Study of Technology adoption in supply chains of Organized Retail.

Title
Study of Technology adoption in Supply Chains of Organized Retail. Aradhana Gandhi

Introduction
Organized retail: The real GDP is expected to grow at 8-10% per annum in the next 5 years. As a result, the consuming class with annual household incomes above Rs. 90,000 is expected to rise from about 370 million in 2006-07 to 620 million in 2011-12. Consequently, the retail business in India is estimated to grow from US$ 395.96 billion in 2011 to US$ 785.12 billion in 2015 (Business Monitor International (BMI) India report for the II quarter of 2011). Organized retail is expected to increase from 5% in 2008 to 14-18% by 2015 (McKinsey & Company, The great Indian Bazaar: Organized Retail comes of age in India). Indian retail industry (organized as well as unorganized) spreads over more than 6 million outlets. Retail industry accounts for over ten percent of the countrys GDP and around 8% of employment. Total number of shopping malls expected to be about 600 by end of 2011 with a capacity of 300 million sq. ft. (ICICI Property Services Technopak Advisers Pvt. Ltd). In the developed economies, organized retail is in the range of 75-80% of total retail, whereas in developing economies, the traditional retail sector dominates the retail business. The share of organized retail varies widely from just 1% in Pakistan and 5% in India to 36 % in Brazil and 55% in Malaysia. In developing countries, the retailing business continues to be dominated by family run neighborhood shops and open markets. As a consequence, wholesalers and distributors who carry products from industrial suppliers and agricultural producers to the independent family owned shops and open markets remain a critical part of the supply chain in these countries. According to (Joseph and Soundararajan, 2009) countries like China, India and Russia are late comers in the diffusion of modern retail and the main reason why they lagged behind was the severe restrictions on foreign direct investment in retailing in these countries. In January 2006, India allowed foreign companies to own up to 51% in single brand retail joint ventures (JVs), but multiple brand foreign firms are still barred in retail although they can set up wholesale operations that are cash and carry formats. 100% FDI is allowed in this segment. Bharti Wal-Mart and Metro have opened their cash and carry wholesale retail outlets in India. Multi-brand foreign firms have entered India through the franchise route. The government is in the process of liberalizing the FDI norms for the foreign single and multi brand retailers. The Indian retail sector is highly fragmented, consisting predominantly of small, independent owner managed shops. The domestic organized retail industry is at the nascent stage. At the macro level factors such as rising disposable income, dominance of the younger population in spending, urbanization, shift of the traditional family structure towards the nuclear family are buttressing the organized growth in India. Being considered as a sunrise sector of the economy, Page 1

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several large business houses are entering the retail industry under multiple modern retail formats. The advancement of information technology is improving end to-end business processing by integrating the entire value chain, backward and forward, for operational efficiencies. On the other hand, rising real estate prices, infrastructure constraints, and expensive technology are making the retail industry capital intensive. The international consulting firm, A.T. Kearney, annually ranks emerging market economies based on more than 25 macroeconomic and retail- specific variables through their Global Retail Development Index (GRDI). For the last three years (2005, 2006 and 2007) India has been ranked as number one indicating that the country is the most attractive market for global retailers to enter. India ranked 3rd in a Global Retail development Index of 30 developing countries drawn up by (AT Kearney) in its 9th annual Global Retail Development Index (GRDI) in 2010

Need for technological investment

A survey by AMR Research projected that the excess consumer goods inventory would exceed $60 billion in the USA and $120 billion globally at the end of 2000(Frozen food age, 2000). Like excess inventory, out of stock could be very costly as well. According to Gruen and Corsten (2006) worldwide out of stock levels still average 8 %. And for every 13 items a shopper plans to purchase, one will be out of stock. When confronted with a shelf level out of stock, on average 30% of consumers switch stores, 25% switch brands and 20 % switch to a lower value alternative.(Gruen and Corsten, 2006). An average customer may not return to a store after three negative experiences and wal mart estimates that each lost customer represents over $200,000 in lifetime lost sales (RRilley, 2004). Ideally, retailers goal would be zero out of stock and an inventory process where inventory is replenished daily as it sells but logistics, customer demands, economy of scale, productivity, uncertainty, and unpredictability makes this goal a far -fetched dream at the present time. Best practices in retail inventory management call for a proper balance between inventory and service levels, recognition of the importance of merchandise availability, and accurate store sales/inventory data (Wilson et al, 1995). It quantifies relationship between inventory, sales and service in the retail and logistics literature. Inventory management is critical to retail financial performance. Nevill et al (1998)note on nearly every merchants balance sheet, inventory tops the list of valuable physical assets. After cost of goods sold, the major costs incurred by retailers involve the resource trinity space, labor and stock (Lusch, 1986; Larson and Laush, 1990). Thus important measures of retail efficiency are sales per square foot, sales per employee, and stock turnover. Inventory (a.k.a.stock) provides product availability, a key dimension of customer service (Lalonde and Zinszer , 1976; Copacino, 1997). Stockouts (Lack of availability) bring lost sales, backorder costs, delayed cash flow and lost customers. Page 2

