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April 26, 2011

Self-Check out: Will it be the future of Indian retail stores?

Last weekend on Saturday, my mother asked me to accompany her for the monthly grocery purchase to the closest retail store from our home-'D-Mart'. We went to the store in mid-morning around 11am thinking it would be relatively less crowded. But I guess, everyone's thought process was exactly like us and the retail store was buzzing with people. Yet, due to effective and now well placed self-service practice in organized retail stores in India, we did not take too much time to finish purchasing our grocery (Just 30 mins!!). But then it was the time for the herculean task of standing in serpentine queue of billing. It took us approximately 50-55 minutes to finally reach the counter and pay the bill. Though there were 5 different counters with cashiers working as fast as they could, the waiting time was still very high.

Suddenly my mother asked a very innocuous question- "Why do we need to stand in queue? Why can't we have a system where we can swipe the product as and when we purchase, pay the bill on our own and then go? We are spending (or wasting) more time standing in queue than it took us for purchasing items".

It triggered my thinking. 'Check out' being last point of contact with consumers; convenience and pleasure at this point can surely improve satisfaction of consumers by few folds. How can Indian retail stores leverage this opportunity? How can this convenience be provided?

Self-checking out can be one option. So what is Self-Checkout mechanism? In colloquial term, it can be defined as any machine/scanner/system which will allow consumers to scan products themselves while picking them up from shelves.

Some form of self-checking out mechanism has a presence in western world. However, same cannot be said for India. But yes, with invasion of organized retailing and consumers embracing the usage of technology, there is a need and requirement of provision of a self-operating scanner or a self-checkout machine.

In my opinion; the way advent of ATMs minimized total time spent at a bank, in similar fashion; installation of Self-Checkout system will also minimize time spent at a retail store. This will in turn be a key to improve the consumer service and satisfaction.

However, like any other IT implementation, a self-checkout mechanism will have its own advantages and disadvantages. Let's put it down:

Advantages

·         Reallocation/freeing of store employees. Thus they can focus on other operational aspect of store

·         During hurry or lesser number of items to buy, faster payment and check out for consumer

·         Another School of thought: Self-Check out/Payment may not be as fast, but the active participation of consumer in the scanning process will surely result in time appearing to pass faster. Thus a happy consumer J

·         Form of privacy for some consumers in buying some personal items/products/goods

Disadvantages

·         Inefficiency of consumer to operate the machine

·         If there is no re-allocation of store employees then possibility of loss of labor

·         Security issues with the self-checkout machine

·        Self- checkout not feasible for huge/big items (e.g.: electronic gadgets like TV/Refrigerator)

 

So what do you think? Will 'Self-checking out' be the future of Indian Retail?

Leaping ahead, as the buzz word all around is Mobile, will 'Mobile-check out' or 'M-check' out also be a thing to look forward to in Indian Retail scenario?

Continue reading "Self-Check out: Will it be the future of Indian retail stores?" »

April 13, 2011

Death of POS

Jim was munching on a cold sandwich at 37000 feet above Colorado fiddling with his phone and trying to pass time. The clock didn't seem to tick as he eagerly waited to see his girlfriend who was to receive him at the airport. Suddenly, his Google calendar blinked his girlfriend's birthday and all hell broke loose. He had forgotten about it entirely and didn't buy anything for her as his business trip was very hectic. It were still three hours for the landing. He logged on to the website of her favorite flower shop, customized multi-colored bouquet comprising of the loveliest of flowers and shipped it to her place. Being a platinum customer, they arranged for an instant delivery within 30 minutes. Relaxed, he promptly loosened his tie and ordered for a nice drink.

Jim contemplated, what would have happened if it was 2005! He imagined dealing with an irate girlfriend after a failed deal. It combined packed a punch strong enough to shatter a relationship which was about to blossom. He closed his eyes and thought of the mobile phone which made it possible. He wondered is the POS with all its peripherals worth its weight? Isn't its end inevitable? OR Will it undergo a metamorphosis and culminate into a website which can be used at a store or opened at home or while flying on a mobile phone? So, was the conventional POS dying OR just transforming itself to be omnipresent?

 POS- the Point of Sale as it is called has had quite an eventful journey since its inception. In its earliest avatar, it was an electronic cash register which replaced the cash drawer and the accounts book. It was a terminal which was accessed by the sales person and managed the sales process and receipt generation.

Slowly the POS terminals evolved to become more functional with in-built processing capability, data storage, networking, and graphical user interface. The peripherals like bar code reader, printers, touch screen monitors; magnetic readers, etc. made it more and more user friendly.

