Impact of IT intervention in retail business

Abstract

This project aims to understand the impact of the intervention of Information Technology in Retail business through both secondary research and primary research. Retailing as such involves all the activities in selling goods and services to the final consumer for their personal use. As increase in population led to advancement of technology, cities became more interconnected and communication between cities became easier. Information technology is a key enabler of efficient retail operations and to improve operational efficiencies, customer satisfaction and also profitability. A retail operation has multiple warehouses, retail outlets and offices located in various places across the globe. In such a case, it is important for the headquarters to be aware of the turnover coming from each store and the information on which products are selling the most in which area and which outlet in order to plan inventory and make it available at the appropriate store. Information system is basically a combination of software, hardware, communication devices, networks and data resources that process information for specific purposes. Increase in globalization is the key driver for retailers to imbibe usage of Information technology at their point of sale, points of supply, back end support which aids them in managing complex retail operations efficiently and at ease. Most of the retail operations are driven by customized solutions in various areas such as supply chain management, seasonality and promotions planning, merchandising which implies the IT systems which drive these operations are also complex. Organizations can use information technologies in many innovative ways and have been useful tools to achieve the objectives of effectiveness and efficiency. Information Technology can be used for strategic planning/Portfolio management internally and Partnership Planning/Alliance management as a tool for strategic positioning; for cost control through automation internally and for account control (suppliers and customers) externally as a tool for operational efficiency. The retail POS is evolving to be a powerful medium that offers real time customer incentives, captures valuable consumer shopping patterns and delivers non-traditional services when compared to its prior role of being cash till and hence enhances targeted marketing. Retail verticals like convenience, pharmacy and grocery are more than traditional essentials and have become consumer destinations where consumers increasingly expect one-stop solutions including bill payment, Telecom top-up services etc. Retailers who prove to have the ability to offer these solutions in a cost-effective, secure and scalable model can achieve high customer loyalty and differentiate themselves from their competitors. Implementation of smart operating systems helps manage supply chain uncertainty across all the stages and improves total inventory planning, helps to stabilize customer levels and minimizes overall costs of the business. Inventory optimization algorithms in SmartOps manage data uncertainties and offer visibility into inventory at every detail of item location. Point of Sale systems might be online to a central computer for inventory updating and credit checking or can be standalone machines used to store daily transactions till they are transmitted to the main computer for further processing. Radio Frequency Identification has solved many problems regarding customer services in the retail industry. With RFID, sales staff can easily locate a particular item in a store and check for its availability in lesser time. Based on the interaction with retail store, it has been observed that there is substantial increase in sales along with reduction in expenses leading to positive impact on profitability after deployment of IT in retail sector. Few stores have started using automatic store credits when any item is returned against taking cash refund and also to track the returned item. These cards which have unique serial number can be used like a gift card, which at times might lead to larger sales if there is smaller credit balance which in turn increases the amount of sales. This also avoids the risk of fraudulent use. By using data from POS, the merchandise system will be able to ensure the needed level of inventory and required mix. This will lead to increase in optimum use of inventory which not only leads to increase in sales but also to have cost savings on inventory carrying charges. A new tool is being used which is also known as the missing persons query. This tool gives them with the details of those customers who have been loyal to store but are not visiting store for past six months. Retailers get their information and send them with a gift certificate which promotes them to visit store again and hence not losing the customer base. By use of this tool, it has been observed there is increase in sales in excess of ten percent. To conclude, IT can aid in improving the customer satisfaction level by understanding the consumer behavior, their tastes, and providing better, quicker, easier and transparent processes by which loyalty of customers can be made and sustained for longer time. This aids in increasing the customer conversion rate and also to attain customer loyalty.