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Retail Industry Insights and SAP S\4HANA Retail
Retail Industry Insights and Introduction © Copyright IBM Corporation 2017
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Course structure

Content
Quick Insight into Retail

Current Trend Of Retailing

Operating Structure

Challenges in Modern Retailing

Retail & HANA

Basics of SAP Retail Master Data

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Quick Insight into Retail

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Retailing & Retail Segments
Plan-Buy-Move-Sale…at the end selling of goods directly to consumers. Retailers can be
classified as both store and non-store retailers and often operate with multiple formats.

Retailers can be classified into the following key broad segments based on the
category of products:

▪ Grocery
▪ Apparel
▪ General Merchandise Retail
Segments
▪ Specialty/Category Killer

The Other segments are -

▪ Pharmacy/Drug
▪ Food Service
▪ Direct/Catalogue/Web
▪ Convenience

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Retail Segments (continued)

Grocers:

▪ Companies that retail a general line (wide range) of food products such as
canned, packaged and frozen foods; fresh fruits and vegetables; meats,
fish, and poultry.
▪ They predominantly operate via convenience stores, supermarkets, super-
centers or hypermarkets, warehouse club, deep discount, and cash & carry
formats.

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Retail Segments (continued)

Apparel and Footwear:

▪ Companies that retail men's, women's, and / or children's clothing and

accessories.
▪ Part of the larger segment of fashion retailers which includes footwear,
jewelers, accessories, and so on.
▪ They operate predominantly through the departmental store, hypermarket,
specialty, and emporium formats.

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Retail Segments (continued)

General Merchandise:

▪ General merchandise stores are defined as retail stores that sell a number
of lines, such as dry goods, apparel and accessories, furniture and home
furnishings, small wares, hardware, and food.
▪ Retail thorough department stores, hypermarkets, deep discounters, and so
on.

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Retail Segments (continued)

Specialty/Category Killer:

▪ Sell one type of product, as opposed to department stores that sell many
kind of products. They focus on a particular segment/category such as
appliances, furniture, home goods, office supplies, books, toys, auto
supplies, home electronics, and sporting goods.
▪

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Sub-Segmentation

Pharmacy/Drug
Stores involved in the retail sale of prescription/proprietary drugs, and non-prescription
medicines. Also may also carry a number of related lines, such as cosmetics, toiletries,
tobacco, novelty merchandise, general line of apparel, dry goods, housewares, groceries
and other lines in limited amounts.
Direct/Catalog/Web
Retailers who sell the majority of their offerings outside of brick-and-mortar stores.

Food Service
Retail establishments selling prepared foods and drinks for consumption on the premises;
and also lunch counters and refreshment stands selling prepared foods and drinks for
immediate consumption.
Convenience
Retailing as second line of business selling merchandise at convenience.

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M
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f Retailers in different segments (cont.)
i
d
e
Department

n
Stores

t
i
a
l
Merchandise
Mass
Grocery
Pharmacy/
Drug
Service
Food

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f Retailers in different segments
i
d
e
n
Apparel &

t
Footwear

i
a
l
Specialty/ Category
Killer
Direct/Catalog/
Web

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Current Trend of Retailing

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Changing ways of retailer-consumer interaction

47.3% of the world Growth of Digital Convenience

is online
3.1 billion people, are online
and this number is estimated to
reach 5 billion by 2020
Users
• Around 600 million people around
the globe are using digital media –
a growth of around 30% since Jan
2016
Shopping via Web
Customers are more inclined to online
shopping – In China 65% of the
population are using online sales at
least once a month

63% research via User generated 1,000,000,000,000

social networking content web pages
47% of the time they are 91% of consumers ranked peer US alone has access to 65,000
influenced by what is read input as the #1 aid to a buying iPhone apps, 10,500 radio
decision stations, 200+ cable networks

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Changing face of consumers

As a result, today’s consumers are more

connected, educated, empowered, and
demanding of retailers seeking their advocacy.

