Supply Chain Imperatives for Retail

The latest BMI India Retail report (Q4, 2011) pegs the Indian retail industry at 411 billion USD, projected to double by 2015. That's an enormous growth rate and this only accelerates further when we talk about the organized retail that stands today at 6% of the entire retail pie - at roughly 25 billion USD. To sample the implication of this growth, consider this - a whopping 6 million sq. ft. of retail space was added just in the first half of 2011! Online retail itself is growing at 35%, annually. The point is - at 22% of the GDP, the potential and importance of the Indian retail industry is unquestionable.

With high growth (and low entry barriers), comes high competition. And, high competition has its own set of implications for the industry, the root of which is - you cannot afford to lose on customer service. In supply chain terms, your supply chain reliability and responsiveness have to be (and perceived, too) best or at least at par with the competition. Moreover in growing economies like India the retail industry is typically characterized by volatility which translates to a strong need for flexible and scalable supply chains.

Now, when we speak of competition and high volumes, we can’t leave out the most important aspect of profitability (and survival) - Cost! Customers today have more choices than ever before and the Indian customer does not only demand more value but it expects this at less cost. 'More for less' seems the mantra, this season and its here to stay.

Some other key dynamics of the Indian retail that are making the retailers to focus on their supply chain effectiveness and efficiency are-

Go-rural trend: The rural retail market is roughly 55% of the total retail size in India and companies like ITC eChoupal, HUL Shakti, Reliance Fresh and Godrej Agrovet are some of the pioneers in this fast emerging market. However supply chain logistics becomes a greater challenge here, given the infrastructural and legal inadequacies of business in rural India.
Focus on Private-labels: Globally, the private label sales is 17-18% of the total sales while the Indian retail private label sales stands at 10-12 %. Increasing the private label sales contribution would mean forging better relationships with vendors and greater backward integration.
The logistics puzzle: Globally, Logistics cost is around 5% of retail sales but Indian retail is grappling with a cost close to 10%!. It is said the cold chain logistics itself has an untapped potential of about 2.6 billion USD and the Indian retail is now looking for a mix of technology leverage and process optimization initiatives to tackle the logistics challenges.

All above considerations make it imperative for the Indian retail to streamline and optimize its supply chain operations. The need is to create a flexible supply chain model that delivers reliably and in a responsive manner, at the least possible cost! Is it an easy ask? Or is it a mammoth task? Ask us!

About the Author

Pavan R. Prasad has close to 8 years of experience in the field of Supply Chain Management. He has worked for and with major multinationals on supply chain planning, consulting and analytics assignments. His understanding of the supply chain comes as much as from working hands-on within the industry as analyzing it from an outside consultant perspective. He did his Masters in International Business with majors in Supply Chain Management from Symbiosis University (SIIB), India. Currently, Pavan is managing a supply chain analytics product implementation project for a leading cosmetics major. He is part of Wipro?s SCM practice.

Service Offerings

Service Offerings

Client Themes

Client Themes

Supply Chain Imperatives for

Retail

About the Author

Service Offerings

Industries

Cloud

Cybersecurity

Digital

EngineeringNXT

HOLMES

Contact Us

About Wipro

Careers

Location

Leadership

Investors

Innovation

News and Events

Blogs

Analyst speak

Products & Platforms

Partner Ecosystem

Sustainability

Contact Wipro