The POS systems became more advanced with web based POS hosted on secure servers with ability of synchronized back-up. Slowly the POS engulfed the customer centric functions such as loyalty systems, promotions, store assortment, etc. The back office of the POS enveloped the inventory system, sales information, basic reporting functions and many more functionalities.

With the advent of ecommerce, the journey of the POS took forked at this juncture. The basic premise of a POS, which was to sell, was questioned as a customer could buy at a store, buys while at standing in a queue, at their homes on websites or could buy at 17,000 feet on their mobile phones. A website could do what was done by all those cumbersome systems at the store. Few smart retailers have started combining their POS and e-commerce both in IT and business. Ecommerce functionalities have been extended to the POS at the store

So, what does it mean for a POS?

The traditional or the conventional POS, as we all know it, is almost in the verge of death now. Nothing is constant in life but change. POS is no exception to this golden rule of life. Everything is changing - the customer profile, the customer buying behavior, the selling strategy, the marketing strategy and the market place as a whole. Technological advancement is another key component that has pushed the conventional POS system into the grave. POS, which was traditionally seen as a simple operational tool has undergone a complete makeover. The perception is changing. It is now becoming a selling tool to drive the sale. POS nowadays is used not only to sell but suggest the customer, help the customer search, service the loyal customer and many more functions. Handheld POS is becoming more and more prevalent these days which helps the salesperson to walk along with the customer and help them complete the sale. Cross-selling and up-selling naturally follow.

This post which is a first in the series to discuss the current state of play and the future of POS will be explored in the forthcoming blogs.

Co-authors: Harshad Deshpande (harshadhanumant_d@infosys.com)

& Bharath Raghunathan (Bharath_R05@infosys.com)

September 30, 2010

Retailers constant challenge: Shelf tag management

During your regular grocery trips you would have noticed a tag or sticker on the shelf next to every product. These tags are called as Shelf Tags. Based on state laws, products at a retail store should have an appropriate Shelf Tag displayed for customers to be able to see. Besides product price these tags will also show certain other information such as product description, product identification number (UPC or item number), product size and unit of measurement.

Shelf tags are governed by state laws. While certain states have flexibility in terms of what is displayed on a tag, size and color of a tag etc, there is uniformity on the accuracy of price information. Most states expects price on the tags to match price at point of sale or price on the receipts. Any violation found during an audit or reported by a customer will result in fines by the government. There are several cases where large retailers have paid millions of dollars in fines for not accurately displaying the price on a tag. So shelf tags and regulations not only inform customers accurate price but also to keep retailers fair and honest.

There are several types of tags, they vary in size, color and what's printed on them. This variation is because of state laws and how retailers want to manage this process efficiently.

Managing shelf tags is a very expensive, complex and labor intensive effort for a retailer. Normally it is a logical last step of a pricing/promotion process. During a regular season, 10 - 15% of products in a grocery store will under have a price change every week (resulting from regular price change or promotional price). In other words, in a grocery store carrying 30,000 products will have around 3,500 price changes every week. That means 3,500 new tags needs to be printed and old tag needs to be replaced by the new tag (this process is called Tag hanging). To add to this complexity, tag hanging should be timed perfectly with price changes in the Point Of Sale. To manage this process in every store, every week- retails have to spend millions of dollars every year.

Many retails have optimized their Shelf Tag management process by adopting weekly mass price changes instead of frequent price changes, centralizing the printing and standardizing the tag hanging process. Even then many retails face challenges arising from inaccurate data, process inefficiency etc. Most common problem faced is either tags are not printed or excess tags are generated. Often store receives shelf tags for the products that are not in the stores due to inaccurate item-store mapping in the pricing system. Such unwanted tags will slow down tag hanging process in addition to increased tag printing cost. On the contrary, if tags are not generated for a product sold at a store, then it could potentially lead to violation of state laws.

While retails will have several opportunities to improve this process, some of the foundational elements for an efficient process are:

·         Accurate product-store mapping information (Master Data management)

·         Minimize types of shelf tags to be used in the stores

·         Centralize tag printing, standardize (and continuous training) tag hanging at stores

·         Deploy technology to synchronize tag hanging and price changes at point of sales

·         Deploy technology for regular audits to improve compliance

·         Use store level inventory system to decide if a shelf tag is required (to avoid excess tag printing)

Shelf tag process is an area of constant opportunity for retailers, an opportunity to save cost. Technology can help to great extent in the endeavor.
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