UAE. “We have also deployed a mobile MIS application to enable the real time updation of information from POS and the shop floor,” adds Kalra.

The EMKE group has invested in a retail POS system that has visibly increased efficiency and provides the decision makers with a comprehensive sales view that includes the most minute details including the movement of products across various store locations, “The software gives us a segregated analysis of what products move off the shelf the fastest, what products sell the fastest across different stores and cash counter movement as well.”

Retail organisations are also investing in fully mobile POS stations and barcode scanning technologies that can be set up using handheld devices to provision better customer service, especially during high volume sales periods.

According to Catania, another notable investment across retail businesses is in traditional cash registers and desktop scanners that are attached to back-end systems via wireless LAN benefitting retailers through reduced cabling costs and increased flexibility in store reconfiguration.

This wireless technology in the form of barcode scanners and entry terminals linked to the back-end systems via WLAN are used in warehousing areas and shipping and receiving areas to update stock logs
from the warehouse locations and are often also used to input invoices into a store’s accounting system, simplifying the process of billing, accounting and inventory management tasks.

Price verification kiosks have also become very popular within retail organisations, customers can now take merchandise, scan the barcode and determine the actual price instead of waiting on store staff to manually check price lists. This greatly improves customer service and leaves store staff to concentrate on more tedious store operations.

Many retail enterprises now routinely connect remote offices, branch offices, and retail outlets with broadband DSL or cable modem Internet connections, and then attach VPN hardware to the connection to establish secure links to a central or regional corporate location.

The acceleration of smart phone penetration and the increasing propensity for consumers to use their mobiles phones for in store activities gives retail chains an incentive to invest in developing usable mobile retail applications.

On the whole, IT executives share an optimistic outlook for the retail industry and the opportunity that technology provides to garner a significant competitive advantage. Decision makers believe that IT needs to “atthe table” now more than ever and therefore investing in IT is a key priority.

Growing customer centricity is driving the need to invest in the latest technologies and this bodes well for the IT industry which is today considered an enabler and not just a support function, the question that decision makers are asking today no longer centre around why an IT investment be made but explores the definition of a wise IT investment.

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