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Goals of a retail outlet: 1. 2. 3. 4. 5. 6. 7. 8. Reduce slow moving inventory thereby improve stock turnover. Reduce clearance inventory. Improve the process of ordering, receiving, packing out from receiving packing. Improve the process of products markdown. Improve the sales per footfall, sales per employee. Reduce the out of stock inventory Accurate store sales/ inventory data Improve merchandise availability

Recent empirical work has documented the lack of inventory accuracy in retail environments. For instance DeHoratius and Raman (2008) found that the inventory records of 65% of the SKUs stocked by one of the retailers were inaccurate. The observed inventory inaccuracies could have the potential of reducing the retailers profit by as much as 10% due to higher inventory cost and lost sales. One of the major causes of inventory discrepancy is shrinkage which is in the range 1.5 2 %. So called Phantom stock outs represent another reason for decreased store performance K Alexender, et al (2010). They occur because inventory is stored in places that are not accessible to the customers (i.e. in the back room) or places where they are not expected (e.g. in the wrong shelf). Ton and Raman (2004) estimate that every sixth person who approached a sales person at Borders (a large US based media store) for help with finding a particular product failed to obtain it although it was actually available somewhere in the store. High product availability at competitive operational costs is the key success factor in the retail industry. If competition is fierce and profit margins thin, distribution systems that provide the right amount of stock at the right place become even more important. Most inventory control policies require accurate information regarding which products are available in what quantities. Apart from using point of sale data for planning purposes such as shop layout and long term supply management, real time data about the location of the merchandise, on the sales floor can help to increase retail supply chain execution. Information technology can and will play a major role in improving the efficiencies of the retail supply chain in India. Organizations have become aware of the importance of technology to improve efficiencies and are taking definitive steps towards leveraging IT in improving the efficiencies of the supply chain. Therefore to summarize: There is a need for complete, timely and accurate coordination of stock keeping unit (SKU) level information among the organizations involved in a retail supply chain. The buying behavior is undergoing a change across the Globe because of Amazon.com and e-bay. Page 3

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E-tailing slowly is making its presence felt. Companies have started using their own web portal or tie ups with horizontal players like rediff.com and Indiatimes.com to offer products on the web. Retailers have to maintain margins despite tight competition Improve responsiveness to trends/opportunities Compete aggressively with volume, category and convenience competitors Cost effectively educate consumers (mobile, digital displays, wands....) Satisfy demanding consumers and integrate their buying experience across channels Deal with regulation and compliance Optimize costs including IT Seek profitable expansion opportunities Manage changing trends, short life cycle products, fluctuating seasonal demands, technology evolution and high customer churn especially in the fashion industry Manage high expectation of service delivery from the customer Tackle food traceability issues with items having a shelf life Design marketing campaigns Manage price changes and auditing And therefore Information Technology appears to play an important role in facilitating the above. Unique needs of Technology in Retail: There are multiple outlets at different locations, multiple hand offs, high frequency of reorder all of which makes retail operations a complex task. Decisions on many important strategic issues impact on the supply chain: how to coordinate the production of goods and services, with suppliers from whom materials are brought? How and where to store inventory? How to distribute products in the most cost effective and timely manner? And how and when to make payments. Most of the retailers suffer from financial and operational difficulties due to poor coordination of players in the value added chain. Multiple touch points require coveraged planning of every player. But, there exists a diversified planning with geographic dispersion of players adding to the complexity of the retail process. With the multiplicity of seasonal goods, highly customized products, fashionable goods, availability of close substitutes and niche products, managing retail operations become a herculean task. A leading retailer manages about 4,00,000 products, which is a complex task to perform. 52% of India Land is under cultivation, making it a food basket of the world. And yet food retailers are under the grip of product complexity because fresh fruits are wasted as much as they are consumed in a year. Finally, the changing demographic profiles and buying pattern of customer enhances the scale complexity of retail operations. Retailers experience millions of transactions per day and the situation becomes more challenging during particular festivals and occasions. These are some of the dimensions representing unique needs of information and communication technology in the retail sector. Page 4

