Dominated by small format stores – referred to as Mom-n-Pop shops, retail primarily focused on need based shopping to the Indian diaspora. It was never seen as an industry – for that matter even today there are debates on whether retail should be classified as an industry; Consumer Products distribution was configured to supply small quantities to the shops who were run by owners with helpers. They knew customers, their likes, preferences and catered to frequent replenishment of essentials. Lifestyle shopping was limited to a few standalone stores in the larger cities and metros. The well-heeled talked about big malls, brands and retail outlets of size that India had yet to see.
Shopping was a chore and not everyone was excited to go to shop for anything; manufacturers limited by licence produced what they could and focused on supply chain to distribute merchandise and collect cash. Technology was non-existent barring the Financial Accounting and stock management at warehouses and distribution centres. In the late 80s technology-based solutions began to make inroads into the Indian enterprise and the ability to scale unimaginable in the past. It was only in the early 90s that seeds for organized retail were sown and it took almost another decade for it to catch speed. Following case is based on my experience with Shoppers Stop.
In 1991, Shoppers Stop started with a promise to provide electronically printed bills to their customers from their first store in Mumbai, slowly and steadily increasing their footprint until the need for an enterprise class system was felt. The journey to select and implement a retail ERP (Enterprise Resource Planning) system was full of potholes considering that organized retailers were a handful and the market size was miniscule. Global vendors did not see India as a market with perceptions of limited market potential, price sensitivity, and a largely fragmented unorganized nature of business. The logistics networks were beginning to take shape despite challenges with the transportation infrastructure – some of them exist in pockets even today.
Being the first has advantages and disadvantages – others wait and watch for you to fail while the disadvantage is that you become the guinea pig and must put in twice the effort to succeed. Shoppers Stop went through this cycle learning and adapting until success found them; the scale up and advantages ensured that they stay ahead of competitors for a long time. Competitive advantage is not easy to find in a crowded market, technology is one of the differentiators and others catch up sooner or later; they continued to fuel the momentum and stacked up gains in the evolving market.
Technology decisions were made with clear decision-making criterion that has stood the test of time even today across industries based on personal experience. The key parameters:
Lessons learned: Evaluate solutions with business in mind and impact what matters; take time to understand and articulate the case. ROI is not always a good measure for every initiative, at times it is about creating a new capability that may appear to be “nice to have” but will pay off in the future. The leap of faith requires credibility and conviction that IT leaders need to build along with the rest of the company. Being a leader means taking risks that may sound foolish at times; with no data to validate, assess the cost (what will not happen) of not doing something.