NEC India Pvt Ltd, a joint venture between NEC Asia Pte Ltd and NEC Corporation Japan, was established in New Delhi, India in August 2006. Leveraging on NEC’s unique capabilities in integrating IT and networking technologies for a diverse customer base across governments, businesses, individuals and society worldwide, NEC India customizes solutions including security and surveillance systems, IP telephony solutions, retail solutions (hardware and software) for the Indian market. In an exclusive interaction with IndiaRetailing, David Arambhan, country head – Retail, NEC India revealed that besides a host of web enabled applications, they are launching a POS in a box concept that can be used by just plugging it. Further, the company is ready to offer applications to single store retailer as cheap as at Rs 15,000 per month. Excerpts:
India Retailing (IR): How long has the company been developing retail oriented products?
David Arambhan (DA): NEC has been in the retail space now for more than 30 years; right from the cash register time to developing such solutions over PC based Point of Sale (POS), to true point of sale architecture. Our strategy has always been to provide complete solutions – from hardware to software. But when we enter any new market, our emphasis is first on building the brand through a few select products and then slowly introducing the entire portfolio.
Our Indian operation started around September 2007, at the India Retail Forum, where we launched our POS hardware solution. We actually saw the market acceptability picking up only in 2008. Keeping the road map similar to our fory in other countries, we are shortly planning to enter the software domain or application domain in the retail space as well.
IR: Please elaborate.
DA: A POS cannot work as a dumb terminal. So obviously when we sell the POS, we need to test it across multiple formats and applications. We always go to the customer with a solution which is the best of the lot available in the market for that specific format. We work very closely with the solution providers. With over 47 partners in India today including SAP, Microsoft Dynamics and Acsent, we are providing solutions across industries. Even our association with very niche companies also helps us in providing web-based applications in the retail domain.
IR: How is your company faring in the current downturn?
DA: Contrary to the economic slowdown, we have really achieved an industry opposite growth rate over the last year. If you look at the pipeline for the Q1 of this year, it is very healthy. There may be a slowdown at the end users level, but as a technology company we are upbeat because we have the technologies to meet the issues of this slowdown. We grew by over 40 per cent YoY and we look at doubling our retail turnover at least in this year. There are two ways to look at our business – one is to have what the competitors have and the other is to have uniqueness in terms of product offerings, and we have both. We at NEC feel as the market matures, we will get more and more people interested in our services. I won’t say we are growing very aggressively, but I must say hugely.
IR: So, what are you offering your customers in such a wary scenario?
DA: At a time when customers need technology most, we have to be innovative. And NEC prides itself as a technology company that is driven by innovation. When everybody is talking about the cost of POS, we are coming up with a ‘Made-in-Japan’ product. We are going to launch a POS hardware which will be the smallest terminal. Besides, it is designed keeping in mind the sectors which require dust proof and spill proof machinery and capable enough to be utilized in multi format module. Also, offering a POS terminal in isolation does not matter much, but what matters is that the solution is robust enough to be hosted on various platforms and can be driven over a common network Very few retail solution companies have such end to end solutions and we are one of them.
IR: What are the points a retailer considers before deciding on an IT solution?
DA: In any IT strategy for a retailer, the initial investment i.e. the cost of acquisition, running cost and warranty cost are very critical. The solutions that a retailer thus zeroes down upon should offer specific reduction in the running cost and be lower in terms of acquisition cost also. So, players in the industry should try and design models for which the retailer does not need to make any upfront investments, especially for hardware acquisition.
IR: In your opinion, how do retailers choose POS vendors?
DA: Any retailer’s buying decision starts with the solution and then it moves on to what are the technologies that can give him that particular solution. So in that sense he looks for the kind of solutions available for his format. For a multi format retailer, one solution might not be the solution across all his formats. For example, for his large retail format, he may use one application in a speciality store while another application for value format. But at the back end he might club them all on an ERP. So his buying decision varies depending on the parameters he wants to address.
IR: How will a POS help a single-store retailer?
DA: There are solutions which are designed specifically for a single store, kirana store, food chain, large format and multi-format retailer. The point is: Are they scalable? Is their acquisition cost affordable? Are they sustainable? So what we are seeing right now in the market is that the market is maturing. The slowdown has led retailers to start rethinking on these parameters rather than just hiring consultants to meet their retail needs. Today, every organization is found talking about the total cost of IT expenditure vis-à-vis the turnover. In such a scenario, cost of ownership of the technology that would be suitable for their format is going to be the key. For a single store retailer, NEC is ready to offer applications as cheap as at Rs 15,000 per month.