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The goal of Technologies in retail is to develop technology devices which enable retailers to provide just in time products at the quantity expected by customer with minimal shrinkage. Some of the Information technology tools that retailers are using are: 1. Radio frequency identification (RFID) is one of such technologies which can dramatically increase the organizations capability to acquire data about entities properties and location. (Chatterjee, R, et all, 2004). RFID technology can provide much useful information about products: Product identification number, price and cost, manufacturing date, location, inventory on hand and so on. (Choa, C.C., et al) . RFID technology can increase speed, accuracy and visibility of operational information exchange which in turn leads to shorter cycle times, lower labour costs and improved customer service. (moberg, C.R, et al, 2003) . Radio frequency identification technology is a technology that uses radio frequency waves to transfer data between a reader and a movable item for the purpose of identifying , categorizing tracking and monitoring products. (Columbus, L, 2005). A typical RFID system is comprised of tags, readers and software. Tags are the key component and are placed on the entity which is identified as data carrier; readers can read/write data on tags and transmit the data between readers and tags; and software integrates an RFID system which usually includes a front end which manages the readers and tags and a middleware which routes this information to servers in order to run the back end database applications(Asif, Zand Mandviwalla, M, 2005). There are three main benefits from RFID application in retail supply chain. First, identifying and tracking product information from RFID system can enable firms to integrate inventory timeliness; for example a study reports that RFID can make a savings of 16% in out of stock. Secondly RFID technology can greatly reduce or avoid shrinkage, which is the financial losses attributable to a combination of employee theft, shoplifting administrative error and vendor fraud. Thirdly RFID technology can help companies improve supply chain planning in three ways: enhanced information visibility, increased information accuracy and privacy and security issues. The three major concerns are first its relative high cost. Second the lack of globally accepted standards and third complexity of RFID implementation.

2. Point of Sale technology: This can be defined as a computerized system used to capture time
and place of sale. It provides up to date information on sales of different brands, size, colour, styles, prices, etc. Under point of sale technologies, specialized terminals or desktops are combined with bar coding readers, magnetic stripe readers and cash registers for accurately and instantly capturing the sale transaction. Retailers investing in these systems can benefit by reducing their inventory investment by 15 to 30 %.

3. Electronic data Interchange: EDI is the exchange of business information through standard
interfaces, by the use of computers. In simplers terms, EDI is defined as the exchange of Page 5

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electronic documents between organizations. It allows retailers to place instantaneous, paperless purchase orders with suppliers. EDI is not only efficient but also reduces the time needed to supply products to customers, by ensuring quick and accurate transactions. By using this technique human intervention can be minimized and employees can focus on key business areas.

4. Barcode and Scanners: Bar code readers are photoelectric scanners that read the bar codes or
vertical zebra striped marks, printed on product containers. Barcode scanner reads the bar codes quickly, speed up the checkout and makes the pleasant cashier to transfer the positive energy to customers. Retailers now a days are increasingly using bar code system called the Universal Product code (UPC).

5. Business to Business (B2B) collaboration: B2B is pre-agreed technological information sharing

mechanism and co-planning process. Business to business collaboration is electronic marketplaces on the internet where supplier and buyers interact to conduct transactions. B2B solutions are usually implemented through packages (SOA, C-ME and customized solution). UccNet is an emerging B2B data communication standard for the retail industry with a significant potential impact. 6. The Database Management, Data Warehousing and Data Mining: A single transaction at a retail outlet releases a handful of information. The use of systems to organize, retrieve, search and manage that data is referred as database management. A data warehouse is a collection of computer based information that is crucial to the successful execution of enterprise initiatives. The concept of data warehouse implies that the data stored for business analytics can most effectively be assessed by separating it from the data in the operational systems. A data warehouse is used for upgrading a retailer with important information regarding sales like colour, size, and quantity of product. Data mining helps the retailers in extracting information from database about the existence of which the user was not aware. It discovers a relationship between customer behavior and variables that seems to be non intuitive.

