The “mother of all tax reforms” is upon us and is all set to commence from July 1, 2017. The Indian retail industry is pegged as one of the most transformative and fast paced. According to a Technopak Analysis, the industry is expected to nearly double to US$ 1.3 trillion by 2020 from US$ 600 billion in 2015. One of the key pillars of Indian economy, retail accounts for 10 per cent of the GDP, a Deloitte report cites. And while the implementation of GST is expected bring in greater transparency, reduced trade barriers and improved credit, it will usher in a wave of new changes in the way the industry operates.
Indian retailers and big box stores have been using data and analytics to produce in-depth insights across the value chain of their operations. According to a PwC report, retailers are facing stiff competition from ecommerce businesses and have to up the game when it comes to customer engagement, supply chain and other stakeholders. While the digitization of the retail space has helped retailers in customizing product choices, dealing with complex data, deriving trends and forecasting demand for new SKUs, GST implementation presents several challenges.
Can analytics help retailers evaluate key strategic decision-making in view of GST implementation
Product Pricing & Promotions
An ongoing and always-on marketing strategy product promotions and discounts will need to be analyzed. According to an earlier KPMG post, product pricing will be affected due to GST and companies in the B2C segment will be significantly affected because of this price impact. Retailers will need to get better insights and visibility into their vendor and product master data and integrate GST configurations. GST will impact prices of goods at every stage in the supply chain and retailers will need to review their prices studies by vendors. GST could definitely impact prices of goods at every link in the supply chain. Retailers will also have to conduct price studies by their vendors but the opportunity to negotiate prices will be available only once before GST is rolled out.
Impact on End of Season Sale
According to a study by Capillary Technologies about the impact of GST on End of Season Sale, this year’s EOSS will be a tough game for ecommerce and big-box players that will be scrambling to clear out the inventory and push out existing stock. Last year’s Summer EOSS (End of Season Sale) didn’t end on a bright note with a 5% drop in footfall and 2.5% dip in overall sales. The End of Season Sale usually begins in end of June, however in a rush towards GST implementation, brands and ecommerce players are on a mission to clean the inventory. While this means the sale season has come early, pricing algorithms can be used to define price points to stave off competition. Effective use of marketing analytics can help design sales and promotion strategy and generate opportunities to acquire customers. Insights from databases can also lead to area-specific campaigns.
Reduced rates of apparel
There will definitely be an uptick in sales and growth with reduced rates of apparel. Data and analytics can help retailers find out new approaches for price optimization, thereby maximizing profitability and maintaining a competitive edge in the market. Analytics can also be leveraged in identifying the latest trends and patterns that help in stock optimization and cash management. In other words, retailers will have to review the existing product portfolio and end-to-end value chain to ensure the profits are met.
Changing purchase pattern
Today consumers have a huge variety of options to choose from and what they buy and the way they buy is changing fast. According to a PwC survey, digital payments is the preferred way to shop with mobile wallets trumping debit and credit cards. Businesses need to review their strategy and tap web and smart devices, to better engage and serve the consumers. The PwC report cites that retailers need to a) capture data and leverage analytics to understand consumer needs and expectations better; b) revisiting products, customer service and experience designs to change the way consumers’ needs were met by eliminating friction points.
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Richa Bhatia is a seasoned journalist with six-years experience in reportage and news coverage and has had stints at Times of India and The Indian Express. She is an avid reader, mum to a feisty two-year-old and loves writing about the next-gen technology that is shaping our world.