IR: Some of the clients of NEC?
DA: We have clients right now in the F&B sector, hospitality sector, grocery sector and high end lifestyle sector such as Sunglass Hut, DKNY, Harra Fresh, Café Ole, Boogi, Allcott and Balaji Hotels. In this short span of time, we have been working across four formats.
IR: Speed is always an issue with POS. What is your take on that?
DA: Any application, if not optimized for a specific hardware, will have speed issues. There are no loopholes in any hardware or software in isolation. We have products which are being used outside India for self checking counters. The customers enter, take their products and bill by themselves. So it’s all about the application and integration of the solution. We have also developed an innovative small format POS equipment for a 512 MB RAM and Celeron 600 MHz processor. It has been tested on SAP and with that configuration it has passed all the performance parameters of all the heavy software. But in the market, there are certain applications which are not even able to port the hardware on that architecture. So, any software application, if it is optimized, it will give you billing at tremendous speed.
IR: Your take on the benefits of a POS?
DA: A POS can help a business in multiple ways. Today the government of India requires any business man to file his returns including direct and indirect taxes. POS can help a retailer automate the operation. It can give reports at the time, and in the format that a particular retailer requires. It also gives him the ability to do their own analysis and define the areas they want to concentrate on further. So a POS system, along with the hardware and the software solutions, also enables a user to make informed business decisions at the right time.
IR: What are the costs attached to acquiring such a system?
DA: The costs are dependent upon what one expects out of their IT investment. For example, if someone wants 1000 POS machines, for a certain function, within a certain time frame, to be able to run on multiple applications, across locations etc., the cost will be different than for a simple single store application. There are many factors that actually affect the cost.
IR: Are retailers in India willing to spend on IT?
DA: Every market takes its own time to mature in terms of IT awareness and adpatability; and I think the Indian retailers are very smart. They know what they want. Their adoption of technology is excellent. Definitely, like any other industry segment in India, retail is also cost sensitive. Due to the economic downturn, all the focus including the growth focus and store focus have been to a large extent affected. So retailers in this slowdown period are definitely looking at the acquisition cost, running cost of their IT solutions and the scalability costs of their applications very closely.
But when you have a solution and value proposition, the customers and retailers are very open to them. We have installed a customer display screen as part of POS in 7Eleven. It’s a dual screen POS equipment, which is a non-touch TFT at the customers side. As the customer sees his billing, he can also see certain promotions. And not surprisingly, this system has recovered all the investment costs of the POS within two months due to these promotions. So the POS, if deployed intelligently, can also be a revenue earner for the store.
IR: Internationally, 7Eleven is an NEC client. How do you manage the retailer?
DA: 7Eleven is a unique concept in the retail industry per se. It is a 24 X 7 retail store. It is said that the US gives the world supply chain management and in that sense 7Eleven and Japan gives the world demand chain management. Suppose you have a store next to a school, you can change the format of your store depending on whether it is an open day, whether it is a parent teacher meeting day or it is a sports day. The platform that is used by 7Eleven helps it forecast the demand and plan its supplies and stores accordingly. We aim to launch the same solution in India soon.
As the convenience format has not yet arrived in India, right now we are introducing the concept. And once these formats come, we will take that forward. NEC’s experience with 7Eleven is fantastic. As an IT solution company, we support around 24,000 7Eleven stores worldwide with the entire IT back bone, platform, network, POS and applications.
IR: How different is a POS designed for a food chain from a grocery outlet?
DA: Each format has its specific requirements. Like for an F&B, things like spill proof and dust proof is very important. For a grocery store, stability is very important. For a speciality store, efficiency is very important. Most of our machines are fan-less. Also when you buy a machine with flash memory, that entire machine does not have a single part moving in it and when you do not have the moving part you do not have the hard disk failure and mother board burning. So a POS that can take care of these concerns is going to be a key.
IR: Any path breaking products in the pipeline?
DA: In near future, lots of interesting things are coming up from our side. We have planned to launch a ‘POS in a box’ concept. We will sell it with the application that could be used by just plugging it in. We also plan to launch certain applications which will be web enabled and ready to use.