7. Cloud computing: Cloud computing is an IT delivery paradigm where compute capacity is made available to users in an on demand fashion through a shared physical infrastructure. The expectation is that sharing hardware, software, network resources and management personnel would reduce per unit compute cost for enterprises. 8. Collaborative, Planning, forecasting and Replenishment: Collaborative Planning, Forecasting and Replenishment (CPFR) is a concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information. This allows for continuous Page 6

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updating of inventory and upcoming requirements, making the end-to-end supply chain process more efficient. Efficiency is created through the decrease expenditures for merchandising, inventory, logistics, and transportation across all trading partners.

9. Electronic Cash Register: The Electronic Cash Register (ECR) keeps track of sales transactions quickly and effectively. An abundance of PLUs (Price Look Ups) and department keys accommodate a variety of merchandise items. This means a faster, more accurate check out process and the ability to manage a wider variety of goods and services more efficiently. And with features like fast, attractive receipt print outs and an easy-to-view LCD operator display, the ECR makes managing the business a pleasure. 10. Loyalty Membership cards: Creative personalized customer loyalty cards enable retailers, casinos and many others to provide customer loyalty reward points, discounts and perks. Customer loyalty card programs also create opportunities to track customer data and use it to build strong, lasting relationships. 11. Two Way Radios like the Kenwood TK3201: Members of staff communicate over a wide area, check stock levels and stay in touch across the entire site. Not only does 2 Way Radio allow members of staff to communicate over a wide area but they can be used as a health and safety tool so workers can report accidents, check stock levels and stay in touch across the entire site from the shop floor to the distribution area. Imagine a customer asking a member of staff if a particular item was in stock. Gone can be the days of the staff member disappearing from what seems like ever to find out. Instead a simple call using the Two Way Radio to someone in charge of the stock levels and the customer is told in seconds if the item is available. Modern Two Way Radios like the Kenwood TK3201 and Motorola XTN446 Radio are a perfect way for modern retailers to differentiate themselves from their competitors whilst making all our shopping experiences better.

12. Quick Response codes (QR): The Quick Response codes are the bar codes on the products which could be downloaded by the customer from the internet or could be picked up from the previously bought products on the smart phones or tablets. A list of all items to be purchased can then be mailed to the retail outlet. The retail outlet can pack your material and either deliver the same at your residence at a price or keep it at the outlet and the customer could pick it up based on his convenience. 13. Customer Relationship management, Online Analytical Processing Collaborative planning forecasting and replenishment: The emphasis of retailers are now in utilizing IT solutions like CRM, OLAP, CPFR tools to carry out the behavioral analysis to stay in the competitive market. Retail ERP packages have been implemented by large retailers but today they are experiencing Page 7

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difficulty in utilizing it fully, one of the key reasons could be the lack of adequate training. But it is expected that the demand and utilization of these packages will grow in the near future. It is estimated that about 400 to 500 mega bytes of data are transmitted daily between point-of sales counters and corporate headquarters of retail chains in developed countries. Relay of transaction data in such volumes helps to maintain a close working relationship between retailers and vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby save cost. Retailing database also helps in tracking purchase behavior through demographic and psychographic information. This clearly is an indication of technology serving as an effective means to build the retail business and not just restricted to supporting and improving the operational efficiency.

14. ERP like Retail Pro, higher-end solutions like JDA, SAP IS Retail or Retek: Facilitate complete integration of all the operations of the retail business and are a must in a scenario where retailers have thousands of products, hundreds of suppliers, multiple locations, etc. 15. Customer Service Kiosks and Intelligent Vending Machines: Latest information about products, their availability, price verification can be done at the customer service kiosks. If the product is not currently available a process, whereby the missing goods are ordered and directly shipped to the customer can be initiated. A Get help button, can be used where by a customer can click on this button and the store manager on the floor can walk down to the customer to resolve his query or could inform the customer how much time he would take to come down to the kiosk. 16. Voice ready Multi-Modal Wearable Computer
Operatives can work completely hands and eyes

free by receiving picking commands from the WMS via a plug-in headset.

Popular application software and devices are available today that give a store associate access to store inventory, point of sale, voice communication, instant messaging, and even external data such as inventory at other stores in the region. Voice communication can be broadcast, where all employees hear the same thing, or unicast where a conversation happens between two employees. Group communication, or multicast, is also available which can be used to let groups of managers communicate only amongst each other.
17.

