IT adoption in the unorganized retail sector is far less compared to its organized counterparts. That simply means there lies a huge untapped market for modern all-in-one point-of-sale solutions, cloud and mobile-based applications, which are fast catching up,says Bhaskar Venkatraman.
The Indian retail sector, which is one of fast growing sectors contributing about 15 per cent to the GDP, is surely on the roll for the last few years. However, due to being largely fragmented and unorganized and reluctance by small and medium retailers to embrace the latest technology to be competitive, the sector finds it hard to keep the momentum sustainable.
There are around 13 million retail outlets across the country accounting for 95% of the total outlets that are still to be automated or organized giving a huge opportunity for Point of Sale (POS) solution providers
and manufacturers to reach out to retailers. These outlets are largely dominated by small retailers such as local Kirana shops, owner-manned general stores, chemists, footwear shops, apparel shops, and other small and medium retail showrooms.
The retail market, which contains both organized and unorganized segments, stood at Rs. 23 lakh crore in 2011-12. The Indian retail sector has experienced high growth over the last decade with a noticeable shift towards organized retailing formats. The industry is moving towards a modern concept of retailing.
IT adoption in the unorganized sector is far less compared to its organized counterparts. That simply means there lies a huge untapped market for modern all-in-one point-of-sale solutions, cloud and mobile-based applications, which are fast catching up.
According to a recent report by consultancy firm PricewaterhouseCoopers (PwC), there are over 12 mn mom-and-pop stores in India's unorganized sector. While mall-based shopping formats are gaining popularity in most cities, the invincible kirana stores have their own advantages as they offer credit, and apply flexible conditions for product returns and exchanges. Apart from these factors, neighborhood locations, personal services etc are among the strengths of the neighbourhood retail stores which are largely unorganized and lack access to modern technology to run the business. Traditionally, the sector has not adopted IT due to lack of awareness and reluctance shown by the retail store owners to automate their operations.
However, rising competition and customer preferences are prompting the unorganized stores to change and go techy to tap the new opportunities and remain competitive. With the government amending rules to make way for foreign direct investment in the multi-brand retail, local retail shop owners should now go for a paradigm shift towards technology and process implementation. To compete in urban markets and middle-class neighborhood, kirana store owners must have at least basic traditional device such as cash register which can do basic functions like billing and sales summery. However, these devices lack flexibility and capability to produce comprehensive MIS reports and integrate key peripherals to provide complete automation.
By automating their business, these small retailers not only accelerate their transection process, but also improve customer satisfaction level, do more business, achieve flawless inventory management and better usage of store space and staff.
A majority of unorganized retail outlets are equipped with little more than a cash register. However, in urban areas and developed neighborhoods, card payment devices have started finding their way into kirana outlets. The unorganized retail sector is shifting from manual to electronic billing as the process is fast, convenient, takes less space and cost-effective. A retailer can start his IT journey with a simple POS system
. PC-based POS solution with barcoding system will help retailers like him to improve stock management and control, and to get more in-depth cash and financial reporting.
Understanding the specific problems of unorganized players, vendors have started to make tailor-made POS solutions for the unorganized retail sector. There are various new billing solutions used by retailers that benefit retailers. The POS technology
allows easy deployment and integration of all the related hardware and software in a multi-store situation for the retailers to have total control over their business at any given time.
While there are several new technologies out there for the unorganized players, there is a grave need to focus on implementing basic applications such as invoicing, inventory management, billing, automation to the standard business processes in the unorganized sector. Small and mid-sized retailers are still in the process of putting a transaction system in place, which includes an integrated POS solution. This can be followed by merchandise management and customer relationship management (CRM) systems.
Going up the ladder, there are applications with user-defined screens that help retailers take care of their front-end store needs as well as back-end warehouse requirements. Such entry-level solutions will work for small retailers with fewer stores. But as their number of stores increases, more evolved technology and solutions are imperative and need to be adapted.