Retail CIOs Taking a Cautious Approach to 2012
Added 27th Jan 2012The last quarter results of the top retailers of the country have shown definite signs of an approaching slowdown in the industry and this is expected to continue for the next two quarters. While the dipping inflation does offer a brief relief, CIOs are being cautious about investments next year.
“IT budgets this year will see either a marginal or no increase. All projects will be strictly on need basis. Focus will be on improving efficiency and optimizing processes,” says Veneeth Purushotaman, head – technology, Hypercity.
Vikram Idnani, head-IT, Trent, agrees. “All feel good projects will have to wait. We’re focusing on projects which will deliver tangible benefits quickly”
Future group with chains like Big Bazaar too has witnessed signs of a slowdown. Parakh Dave, CTO and CIO, Future Group says although his budgets haven’t been affected, he will capitalize on the market condition to extract better technology deals.” This is an ideal time to leverage technology to better operational efficiency,” he says.
FDI in Retail ?
Apart from the global economic uncertainty and inflation, other external factors such as the opening up of single brand retail and possible FDI in multi-branded retail are expected to affect the retail industry. While the economic uncertainty in Europe and America has driven single branded retailers already into India, there is much uncertainty on the multi-brand retail front and the possible repercussion of it on Indian retailers. But it is sure to increase competition in the market.
“FDI will be great for the consumers, because it will open up choices at competitive prices. Therefore our main focus for this year would be on customer-centric initiatives,” explains Dave.
However, even if the FDI does come through this year, the short-term effect would be negligible and it would take a while for it be to have an impact of existing retailers. “The modern Indian consumer pie is very large,” says Dave.
E-retailing
According to an Ernst and Young report on the global retail industry, the growth of e-commerce and m-commerce, and recent rapid shifts in consumer behavior, have increased the benefits for retailers that can stay in touch with consumers through multiple channels. And Indian CIOs are catching up on the trend.
Proliferation of mobile devices, increasing interest in e-commerce and social media would be a key focus area for retail CIOs. Idnani, who handles IT for Westside, Star Bazaar and Landmark books and Music, will focus on improving customer engagement and loyalty through mobility, social media and a better checkout and in-store customer experience. Similarly Dave is working on building multi-channel delivery platforms for customers through social media and mobility solutions.
The road ahead
However, the retail industry has much to cheer about in the coming months. According to a Derry Finkeldey, principal research analyst at Gartner, recent government decisions to allow 100 percent FDI in single brand retail, and up to 51percent in multi brand retail, are expected to provide the retail sector with a significant boost in terms of IT usage and adoption. The retail industry is expected to achieve the strongest growth in percentage terms in 2012, where IT spending is forecast to grow 11.8 percent.
The other factor expected to have a role in shaping up the retail industry is the government’s decision on Goods and Service Tax. “There is a lot of confusion over the retail taxation policy. The introduction of GST can lead to a uniform tax structure that will eventually improve our supply chain and lower costs of products,” says Purushotaman.
Next Week: BFSI
Send feedback to varsha_chidambaram@cio.in
This is a part of our series on how the slowdown is affecting Indian Industries and the decisions of CIOs. You can read the rest here
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