Mobile payment: Order through M-commerce or telephone and pay through mobile. This is a very convenient way of making payment. The customer can order the material through his smart phones using the Quick response codes. Ask the retailer to deliver the goods at his residence and make payment through mobile saving huge amount of time.

18. Global Data Synchronization Network (GDSN) Master Data across all business partners remains the same. If any business partner makes a change in the master data especially product master, a simultaneous change will be initiated in the database of all the other parties interested that is the suppliers, company and the customers. And therefore all the parties in the value chain maintain the same master data avoiding confusion and errors.

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19. Video Conferencing: Video conferencing solutions within and between retail branch locations can facilitate inventory checks, remote support, remote team meetings, last minute specials, new incentive programs, faster access to sales reports, employee information and remote expertise 20. Mobile point of sale: Fully mobile point-of-sale stations can be set up using handheld computers, scanners, and printers with integrated credit card readers. This would be a great help in reducing the queue at the retail outlets especially during peak hours. The store personnel could use mobile point of sale equipments and complete the customer transaction at a great speed avoiding dissatisfaction. 21. E-Commerce and F-Commerce: Use of electronic communication like e-marketing could well be a cost-effective form of attracting and retaining customers. With internet penetration and awareness on the rise in the country, e-marketing does prove to be a good communication tool. Use of technology could further be extended to home shopping, direct mails and telemarketing. It can also facilitate growth in newer applications like kiosks, intelligent vending machines, PC net shops, etc. F-commerce is face book commerce. Retailers are sending posts to the respective face book accounts based on the interest level of the customer thereby individualize the information sent.

Areas of concern
Regulatory framework: In 1997 it was decided to prohibit FDI in retailing into the country. In January 2006, however, a partial liberalization took place in policy in which foreign companies are allowed to own up to 51% in single brand retail JVs as approved by the Foreign Investment Promotion Board (FIPB). Besides this, foreign companies are allowed in wholesale cash and carry business and export trading with 100% equity through the automatic route. And therefore International firms like TESCO and Wal-Mart are not able to open their retail chain. They have entered the country for only sourcing purpose. According to Gruen and Corsten (2006) worldwide Out of stock levels still average 8 %, resulting in loss of short term sales and erosion of long term brand power and Loyalty. And for every 13 items a shopper plans to purchase, one will be out of stock. When confronted with a shelf level out of stock, on average 30% of consumers switch stores, 25% switch brands and 20 % switch to a lower value alternative.(Gruen and Corsten, 2006). An average customer may not return to a store after three negative experiences and wal mart estimates that each lost customer represents over $200,000 in lifetime lost sales (RRilley, 2004). Therefore one needs to find out how these problems can be addressed. Further, the uncertainty and variability caused by lack of true demand information leads manufacturers to stockpile extra inventory, thereby reducing the overall efficiency of a supply chain. There is a surge in the volumes of information available today and most organizations are drowning, struggling to understand what to do with the data they receive. Page 9

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Rising real estate prices, infrastructure constraints, and expensive technology are making the retail industry capital intensive.

Rationale and Significance of Study

The current body of knowledge on select issues in technologies in organized retail in Indian context has been limited. This study would enhance the knowledge base and aims to bring out new insights on the technologies used by Organised retail and the future outlook that would add to the knowledge of both academicians and practitioners for formulating future strategies. It is an upcoming sector with a lot of growth opportunity so the research would remain relevant in future. International companies like Wal-Mart and Tesco have far better technology and competency in retailing. They are going to give tough competition to the Indian companies. And therefore this study becomes all the more exciting.

Literature review
Kent and Mentzer (2003) studied the investment in inter-organizational information technology on the long term supply chain relationship. Behavioral variables like trust, commitment, dependence and long term relationship were evaluated. The study suggested that if retailers perceive their suppliers are investing in Inter organizational information technology, the retailer will be more committed to the relationship. From a managerial perspective, the finding that logistics efficiency is a significant consequence of relationship commitment based on trust and perceived supplier investment in Inter- organizational information technology has definite supply chain management implications. Lin, Po and Orellan (2010) used a case study approach for a children apparel retail chain which has implemented POS systems to ascertain the most important service experience variables determining the customer purchase decision and the clerks influence on customer purchase. The finding suggest that storefront employees should take initiative in helping pay attention to the customer. It can determine whether or not a customer purchases an article. Morgan and Hunt (1994) evaluated trust, commitment with investment in Technologies within a structural equation model based on a sample of retail tire stores. Xiaoran Wu and Subramaniam (2009) using the Technology-Organisation-Environment (TOE) framework the authors have developed a theoretical model for RFID adoption and infusion. Based on the study the implications for managers are, managers should not only evaluate potential benefits of innovation but also evaluate innovation maturity for adoption when managers make decisions on innovation adoption. Anand and Kulshreshtha (2007) extended the TOE framework by (Tornatsky and Fleischers) by including another aspect customer to study an Indian retail companys B2C adoption process in Page 10