Consumers demand
flexibility

Connected educated empowered demanding

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These trends are creating opportunities … and …
….. unprecedented challenges for our industry

58% of Retailers agree that brick & “ The biggest threat is new
mortar “only” stores will not survive in future competitors that aren’t classified as
competitors “

>80% retailers agree that having mobile

apps represent key advantage over competition
“ Data Science now determines who
will win and who will lose “
Customers say that 50% of their in-store
purchases will be influenced by digital devices

“ The hardest thing is working out

whether what’s happening is hype,
85% of shoppers expect a seamless trend or tsunami “
experience across all retail channels

Retail Industry Insights and Introduction © Copyright IBM Corporation 2017

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Retailing in India
 The Indian retail industry accounts for over 10 per cent of the country’s GDP and around 8
per cent of the employment. India is the world’s fifth-largest global destination in the retail
space.
 India’s retail market is expected to nearly double to US$ 1 trillion by 2020 from US$ 600
billion in 2015#, driven by income growth, urbanization and attitudinal shifts.
 Online retail is expected to be at par with the physical stores in the next five years.
 India is expected to become the world’s fastest growing e-commerce market, driven by
robust investment in the sector and rapid increase in the number of internet users.
 India’s direct selling industry is expected to reach a size of Rs 23,654 crore (US$ 3.54
billion) by FY2019-20.
 The size of modern retail in India is expected to double to Rs 171,800 crore (US$ 25.7
billion) from Rs 87,100 crore (US$ 13 billion) in three years driven by omni-channel retail.

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Retailing in India
Sector's High Growth Potential is Attracting Investors -

• India has occupied a remarkable position in global retail rankings; the country has high
market potential, low economic risk, and moderate political risk
• India’s net retail sales are quite significant among emerging and developed nations; the
country is ranked third (after China and Brazil)
• Overall, given its high growth potential, India compares favorably with global peers
among foreign investors

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Rising Prominence of Online Retail in India
• Online retail business is the next generation format which has high potential for growth in
the near future. After conquering physical stores, retailers are now foraying into the
domain of e-retailing
• E-commerce is expected to be the next major area supporting retail growth in India. The
industry is projected to touch US$ 100 billion by 2020 growing from US$ 30 billion in 2016
• With growth in the e-commerce industry, online retail is estimated to reach US$ 70 billion
by 2020 from US$ 3 billion in 2014

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Top 10 Global Retailers by Revenue - 2017

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Operating Structure

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Retail Business Process Head Office Functions
Merchandise Financial Planning and Strategy,
Logistics & Distribution Plan merchandise
Receiving Inbound Merchandise Plan assortment & Plan range
Plan Space/Capacity & Plan OTB
Cross Docking & Flow Through
Manage allocation & replenishment
Put away and Storage
Head Office Optimize Supply Chain Inventory and Pricing
Picking and Shipping & Outbound Shipments
Manage Enterprise-wide master data
Stock Management and Inventory Valuation Manage Merchandise/Organization Hierarchy
Aging and Physical Inventory Manage vendor
Manage RTV Manage Promotions- Schemes/Offers
Manage Sourcing and Purchasing
Manage Cost and Pricing
Central Warehouse
Manage New Product & Service Launch
Manage Property & Legal

Delivery Store 3
Centre 1

Store 2
Store 1
RETAIL OPERATIONS
Manage Sales
Manage Sales Returns
Manage Stock
Store 4
Delivery
Cash/Tender
Management
Centre 2
Manage SEL
Store 5
Manage Range/Layout Store 6
Manage RTV
Manage Shrinkage
Delivery Store 7
Centre 3

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Retail Value Chain

2. Supply 4. Customer
Retail Organization
1. Merchandising Chain 3. Stores Mgmt. and Most retail organizations (centralized or
Marketing decentralized) consist of 8
departments:
▪ Buying & Merchandising Department
5. Finance & Accounting ▪ Distribution and Logistics
Department
▪ Store Operations Department
6. Human Resources
▪ Marketing Department
▪ Finance and Accounting Department
7. IT Management
▪ Human Resources Department
▪ Information Technology (IT)
8. Other Corporate Functions Department
▪ Corporate Planning , Projects & Legal

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Business Processes – Quick decomposition

MERCHANDISING SUPPLY CHAIN STORE OPERATIONS

What was Sold? What to Buy?
How much to Buy? Where to
Place? Sell Price?
They put together the
‘selling proposition’ of
Goods & services
What do I need to move? How?
What /How to store? Manage Inwards?
Reduce time to ship?
They work like “glue” to
connect planning, purchasing,
production, transportation,
storage & distribution
How do I meet sales target? How do I
improve customer shopping
experience?
Store P&L? stock management?
The Mini CEOs! They are
also the brand’s face for
the customers

MARKETING IT MGT F&A

Brand’s point of view? Customer Cash flows? Capital expenditure?

Infrastructure management?
Loyalty?
Credits & Debits?
Application maintenance?
How to increase brand visibility? Which
Promotions to use? Data? Analytics?

The Image makers! The Information Managers! The Money lenders!

