The retail industry has been rapidly growing over the last 20 years and is expected to grow at an even larger pace in the future. With the online market gaining momentum, we can consider retail e-commerce to be one of the most attractive industries to invest in.

Vishal Mega Mart is already known to us. To state a few latest facts and figures:

• It has 400 stores across India
• Provisional revenue as stated by Crisil for 2018 is at ₹2,252 crore with profit greater than ₹150 crore (as per latest data available). A major portion of this comes from the lower middle-class segment in the stores in tier 2 cities
• Own facilities set up in Gurgaon and Dehradun
• Average store size of 25,000-30,000 sq. ft
• Economies of scale in practice
• Loyalty programme already in place
• Frequent occasional offers like Dhanteras Dhamaal and 5 Din Ki Maha Bachat

With considerable growth in organised markets — 9 per cent in 2012 to 12 per cent in 2022 — this is the market distribution: BigBasket and Grofers are killing the grocery and daily needs segment by providing all essential items to doorstep. DMart and Big Bazaar are offering maximum items at very discounted prices. Reliance is a brand which consumers trust.

Our objective strategy is to mark Vishal Mega Mart’s presence in the territory of big competitors through technology-enabled solutions with focus area as apparel, footwear, electronics, grocery and daily need items.

Inventory management

Smart inventory management with dynamic pricing is the most critical aspect of the success of any retail store. It is significant to know about the user demands to be able to sell products well. Hence, we need to ensure that inventory is always stocked with the items in demand. In case of special occasions, we must make sure to update our inventory according to the festival demand.

But it is not possible to predict what will be the next bestseller item with 100 per cent accuracy. To solve this issue, we can opt for dynamic pricing in order to clear inventory. This will ensure that low-selling items (or items of inferior quality or the ones with close expiry date) can be cleared off with sales or discounts with even minimal margin reducing costs for the company.

Machine Learning technology can be leveraged to do this. Using Machine Learning, we can predict which stock will last for how long. The ideal price of the item with the maximum discount will also be known

Expiry management is also extremely important. The near-expiry date items if any (esuch as fruit juices/groceries/packed perishable food items) can be sold on very low margins. We can build trust with customers by providing the items at a way lower price. Vishal Mart should enable automatic ordering of trending items once the stock reaches the minimum threshold.

This will be done through RFID scanners. As and when an item gets listed in the inventory, the auto inventory management system will note the amount of stock in the store. The retail company can outsource the implementation of this to tech consulting firms until the time it can set up its own.

Door-to-door delivery

Vishal Mart has an e-commerce platform ready but is unable to generate revenue. Currently, Amazon is the top e-commerce site in India. But like every other site, the consumer lacks touch and feel of the product, which is the pain point in online shopping.

We can solve this problem by leveraging the physical retail stores of Vishal Mart present in almost every tier 2 city along with the integration of inventory management software. Below flow diagram explains the idea -

To start with, it is best to focus on locations that already have our physical retail stores. This way, no extra costs will be incurred on building the supply chain (already present for Vishal Mart but not for big players like Amazon or Flipkart as they don’t have any physical retail outlets). The delivery executive from the store will be able to handle the delivery tasks for trial purposes to the customers. The first trial delivery can be free, and charge an upfront convenience fee thereafter.

This will add value to the customer, build trustworthy relationships, and drastically increase customer retention. Besides, one can run marketing campaigns and put in place auto-recommender systems that will communicate special discounts to the customers to keep them well-informed.

This combination of both online and offline will enhance user experience and add value to the end retail consumer.

Geolocation analysis

Using geolocation analysis to open new stores and increase the consumer base is another feasible option for Vishal Mart. A poor location can limit a store’s success and can even lead to its demise. So, geolocation analysis can be used to get maximum information on population distribution, preferences and literacy levels, income level (to estimate sales and inventory), and number of retail stores already present in the area.

Initially, this analysis can be outsourced to data science consultancy firms. Based on the results, Vishal Mart can start launching a minimal number of stores and analyse the after-launch results to make informed and impactful decisions going foward.