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Applications of IT in Retailing

Automating Processes: Electronic Point of Sales (EPOS), Inventory Planning, Ordering and Management Collecting Data About Customers: Purchasing patterns of customers, segmentation, personalization, customization of offers, loyalty programmes, store design and product placements Feedback on Marketing Decisions: EPOS data to study effects of promotions, prices, new products and packaging changes Communications: With suppliers, customers, internal

Applications of IT in Retailing (contd.)

Tools to Plan the Business: Software to plan, budget, forecast. Choose best locations (GIS) Adding Value to Retail Transactions: IT-assisted transactions (ATMs) may be preferred by some customers, self-scanning, in-store kiosks for product and info. search. Technologically-enabled Shopping: Internet shopping

Benefits of IT in Retailing
Cost and Productivity Benefits Efficiency of time/transaction speed increases Reduced queuing times Operating cost reductions Increased accuracy of all aspects of the sales transaction Improved inventory management Reductions in stock outs and stock holdings

Benefits of IT in Retailing (contd.)

Marketing Benefits Improved data-effectiveness of promotions, forecast of sales Ability to incorporate faster responses to changing market conditions Consumer benefits from operational efficiencies e.g. shorter queues Can lead to building of loyalty schemes Additonal selling space coz of reduced stockholdings

A Retail IT System

Electronic Point-of-Sale Systems (EPOS) Electronic Funds Transfer at Point of Sale (EFTPOS)

The Universal Product Code (UPC) or Barcode

Identifies each product down to its SKU

GSI (Formerly European Article Numbering System )

represents membership of 101 countries First 3 digits: Country code Next 4 digits: Company code Next 5 digits: Product code Last digit: Check digit

RFID (Radio Frequency Identification Tags): Wireless barcodes that provide wireless communication b/w objects & readers; uses tags that can store data; tracks products/eqpt. in real time w/o contact or line of sight

Electronic data Interchange (EDI)

With EDI, retailers and suppliers regularly exchange information through their computers with regard to inventory levels, delivery times, unit sales etc of particular items. Both parties enhance their decision-making capabilities, better control inventory and are more responsive to demand.

Quick-Response (QR) Replenishment Systems

When EPOS are combined with EDI, retailers are in effect adopting just-in-time or quick response (QR) replenishment methods. Reduces stock outs and inventory levels, hence improving service to customers and reducing costs for retailers. CPFR( Collaboration, Planning, Forecasting and Replenishment)

Types of Technology Used in Retailing-In-store (Illustrative)

Electronic Point of Sales (EPOS) Interactive Kiosks Electronic Point-of-Sale Signage Self-Scanning and Self-Checkout system Virtual Display Cases Body Scanning

A Retail Information System anticipates the information needs of retail managers; collects, organizes and stores relevant data on a continuous basis; directs the flow of information to the proper decision makers.

Data-Base Management
Procedure a retailer uses to gather, integrate, apply and store information related to a specific subject area. Involves use of customer data bases, vendor data bases, product category data bases etc.

Data Bases (Illustrative)

Customer data bases-Purchase frequency, items bought, avg. purchase, demographics, payment methods etc. Vendor data bases- total retailer purchases per period, total sales to customer per period, most popular items, retailer profit margins, avg. delivery time and service quality

Data Bases (Illustrative)

Product Category Data Bases: Total category sales per period, retailer profit margins, percentage of items discounted etc.

Steps in Data-base Management

Plan the particular database and its components and determine information needs Acquire the necessary information Retain the information in a usable and accessible format Analyze the data base for organization purposes Update the database regularly

Data Warehousing
The data warehouse is where information is collected, sorted and stored centrally Components of a data warehouse:
1. Data warehouse, where data are physically stored

2. Software to copy original databases and transfer them to warehouse 3. Interactive software to allow enquiries to be processed 4. Directory for categories of information kept in warehouse.

Data Mining

Data Mining: In-depth analysis of information to gain specific insights about customers, product categories, vendors etc. Relies on special software to sift through vast amounts of info. in a data warehouse to uncover patterns and relationships b/w different factors

Micro Marketing

Application of data mining whereby retailer uses differentiated marketing and develops focused retail strategy mixes for specific customer segments, sometimes fine-tuned for the individual shopper.

Types of Information Systems

RIS can be divided into 4 basic types 1. Transaction Processing Systems (TPS) : Used to facilitate customer transactions and other routine business processes (e.g. EPOS systems, payroll and employee record keeping). Critical to operations. Forms major input into other systems

Types of Information Systems (contd.)

Management Information Systems (MIS): To assist middle managers in their monitoring, controlling and decision-making activities. - Provide routine summary or exception reports (usually from transaction data from TPS indicating firms current performance) either in the form of a report or online access. -Usually involve pre-specified questions, simple summaries and comparisons.

Types of Information Systems (contd.)

Decision Support Systems (DSS): An IS designed to assist manager in non-routine semi-structured or unstructured decisions. -Combines use of models and data from various sources. -Allows user to conduct a what-if analyses by changing the assumptions underlying various components of the decision

Types of Information Systems (contd.)

Executive Support Systems : Designed to support senior managers responsible for making strategic decisions- non-routine and require information about trends in the external environment as well as internally. - Incorporates information both from MIS and DSS and external data about economic, competitive and regulatory environment etc.