1. Transforming Retail Business U. B. Pravin Rao

2. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 1 Agenda »Market Factors »Competitive Landscape »Key Demand Drivers »Infosys Strategy »Solution Example »Conclusion

3. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 2 Industry Size and Outlook Retail Segments and Size »In 2002, Total Retail Revenue was $ 3.6 trillion. In 2003, Retail Industry is expected to grow 5.6% to $ 3.8 trillion as against 5.4% growth in 2002. Macroeconomic Outlook »The Retail Sector Performance Index till date has been steady over the mid months of 2003 »Demand outlook for next 6 months is showing optimism (reflected in consumer confidence, expectation index and Retail executives index) »Wal-Mart continues to dictate the agenda for most other retailers »Retailers slowly realizing the benefits of outsourcing and the possible benefits Key SegmentsRevenue ($Bn) Non-Store Retailers156 Apparel + Footwear (Manufacturer and Retail)169 Convenience269 Specialty562 General Merchandise601 Grocery473 Source : Gartner

4. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 3 Market Size and IT Spending Retail Segments and Size »2003 Retail IT spend is expected to be US$31 billion; CAGR of 6.5% »IT is increasingly being seen as a critical element of business strategy »Key drivers for IT spending - reduce operating cost, improve productivity, retain customers; consolidate/integrate IT systems »Retail IT spending is very metric led with a very high ROI focus »Estimated potential spend of US$9.1billion in 2003 (estimated spend on external services) »Internal spending of US$11.9billion in 2003 also presents a significant outsourcing opportunity CAGR (%) 2000- 2005 27,10428,98629,80431,56333,96537,1446.5 15,95717,46718,24819,62321,66324,4648.9 Hardware6,0126,3446,7426,8027,0357,8955.6 Software1,4371,8111,9182,2772,7203,13416.9 External Services 7,2708,0018,2499,17010,44011,88210.3 Network Equipment 1,2371,3111,3381,3741,4681,5534.7 11,14811,51811,55611,94012,30212,6802.6 Note: Columns may not add up to totals shown because of rounding. Source: Gartner Dataquest (April 2002) TotalRetail IT Spending External Spending Internal Spending 20042005 U.S.Retail IT Spending by Component (Millions of U.S. Dollars) 2000200120022003

5. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 4 Competitive Landscape Infrastructure Players (Hardware & Software) »IBM »Microsoft »Sun »NCR »Oracle Package Vendors »Retek »JDA »SAP Retail »TechRX – Pharmacy »PDX – Pharmacy Systems Integrators »IBM Global Services »Accenture »CGEY »Bearing Point »Deloitte »EDS Offshore Players »Infosys »Wipro »TCS Niche Players (Hardware) »Handheld – Symbol, Intemec »POS – Fujitsu, Wincorf »RFID – Alien, Matrics Niche Players (Packages) »Optimization - Profitlogic, Demandtech, Khimetrics, Marketmax »WMS – Manhattan Associates »Forecasting – Evant »POS – Retailix, STS »Supply Chain – i2, Manugistics, Aldata

6. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 5 Key Demand Drivers Key Business Imperatives »Pressure from Wal-Mart »Increasing focus on customers »Lowering companys operating cost »Emerging multi-channel environment Key IT Imperatives »IT platform consolidation »Ever-increasing pressure to reduce IT costs »Package Focus

7. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 6 Buying Behavior Today What is different ? »Co-operation of business and IT »CIO and business unit head together make purchase decisions »Strategic sourcing initiative now include IT services This results in: »More scrutiny on projects, vendors, and budgets »Longer sales cycles »Demand for solid ROI and cost savings »Preference for vendors with deep expertise and industry references »Preference for vendors with proven estimating skills, program & project management skills and excellence in execution

8. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 7 Infosys in the Retail Space Infosys Retail Revenues US$ mn 0 16.6 21.6 37.6 67.0 85.8 Retail Revenue CAGR 51%

9. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 8 Infosys Retail IBU Structure Head – Retail IBU Sales Domain Consulting Technology Consulting Delivery »Knowledge of Retail industry and specific business needs of segments »Solution selling »Domain expertise across the Retail Value Chain »Retail Segment expertise »Expertise in best of breed Retail Packages »Change Management »Retail business/ process consulting »Expertise in various technologies, tools and packages »Technology Architecture and Infrastructure Consulting »Program/ Project Management expertise »Software Engineering expertise »Expertise in packages

10. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 9 Infosys Strategy Market Needs »Effective Solutions to Business Issues »Business needs vary across retail segments and functional areas »Need for true end-to-end retail business/ functional understanding and execution excellence »Need for win-win alliances for successful implementations Infosys Strategy »Solutions Approach for better business alignment and higher value-for-money in IT spend »Focus on a set of Retail Solutions that address specific pain points of retailers, leveraging GDM and existing service offerings »Utilize close, well managed alliances with applications providers to enhance the quality and innovativeness of solutions »RIBU Internal Structure aligned to address market needs »Retail industry focused sales supported by execution excellence through strong business/ domain and technology expertise

11. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 10 Solution Example – Lead Time Optimization GLOBAL SOURCING Higher realization of profit potential, through minimizing rigidity in the supply chain, enabled by procuring closer to in-store dates and improved full-price sales ROBUST FORECASTING & PLANNING SHORT WINDOWS OF OPPORTUNITIES UNCERTAIN DEMANDS FLEXIBLE SOURCING STAGED PRODUCTION DESIRED INDUSTRY RESPONSE FORCES SHAPING THE FASHION INDUSTRY

12. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 11 Solution Example – Lead Time Optimization (Contd.) Client Context and Challenges »US$3-3.5bn potential lost to Markdowns - 40% of Sales »Additional US$2-3bn potential revenue lost to Stock outs Infosys Solution »Partnering with a leading LTO package vendor in the Apparel Retail Segment »Global pilot implementation across 5 countries - in under 4 months »Piloted the solution in one of the product lines – with 2 suppliers »Shift suppliers from a 5-month to a 3-month global supply chain »Make Capacity and Raw Material Commitment in the 5th month »Make FG commitments in the 3rd month – when quality of forecasts are much superior Preliminary Results (for the first month) »Significant increase in gross margins »10-15% inventory reduction expected »Reduction in PO lead times from 5 months to 3 months »61% average change in SKU qty (between orders in the 5th month and 3rd month) »31% reduction in number of POs raised

13. Analyst Meet 2003© Infosys Technologies Limited 2003-2004Slide 12 Conclusion To ensure sustained and profitable growth we are: »Bringing solution focus to all that we do for our clients »Weaving together services, GDM, alliances, execution excellence and deep domain knowledge to create innovative new solutions »Enabled by a structure of Retail Industry focused Sales & Relationship Mgmt teams, Business / Domain Consultants and Technologists.

14. Thank You www.infosys.com