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India. According to the study some of the important factors for B2C adoption in an Indian retail company are first Higher value proposition of technology makes the firm adopt B2C. Secondly a firm with bigger scope encourages B2C adoption. Thirdly Competition from other retail firms makes the firm to adopt B2C. Fourthly Government environment is a critical environmental factor. Marzocchi and Zammit (2006) discussed how self scanning technologies can be used in retail. The study tried to ascertain whether satisfaction with self scanning technologies has any impact on consumers overall opinion of the supermarket and their intention to patronize the store with greater frequency. Chieu, et al (2010) discusses a framework for deployment of business analytics solutions on a cloud platform. The solutions are characterized by a need to process and manage large volumes of data, rapid on boarding of new retailers and CPs and an ability to plug in different analytical providers. The framework provides a standardized mechanism to deploy solutions in the cloud. Dane, et al (2010) examines the impact of radio frequency identification (RFID) technology on the inventory control practices of a small to medium retailer. When integrating into a firms business processes, the RFID technology allows any tagged entity to become a mobile, intelligent, communicating component of the organizations overall information infrastructure. Singh, et al (2010) conducted a study of relating organised retail supply chain management practices, competitive advantage and Organisational performance. The study was conducted in Top 10 nonlivestock organized retail players operating in Punjab, Haryana, Chandigarh, New Delhi and Gurgaon in India. A framework of structural equation modelling was used. The results indicate that Indian retailers know that competitive advantage has high impact on supply chain practices but they fail in matching supply chain practices, competitive advantage and organizational performance. Tanwar, et al (2008) have critically stated the different Information and communication technology available in the market. They also stated the ERP that some of the leading Indian retail firms are currently using. Information and communication technology has contributed significantly to the retail acceleration globally. However Indian retail is still leapfrogging in terms of leveraging Information and communication technology. The author states that Indian retailers can learn from the experiences of their foreign rivals and save their cost of learning. Joseph and Soundararajan (2009) made an attempt to rigorously analyse the impact of organized retailing on different segments of the economy. The study finds that both traditional and organized retail are bound not only to coexist but also achieve rapid and sustained growth in the coming years. This is clearly not a case of a zero sum game as both organized and traditional retail will see a massive scaling up of their activities. The retail sector left entirely in the traditional and informal segment of the economy, could well emerge as a major constraint on economic growth.

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Gap Analysis
An abundance of information can be found in the popular business press citing benefits for the use of information technology in supply chain management (Bowman 1993: Ross 1996). However the logistics, retail and marketing literature lacks adequate empirical research to support these often cited normative statements. Big names in organized retail like Reliance, Tata, Av Birla Group and ITC started showing presence since 2006-2007. The industry is barely 5 years old and therefore there is a lot of scope for research in this area. There is very little research done for Organized retail in India as it is an upcoming sector. Use of Technology in Indian Organized retail is in its primitive stage. Not much research work has been conducted in understanding its enablers and barriers except the General TOE framework given by (Tornatsky and Fleischer) Integration of POS technology with ERP and internal business processes, performance indicators of organized retail are still not well understood. Most of the current research focuses on one technology for example RFID, POS or Cloud computing, etc and talks about its adoption issues.

Research objective
There is a need for complete, timely and accurate coordination of stock keeping unit (SKU) level information among the organizations involved in a retail supply chain. Information Technology appears to play an important role in facilitating the above. The primary purpose of the current research is to empirically test a retail supply chain model by investigating the effect of investment in technology on supply chain effectiveness and customer satisfaction levels. An abundance of information can be found in the popular business press citing benefits for the use of information technology in supply chain management (Bowman 1993: Ross 1996). However the logistics, retail and marketing literature lacks adequate empirical research to support these often cited normative statements. Innovations of information technology continue to improve the capabilities of organizations to acquire, interpret, retain and distribute information (Angeles, R., 2005) . Real time information gathering technologies and decision support systems promote real time decision making to benefit organization. Retail is an information intensive industry and the adoption of information technology is essential for the retail firms in the new era. Information technology is the tool that has been used by retailers ranging from Amazon.com to eBay to radically change buying behavior across the globe. The e-tailing channel is slowly making its presence felt in India. Companies in India are using either Page 12

