GULU UNIVERSITY

FACULTY OF BUSINESS AND DEV’T STUDIES

DEPARTMENT OF MARKETING & ENTREPRENUERSHIP

COURSE: MASTER OF BUSINESS ADMINISTRATION

MBA 6510: RETAIL STRATEGY

LECTURER: MR.OCHAYA PATRICK

17/U/2607/MBA

MICHEAL MUKASA

QUESTION

1. Explain IT application in retail management

Application of IT in Retail Business

With the increasing globalization of retailing, both in terms of their points-of-sale and their
points-of-supply; the information technology (IT) spend in the retail sector has increased
significantly(Specialisation, 2011). IT plays an increasingly important role in the management of
complex retail operations.

Market knowledge, as well as control of data and information, is key to obtaining a competitive
advantage in the retail sector(Kotler, n.d.). Markets are continuing to grow and become more
complex; the simple process of retailing has started to deploy more advanced retail information
systems to cope with all the transactions involved.

Today, retailers need to transform their IT capabilities for multiple reasons, including:

 To increase the company’s ability to respond to the evolving marketplace through

enhanced speed and flexibility.
 To collect and analyze customer data while enhancing differentiation.
 To work effectively; retailers need one system working across stores (or even across
national borders) to make sure the most effective use of stock and improve business
processes.

Retailers are beginning to notice that technology’s role is one of an enabler. Essentially,
information technology can speed up processes and deliver cost saving benefits to the company.

Management information systems have several applications in the retail industry(“No Title,”
n.d.). MIS is the systematic use of technology and people to manage the flow of information. In
retail, MIS is used for point-of-sale data collection, logistics, inventory control and internal
communication, all of which affect retail operations and marketing.

CRM and POS; Customer relationship management, or CRM, is a prominent marketing system
in which companies use point-of-sale terminals to set up customer accounts and collect data on
their relationship history. Front-end service associates perform transactions, and your
relationship software database collects and stores the information. Using CRM helps you
leverage your core customer relationships, which is key to the success of small retailers
competing with large chains. You can use customer data become more familiar with your top
customers, to offer targeted marketing promotions and to improve your total customer
experience. For instance, customers who have purchased certain products are good targets for
renewal or upgrade offers when the opportunities arise. You also could send direct mailers to
customers you haven't seen for a while.

When it comes to customer service, one of the areas where the most number of issues arise,
besides long lines in checkout is regarding the lack of store associates to direct customers or give
more information about their product or store. This is where technology comes in handy. Self-
help kiosks can be placed in stores, where the customers themselves can access product
information, store information, inventory information (both for that particular store as well as
other nearby stores in their chain), store directory (so as to locate what product is placed where)
and the like.

Many retailers are already using such self-help kiosks instead of additional sales associates,
which have helped them to save a lot on costs. Some of these also have “get help” buttons, which
alert nearby store assistants when pressed, and enable customers to talk to them through their
voice-enabled Personal Digital Assistants (PDAs). Such kiosks allow customers to find answers
to their questions on their own without having to look around for store assistants, thereby
improving customer service.

Logistics; Small retailers have a distinct disadvantage over large chains that use expensive
technology to manage the flow of information and goods throughout the retail distribution
process. You can keep up by linking your store computers directly to key suppliers or your
distribution center if you have multiple locations. This allows your vendors to pull shipping data
automatically from stores for order fulfillment. Once orders are ready, vendors can submit
shipping orders electronically to stores to alert them that the merchandise is on the way. Store
computers show product in stock at the same time they arrive physically.

Inventory Control; Closely related to logistics and distribution is inventory control. At the store
level, MIS technology allows retail associates to more efficiently update pricing and conduct
inventory audits. In the past, an employee went around manually to put sticker prices on
products. Scanners then evolved to the point that employees could scan the new price for each
product. Today, retailers often have electronic scanners synched directly to their computers that
allow them to simply change the store-level price on a particular item of stock rather than correct
each individual product. This not only speeds things up, but it also makes it easier for employees
to compare actual stock to computer inventory data to account for missing items.

Management of inventory, both in-stores as well in the warehouse has always been a major area
of expense for retailers. Merchandise must be entered into inventory, tracked on movements and
removed from inventory, on being sold. Also, real-time inventory information needs to be
available in stores so as to plan the purchase of products, as and when they go out of stock. A
total inventory management system that is integrated with the POS can put things in order to a
large extent.