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Retail Industry Insights and Introduction
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Challenges in Modern Retailing

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What are the Challenges in Retail

Real Time
On-Shelf
Inventory
Availability
Visibility

Flexible
Reporting for Omni- Channel
Sales across all Sourcing
1. Proactive
the channels business decision
2. Accuracy
3. Faster ROI
4. Operational
efficiency
5. Improved top
and bottom line

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Retailers are needing to embrace change, find new ways to
understand, engage and fulfill consumer demand
Engage in Context Seamless Shopping

Innovate, transform, experiment Protect and leverage data

Retail Industry Insights and Introduction © Copyright IBM Corporation 2017

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To capitalize on these opportunities Retailers may leverage new
technologies and execute three imperatives flawlessly

Retail Industry Insights and Introduction © Copyright IBM Corporation 2017

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Retail and HANA

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Advantages That SAP Hana Brings to Retailers
➢ SAP HANA makes it easier for retailers to manage their complex and large
databases at a lower cost.

➢ This allows retailers to learn more about their customers and use that
information in context to make smarter decisions.

➢ SAP HANA in conjunction with SAP Customer Activity Repository simplifies IT

while also delivering insights, speed, and agility to retailers.

➢ Cloud-based solutions add another advantage: the ability to deploy their

solutions faster. allowing them to keep up with the competition.

➢ SAP HANA Reduces the time needed to access information critical to a retailer’s
business leading to better optimized retail operations SAP HANA transforms
business by streamlining transactions, analytics, planning, predictive and
sentiment data processing on a single, in-memory database so business can
operate in real time.

➢ HANA will kill the batch job!

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New Offerings from SAP for Retail
SAP for Retail has come up with new offerings to address the current
challenges of Retail industry with additional benefits.

▪ Traditional SAP Retail on HANA Platform integrated with SAP CAR (&
CARAB- CAR Application Bundle) & SAP Hybris Marketing (optional)
▪ SAP Fashion Management Solution on HANA for Fashion Industries who are
into both Manufacturing & Retailing.
▪ SAP S/4 HANA Retail for merchandise management.

SAP S/4HANA Retail for merchandise management is SAP’s new industry-specific solution
for the retail sector. Developed natively on SAP HANA, it has a new, SAP Fiori-ized user
interface, features a simplified data model with embedded analytics functions, and supports
retail core processes end to end – from master data entry and product listing, through
promotion execution and price maintenance to point-of-sale accounting.

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SAP S/4 HANA Retail for Merchandise Management
Designed for Items with
More efficient season less life time but high lead
management & optimized time from vendor.
ordering with distribution Prevents seasonal goods
curves across the entire Lesser arriving too late & hence
lifecycle of the product. Markdowns for Less Stock Outs causing loss of sales.
Fashion & Hi- & On-Time
Tech Procurement

Techno-
Functional Greater Inventory
Benefits Accuracy

SAP S/4 HANA

Retail for
Merchandise In the current solution, there is a
Aggregates & Indexes are replaced by
Management single source of information for Stock
Central tables ,e.g. for Stock &
Unlike the traditional system
Valuation
Without using DW systems, operational
insights are possible for different kinds
of data

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SAP Retail ECC integrated with SAP CAR-AB

• SAP Merchandising Planning for Retail

• SAP Allocation Management for Retail

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Omni Channel demands Centralized Services and Data

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Typical SAP Retail architecture (Representative)
Head Office

Suppliers
Integrated Head Office System S\4HANA
Merchandising
Supply chain and
Finance Promotion
logistics
Store Integrtaion

SAP CAR
Banks,
Clearing
Houses
Communication
Integration
Infrastructure (Middleware)
Systems

SAP Retail
Store

Loyalty
POS systems

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Basics of Retail Master Data

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Merchandise category and hierarchy

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Article Master: Types of Article

The relevant types of article for Retail are -

Single
article
Case set Shoe-Prepack Socks
= = =
Inventory, sales and Sales set Display
purchase managed
Prepack
Articles of
Always at SKU level Groups of Artilces of same MC same/different MC‘s
Articles of Packed together by
Same/different MC‘s combined
Retailer/Manufacturer. with an particular
sold together by Always sold at SKU
Retailer as a unit with Packing by
level manufacturer.Alwyas
special sales price
sold at SKU level

Retail Industry Insights and Introduction © Copyright IBM Corporation 2017

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Article Master: Types of Article

 Variants - Article, which are only different in particular

characteristics (for example, colour, value )
 Variants of the articles are combined under a generic article
 Own master record for every inventory-managed variant.

Generic article Variants

Retail Industry Insights and Introduction © Copyright IBM Corporation 2017

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