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their own web portals or are tying up with horizontal players like rediff.com and indiatimes.com to offer their products on the web. At present how to develop and effectively adopt IT is especially important for Indian retail firms. Indias Organised retail sector is the sunrise industry, representing the unique and diversified needs of customers. Todays scenario demands information on ones finger tips, which is possible only through Information and Communication technology. To stay ahead in the global retail race, the use of modern technologies like Radio Frequency Identification (RFID), Electronic data Interchange (EDI), Data warehousing and Data Mining and Bar coding and scanning is imperative. Big Players of the Indian retail industry have already started using these technologies and now its the turn for the other players too to embrace this. And therefore the study will try to ascertain the level of technology in various retail outlets, whether there is a relationship between level of technology and success of the retail firms, how customers perceive retail outlets which use technology compared to those who do not. Broad Objectives of the study The primary purpose of the current research is to empirically test a retail supply chain model by investigating the effect of investment in technology on supply chain effectiveness and customer satisfaction levels. The study will try to ascertain the level of technology in various retail outlets, whether there is a relationship between level of technology and success of the retail firms, how customers perceive retail outlets which use technology compared to those who do not. To study the use of Point of Sale, ERP and other technologies used in organized retail in India To access the effectiveness of current and emerging supply chain practices related to ERP in contemporary organized retail in India. To analyse enablers, barriers, critical success factors, technology effectiveness such as POS, RFID, ERP , etc of technology adoption in a retail firm. Analysis of the role of technology in different retail formats. To analyze the effectiveness of technology in the success of retail supply chain using Quantitative modeling techniques. Design and analyze an experiment to investigate the impact of technology on the customer satisfaction levels. To understand the voice of the customer with reference to technological requirements through QFD and convert the same into technical specifications which can be incorporated in the technological products.

Research methodology

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Conduct a review of literature on organized retail sector in India and how technology has enabled the retail sector to perform on various parameters. During the literature review detailed study is firstly proposed about the organized retail sector in India, the different players in the market and how they are performing. Then do a literature survey about the meaning of technology management, what are the parameters for adoption and diffusion of technology in a retail outlet, technology life cycle, etc. Then proceed to study each big retail outlet case study to understand how these retail chains have come up, what is the level of technology they have infused in their operations, how they are performing compared to their competitors, etc. Hypothesis Development: To develop appropriate hypothesis regarding retail technology and customer satisfaction linked to the technological advancement. Product category coverage: The study proposes to cover the following category of Organised retail outlets: Food and Grocery Textile and clothing Footwear Consumer Durables and Information technology Furnishing Hardware General merchandise Includes lightning, stationery, toys, gifts, utensils and crockery stores Geographical Coverage: Since the retail universe is very fast, widespread and diverse, obtaining a nationally representative sample (covering urban and rural areas) would involve a very large budget and time. Moreover, organized retailing is more of an urban and metropolitan phenomenon and therefore it is proposed to cover metropolitan cities in India. Retail format coverage: All the retail formats are proposed to be included in the sample like: Hypermarket Cash and Carry Department store Supermarkets Shop in shop Specialty store Discount stores Convenience stores List of retailers (Secondary data) will be collected through: 1. Company websites 2. Indian retail reports Page 14