As the products are sold through the POS, they also get removed from the inventory and are
updated across all systems that use such inventory information. A large clothing retailer makes
use of hand-held computers or kiosks integrated with the central inventory system, which can be
used to place orders to the warehouse. This is to directly deliver a product to a customer’s house
because it was not available in-store when the customer asked for it.

In large stores, wireless barcode scanners can be used at the receiving place to enter stock
directly into the inventory, as they get delivered, with the warehouse location of the items also
being able to be tracked instantly. Many retailers are already using DEX/UCS (Direct
Exchange/Uniform Communication Standard) to allow the delivery people to directly enter
invoices into a store’s accounting system, thereby simplifying billing as well as accounting

Supply Chain management; Asset tracking is one of the biggest trends in supply chain
management by completely overhauling their supply chain logistics operations. And this change
is already underway starting with the big retail companies who have already started a digital
transformation in logistics and supply chain operation.

Asset tracking is not new in the industry this was earlier done by barcode scanners that were
used to track and manage inventory but with running time and technology these scanners are
becoming obsolete. Their limitations of recording only broad information with no information on
location and conditions of the items are developing the need of new technology. Asset tracking
solutions offer much more essential functioning data mainly when coupled with IoT
technologies.

Fleet management; big retailers that operate vast number of vehicles are more often using fleet
management solutions making the process more efficient. These Solutions are GPS enabled
along with added tracking technologies to collect real time data of their locations and operations
of their vehicles.

Fleet management solutions are capable of connecting and reaching millions of commercial
vehicles resulting in tenfold increase in ten years.

Retail businesses are positioning the fleet management solutions in three ways:

1. Physical asset movement and delivery: This includes fleets of largely semi-trailer
trucks that transport goods to fulfill business’ and consumers' orders. These fleets can
handle long distance or last-mile delivery.
2. Consumer transportation: This includes businesses and governments vehicles that are
used to transport people from one destination to another.
3. Field-service vehicles: Vehicles that are operated mostly by businesses to transport
employees for their job functions such as sales drives. For instance Jumia-Foods
packages their service with a door steps delivery using motorcycles within Kampala.

Deploying the unending potential that IoT can offer, one must keep in mind the above mentioned
points.

Internal Communication; MIS technology offers several benefits for internal communication.
You can program your store computers to display daily messages and important memos for all
staff members to read. If you have employees who work at different times or at multiple
locations, they can communicate via email with other employees or stores. This allows for
quicker sharing of important messages. Some retailers also provide online training programs or
tutorials that enable new employees to train at their own pace or at a convenient time. Discussion
forums or message boards are other mechanisms for internal communication if you have several
stores.

Personalized Messaging; for people involved in IoT innovations in retail beacons and geofencing
aren’t new concepts. But if you have just started exploring the landscape of internet of things in
retail then you should definitely take a look at the uses of geofencing. By using Bluetooth
beacons, RFID or Wi-Fi networks retailers can trigger location specific marketing messages
when a prospect enters or leaves a set geographical boundary. This allows for more personalized
permission-based marketing where there is actual value in marketing messages.

The application of voip technology will enable businesses to attain:

 Voicemail, optionally sent to email as an audio attachment

 Caller ID
 Multiple virtual receptionists
 Music on hold, dial by name, and customizable time-based greetings
 Email notifications for specific events
 Outlook integration
 Conference calling with administrative controls, PIN codes, email notification for
scheduled conference calls, multiple conference "rooms," and ad-hoc three-way calling.

Global data synchronization; Due to radio frequency identification/electronic product coding,

the entire supply chain has become more intelligent. Retailers must enable the use of real-time
data to watch inventory levels. In addition, radio frequency identification tagging positions the
company to be able to safeguard its shipments by allowing products to be tracked from
manufacturer through the entire supply chain.

The retailers who take advantage of outsourcing IT will obtain optimal advice and benefits from
outsourcing. Many retailers have turned towards IT outsourcing as a way to control costs and
improve their service delivery.

Market Basket Analysis(MBA); a data analysis technique used to predict the future purchases
based on previous checkouts and items in the cart and knowledge about the consumer buying
process, the items which they purchase, their movement from one category of store items to
another, their behavior to changes in store layout etc. