 "SMEs are aggressively penetrating apparel, food and groceries segments: Prashant Lohia")
Ginni Systems is a provider of retail solutions to small and medium enterprises. Prashant Lohia, its CEO, tells Rajiv Shirali that SMEs in the retail space are strengthening their back-end infrastructure, adopting information technology solutions and ensuring greater efficiencies in business. Edited excerpts:
How did you decide to zero in on SMEs as your target customers?
The requirements of SMEs are different from those of large established businesses. They require far more customised products to cater to the challenges of their unique business models. Initially, the scale of the business might be small but there is potential for aggressive growth and expansion.
Standardised solutions lacking flexibility can't help such SMEs. When we entered the market, there were complex ERPs around to cater to the top retailers of India, but none which were stable, scalable and secure, and which could be implemented in a simple enough way for a SME business. We were able to identify this as an opportunity of immense potential. SMEs in the retail space require cost-effective grass-roots solutions for their business and we were rightly positioned to provide it.
What kind of benefits are SMEs deriving from your products?
At the basic level, retail and wholesale involves physical goods, people, locations and movement. Hence there is huge scope for loss if things are not tracked closely. Retailers require full visibility of their stock and control over their operating procedures. This becomes even more complex when you consider the fact that operations in the case of SMEs are not always that organised.
Therefore, we make it a point to spend quality time understanding the internal processes of clients to create customised products. This leads to better operating profits for them. By providing analytics capabilities we also help SMEs in generating business intelligence. This translates into better strategic decisions and enhanced customer satisfaction.
Which of the verticals that you address are witnessing maximum demand from SMEs?
While SMEs are aggressively penetrating almost every vertical, we are witnessing a lot of traction in segments like apparel, food and groceries. These verticals are best suited to the unique competencies of SMEs. An SME in the apparel sector can benefit from its knowledge of customer preferences, local tastes and stock inventories accordingly. It can also play on price advantages compared to larger players. In the food and groceries sector, highly customised orders can be delivered to customers. Non-standardised quantities can also be sold.
Are SMEs in the retail space well-placed to withstand competition from organised retail, including foreign players?
SMEs might not be able to compete in terms of scale but that should not be really considered a disadvantage. The Indian consumer is a very unique one. Understanding the Indian consumer will be a challenge for foreign players. SMEs already have a keen understanding of the market. Further, SMEs enjoy undisputed leadership in the hinterlands of India. They are not restricted to the metros and tier-1 cities.
What market strategies do you see SMEs adopting?
SMEs in the retail domain have certain competitive advantages. They hold an edge over larger players in terms of local insights, customer understanding and engagement, providing flexible solutions, etc. However, in order to provide credible competition to larger players and grow exponentially, SMEs are now adopting several strategies. One of them includes introducing a greater level of organisation. This also translates into strengthening of back-end infrastructure and processes. By adopting customised solutions suited to business models, SMEs are now ensuring greater efficiencies in business.
There is also an increased level of business intelligence which is being used to grow business. Another strategy that is being witnessed is the emergence of private labels. Largely seen in the case of consumer durables, apparels, groceries, etc, private labels are allowing SMEs to push products at attractive price points.
How is SMEs' demand for sophisticated IT solutions and analytics growing?
As SMEs scale up and managerial as well operational complications increase, scalable ERP solutions become the need of the day. After reaching a size of around Rs 5 crores, an SME starts looking for a comprehensive IT solution. The adoption of such an ERP product can induce cost savings to the tune of two to five per cent of margins.
What are your plans for adding new verticals to your portfolio?
Right now we have an exhaustive understanding of four key verticals, namely lifestyle, consumer durables, FMCG and luxury. We are working in close collaboration with some of the most reputed brands across these verticals. We plan to enter new verticals but in a diligent way, by completing all requirements for that vertical. Penetrating and establishing leadership in any vertical requires a lot of research.
How did you decide to zero in on SMEs as your target customers?
The requirements of SMEs are different from those of large established businesses. They require far more customised products to cater to the challenges of their unique business models. Initially, the scale of the business might be small but there is potential for aggressive growth and expansion.
Standardised solutions lacking flexibility can't help such SMEs. When we entered the market, there were complex ERPs around to cater to the top retailers of India, but none which were stable, scalable and secure, and which could be implemented in a simple enough way for a SME business. We were able to identify this as an opportunity of immense potential. SMEs in the retail space require cost-effective grass-roots solutions for their business and we were rightly positioned to provide it.
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What kind of benefits are SMEs deriving from your products?
At the basic level, retail and wholesale involves physical goods, people, locations and movement. Hence there is huge scope for loss if things are not tracked closely. Retailers require full visibility of their stock and control over their operating procedures. This becomes even more complex when you consider the fact that operations in the case of SMEs are not always that organised.
Therefore, we make it a point to spend quality time understanding the internal processes of clients to create customised products. This leads to better operating profits for them. By providing analytics capabilities we also help SMEs in generating business intelligence. This translates into better strategic decisions and enhanced customer satisfaction.
Which of the verticals that you address are witnessing maximum demand from SMEs?
While SMEs are aggressively penetrating almost every vertical, we are witnessing a lot of traction in segments like apparel, food and groceries. These verticals are best suited to the unique competencies of SMEs. An SME in the apparel sector can benefit from its knowledge of customer preferences, local tastes and stock inventories accordingly. It can also play on price advantages compared to larger players. In the food and groceries sector, highly customised orders can be delivered to customers. Non-standardised quantities can also be sold.
Are SMEs in the retail space well-placed to withstand competition from organised retail, including foreign players?
SMEs might not be able to compete in terms of scale but that should not be really considered a disadvantage. The Indian consumer is a very unique one. Understanding the Indian consumer will be a challenge for foreign players. SMEs already have a keen understanding of the market. Further, SMEs enjoy undisputed leadership in the hinterlands of India. They are not restricted to the metros and tier-1 cities.
What market strategies do you see SMEs adopting?
SMEs in the retail domain have certain competitive advantages. They hold an edge over larger players in terms of local insights, customer understanding and engagement, providing flexible solutions, etc. However, in order to provide credible competition to larger players and grow exponentially, SMEs are now adopting several strategies. One of them includes introducing a greater level of organisation. This also translates into strengthening of back-end infrastructure and processes. By adopting customised solutions suited to business models, SMEs are now ensuring greater efficiencies in business.
There is also an increased level of business intelligence which is being used to grow business. Another strategy that is being witnessed is the emergence of private labels. Largely seen in the case of consumer durables, apparels, groceries, etc, private labels are allowing SMEs to push products at attractive price points.
How is SMEs' demand for sophisticated IT solutions and analytics growing?
As SMEs scale up and managerial as well operational complications increase, scalable ERP solutions become the need of the day. After reaching a size of around Rs 5 crores, an SME starts looking for a comprehensive IT solution. The adoption of such an ERP product can induce cost savings to the tune of two to five per cent of margins.
What are your plans for adding new verticals to your portfolio?
Right now we have an exhaustive understanding of four key verticals, namely lifestyle, consumer durables, FMCG and luxury. We are working in close collaboration with some of the most reputed brands across these verticals. We plan to enter new verticals but in a diligent way, by completing all requirements for that vertical. Penetrating and establishing leadership in any vertical requires a lot of research.