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3. Retail telephone directory, etc Conduct Primary research: A questionnaire method has been proposed to be used typically where objective methods of assessing performance are not available. This measure can be used to measure perceptions, attitudes which are not possible using objective measures. Datta, and Grant (1990) have advocated the use of a questionnaire method for analyzing performance. Questionnaire will be administered on the retail outlets and the customers buying products from the organized retail outlet. As consumers are a major stakeholder category in the expansion of organized retail, a consumer survey is proposed to be planned as an integral part of the present impact assessment study. The sample size proposed is around 100 retailers in India. The questions in the questionnaire will try to test the hypothesis. A five point Likert scale is proposed to be used starting from strongly disagree (1)n to strongly agree (5). Statistical technique called structural equation modeling will be used to test the hypothesis (software AMOS 4.0 version). All the variables of interest are proposed to be assessed through the respondents perceptual evaluations. Structural Equation Modeling (SEM) is a statistical technique for testing and estimating causal relations using a combination of statistical data and qualitative causal assumptions. This definition of SEM was articulated by the geneticist Sewall Wright (1921), the economist Trygve Haavelmo (1943) and the cognitive scientist Herbert Simon (1953), and formally defined by Judea Pearl (2000) using a calculus of counterfactuals. Structural Equation Models (SEM) allows both confirmatory and exploratory modeling, meaning they are suited to both theory testing and theory development. Confirmatory modeling usually starts out with a hypothesis that gets represented in a causal model. The concepts used in the model must then be operationalized to allow testing of the relationships between the concepts in the model. The model is tested against the obtained measurement data to determine how well the model fits the data. The causal assumptions embedded in the model often have falsifiable implications which can be tested against the data. With an initial theory SEM can be used inductively by specifying a corresponding model and using data to estimate the values of free parameters. Among the strengths of SEM is the ability to construct latent variables: variables which are not measured directly, but are estimated in the model from several measured variables each of which is predicted to 'tap into' the latent variables. This allows the modeler to explicitly capture the unreliability of measurement in the model, which in theory allows the structural relations between latent variables to be accurately estimated. Factor analysis, path analysis and regression all represent special cases of SEM Techniques like ANOVA, Regression, Chi square test, Correlation, Regression, t- test, etc will be used to analyze the data and model is proposed to be formulated. Quality Function Deployment will be used for converting the process requirements into technology management specifications. Quality function deployment (QFD) is a method to transform user demands into design quality, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process. as described by Dr. Yoji Akao, who originally

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developed QFD in Japan in 1966, when the author combined his work in quality assurance and quality control points with function deployment used in value engineering. QFD is designed to help planners focus on characteristics of a new or existing product or service from the viewpoints of market segments, company, or technology-development needs. The technique yields graphs and matrices. QFD helps transform customer needs (the voice of the customer [VOC]) into engineering characteristics (and appropriate test methods) for a product or service, prioritizing each product or service characteristic while simultaneously setting development targets for product or service. Customer survey will be conducted and the voice of the customer will be picked up and appropriate engineering characteristics will be ascertained which can be incorporated in the product or service offered to the customer. Case study approach will be used to understand the retail industry critical success and failure reasons. Organized retail firms like Subhiksha, Trent limited (Westside, Star India Bazaar & Landmark), Pantaloon Retail India Limited (Food bazaar, Big bazaar, Mbazaar, Furniture bazaar, Shoe factory, Pantaloon, Central, aLLBlue sky), ITC Choupal sagar and Choupal Fresh, Spencers retail and mother dairy will be studied in detail using the case study methodology. Data envelopment analysis is proposed to be used for benchmarking. IT presents a procedure for performance benchmarking, that extends the performance measurement technique Data Envelopment Analysis (DEA), to incorporate the interactive decision procedure Interactive Multiple Goal Programming (IMGP). The resulting procedure is called Interactive Data Envelopment Analysis (IDEA). It is a decision support tool that helps decision makers to select performance benchmarks that are both feasible and desirable, and to identify benchmark partners that may be helpful in uncovering ways for achieving the selected performance standards.

Input variables proposed in the study:

Level of use of technologies (T1, T2, T3, T4) T1: RFID T2: ERP like SAP - Retail T3: POS technology / Computerized billing T4: Self Scanning technologies T5: Credit card Machines T6: Scanning / Bar coding machines T7: Computerized accounting, inventory control, etc. T8: Electronic weighing machine T9: Multi channel distribution, i.e. E-commerce, retail outlet, Home delivery, etc. T10: Innovation visible at the retail outlet T11: Loyalty membership card T12: Supply chain integration T13: Market share T14: Level of Top management involvement in technological decisions T15: Biometric validation for fast and accurate cashier login and overrides Page 16

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T16: Images of scanned products for visual item matching T17: Real-time performance indicator to drive cashier productivity T18: Image recognition to reduce shrink loss of un-scanned items T19: Touch screen keyboards T20: Exotic payment options like biometrics and contactless cards T21: Collaborative Planning, Forecasting and Replenishment T22: Customer Relationship Management & Business Analytics

Output variables proposed in the study:

Customer satisfaction Number of footfalls Sales per employee Sales per floor area Supply chain speed Profitability

Timeline

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References
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