SMU MBA ASSIGNMENTS

The importance of information technology in retail stems from the importance of data. Data is nothing but information that aids decision making. The right data, in the right form to the right setoff people at the right time, is one of the greatest tools in the hands of the retailer. Information is always with reference to a particular time frame.

Let us consider an example of a customer at a department store. After selecting some goods he proceeds towards the billing counter. Here the billing clerk scans each product at the POS (Point of sale) terminal the total number of items and the bill amount is added up. While doing so he has so checked with the customer if he is a member of the store’s loyalty program. The customer confirms that he is, gives him the store card for entry makes the payment by way of credit card and exits the store with his purchases.

While to the customer it is just a routine purchase, let us look at the information that the store has gathered from this transaction and how the information helps the retailer;

Efficient Stocking of merchandise

The items purchased provide information on merchandise sold in the store; this is the basis of sales analysis and decisions on replenishment re-ordering and merchandise planning. If this information is passed on to the manufacturer; it can help reduce production time. This is particularly true in case of fashion items, which have a very short life cycle. For example data gathered in this manner may indicate youngsters buying certain styles in Jeans or colors, in the tee shirts from the store. To service this section of the audience the retailer may need replenishments faster. The use of technology aids the collection and transmission of information. The trends in sales can be analyzed. This helps avoid situations of stock out helps spot merchandise or products timely markdowns and higher inventory turns.

Collection of Data

The use of technology aids data collection. Data can be collected about consumers, their purchases the frequency of their buying and the typical basket size. This information helps the retailer distinguish the customers who shops at his store frequently and also reward them. For example information gathered about a customer may reveal preferences for certain brands; this may be used for further communication with the customer regarding promotional offers etc. The data on purchase made is also passed on to the credit card organization for payment to the merchant establishment and also for billing the customer.

Efficiency in Operations

The use of information technology serves as a basis for integrating the functioning of various departments. When a retailer decides to use the power of technology to aid business, the investment in terms of money is usually high. However the benefits of the use of information technology are many. As the process gets automated the time involved in particular task is reduced. For example, a person manually billing a customer for purchase made will take a longer time as compared to a person who is needed to scan in the items using the point of sale systems.

Helps Communication

Communication within the organization can be faster with the use of software like Lotus Notes. Retail stores can also communicate with each other and with the warehouses. This can be done 24 hours a day and seven days a week. Electronic Data Interchange (EDI) can also be used for communication with suppliers and vendors.

The information needs of the retailer largely depend on the size and the spread of the organization. In most cases a small boutique operator or a small retailer like the baniya can do manual billing and gather a fair amount of information by making a phone cal or making a personal visit to the store.

With an increase in the number of stores and /or an increase in the number of products sold in the store, gathering of information becomes crucial Technology plays a vital role in gathering this information and making it available to the right set of persons.
How Information Technology involved in Retailing  Operations

* Forecasting: Forecasting is the process of estimation in unknown situations. It’s an essential and very important process in any business organization. Business leaders and economists are continually involved in the process of trying to forecast, or predict, the future of business in the economy. Business leaders engage in this process because much of what happens in businesses today depends on what is going to happen in the future.

1.   Retail Demand Forecasting: Modern demand-forecasting systems provide new opportunities to improve retail performance. Although the art of the individual merchant may never be replaced, it can be augmented by an efficient, objective and scientific approach to forecasting demand.

Large-scale systems are now capable of handling the mass of retail transaction data — organizing it, mining it and projecting it into future customer behavior. This new approach to demand forecasting in retail will contribute to the accuracy of future plans, the satisfaction of future customers and the overall efficiency and profitability of retail operations.

* Inventory Management: Inventory can be either raw materials, finished items already available for sale, or goods in the process of being manufactured. Inventory is recorded as an asset on a company’s balance sheet.

To optimize the deployment of inventory, retailers need to manage the uncertainties, constraints, and complexities across their global supply chain on continuous basis. This allows them to improve their inventory forecasting ability and accurately set inventory targets. An IT solution is a proven and market leading solution for determining optimal time-varying inventory targets for every item, at every location throughout  supply chain. This allows retailers you to significantly reduce inventory without adversely affecting service levels.

* Store Management: Another example where Information technology can be beneficial is a store management. That alerts out-of-place or stock-out items. A store, commonly a shop or stall for the retail sale of commodities, but also a place where wholesale supplies are kept, exhibited, or sold. A place where something is deposited for safekeeping is called store.

The in-store system use magnetic strips or barcodes or RFID to monitor actual versus intended product location on the floor or in the stockroom.

Retail’s Complexity: the Information Technology Solution

Much of the retail operations functionality is driven by customized point solutions in areas such  as merchandizing, supply chain management, in-store operations, seasonality and promotions planning. This means the underlying IT systems to drive operations are equally complex.

IT systems are at the heart of retail operations and hence play a central role in alleviating pressure points in the retail sector. The converse also holds true–retailers who do not manage their IT landscape effectively will find that, in time, the IT systems become part of the problem rather than components of the solution.

There are two critical areas where IT can reduce

Complexity and improve results:

FUNCTIONAL RETAIL AREAS

Merchandizing systems impact top-line revenues and need to be configured, customized and managed effectively for the retailer to improve its top line. To achieve this, retailers need to effectively mine large amounts of data and leverage this data to carry out effective forecasting, assortment planning, and collaboration with its suppliers so that promotions and other merchandizing activities are effective and efficient. Supply chain systems are key from a bottom line point of view as they play a key role in getting the right product to the right place at the right time–which in turn impacts the inventory levels and the rate of flow of products through the retailer’s stores, both of which are significant components of the retailer’s cost of doing business.

DATA CLEANSING AND ARCHITECTURE IMPROVEMENT

Data cleansing, and thereafter, effective mining (via large data warehouses) is fundamentally important in the retail space because so much decision-making is based on data. If the data is bad, the effectiveness and efficiency of carrying out retail operations is hampered. This becomes particularly crucial when the retailer is implementing new systems and a large data conversion effort is required–it becomes essential that the old data be effectively cleaned, re-architect and made ready in the new system, so that the business functions can make decisions effectively.

In challenges, place ever-greater demands on retailers. It systems are at the complexity of products, scale and processes, along with supply chain heart of retail operations and hence play a central role in alleviating pressure points in the retail sector.

 

The High Technology Retailing Environment 

 

Q2. How do security tags and deactivators help in managing retail activities?

Retail stores have a number of different security precautions to protect their products, employees and their customers from theft or other criminal activity. These precautions range from different