With the consumerism heat wave gripping the whole world owing to the festive seasons and a volley of new launches the competition in the retail and etail sector has become steeper than never before. In order to sustain profitably and not get phased out the retail giants are leaving no stone unturned. Due to the intense competition in the retail sector pricing is one tool which is now controlled by the consumers and not the sellers. Especially the brick and mortar retailers have been struggling to keep pace with the ecommerce giants when it comes to pricing. Hence the only choice left to make the days of their investors brighter is through effective control of P/E ratio or in simpler words by cutting operational cost thus increasing the margins and making the investors smile.
Bangalore - the new Destination for U.S. Retail Giants
Amazon (AMZN, Financial) with its competitive pricing edge has made the going for conventional retail companies like Wal-Mart (WMT, Financial) and Target (TGT, Financial) all the more difficult and now their survival have come under doubt. This is why perhaps US retailers are sending software development and IT infrastructure maintenance work to India, where they also have well-established back office technology teams. After Silicon Valley, Bangalore is the destination for the largest talent pool in emerging technologies like cloud, social and mobility and that too at a cost half of that of Silicon Valley thanks to the currency rate difference.
Popularly known as the IT capital of India, Bangalore has now supposedly turned into a tech hub where all the U.S. retail biggies like Wal-Mart, Target, L Brands (LB, Financial) and Lowe's (LOW, Financial) are in the run to recruit talented engineers in Bangalore as they aim to get their grip strengthened on the ecommerce rage with same-day delivery and cut-throat pricing.
The conventional retail giants have finally started recognizing the futuristic trend of sales through ecommerce and have started adopting it rather than opposing it and in their bid to do so they are now brainstorming to create the next big disruption and ensure sales move from retail stores to online and mobile app mode, for which the companies are willing to dole out salaries that are equal to and even exceed those of the top management of the IT sectors that are currently operating in India. A lucrative proposition up for grab for the young IT talent pool of India.
What’s on Offer?
Wal-Mart has planned a rapid expansion program for its technology center in India. It has already hired a former Oracle (ORCL, Financial) executive to head its technology operations and has charted out the plan to add a technical workforce of at least 350-400 more jobs at a new facility in Bangalore. This is Wal-Mart’s initiative to strengthen its foothold in the ecommerce business and compete against Amazon the largest global ecommerce company. It is now tapping engineering talent in Bangalore to build its e-commerce platform, Pangaea, which will let customers buy through their smartphones while they are checking the items on the shelves in a store.
Minneapolis-based Target, which also followed suit and set up a technology center in Bangalore almost a decade ago but did not really use it to much effect, is now focusing on setting up an analytics and big data capability division. Target has also acquired a second set of startups to step up its activity in mobile shopping and social media advertising. It is also strongly driving big data analytics spaces to help further its transformation into an omni-channel retailer thus positioning it as an innovative etail company providing a futuristic shopping experience.
Ohio-based L Brands, the largest retailer of lingerie, personal care and beauty products and apparels. They expertise in selling premium brands such as Victoria's Secret, Pink, Bath & Body Works, La Senza and Henri Bendely, has acquired two floors on long lease in the Manyata Tech Park for its IT operations, from where it plans to conduct predictive analysis on bigdata to develop new offerings and customize their sales offering based on customer demography thus creating a next generation online shopping experience.
Final Outcome
From the above initiatives towards a more tech savvy retail operation it is quite clear that the companies’ are scouting for strong algorithm knowledge and experience in building scalable cutting-edge software, which is why perhaps Wal-Mart Labs India is hiring 350 people in Bangalore to expand its team of data scientists and technologists in supply chain and pricing technologies.
In this race the possible outcome is that we will get to see a paradigm shift in the retail sector as more and more conventional stores move on to adorn the more tech oriented ecommerce sales path. The last beneficiary of this tech race would obviously be the consumers who can buy more for less from the pricing rage. From an investors perspective it is always good news when the company, which features on your portfolio, is making efforts to move towards the next level of development, since this will not only ensure security of your investment but also assure handsome return through incremental sales. For now let us keep a close watch on how their tech initiatives work out as they make Bangalore a global tech destination.
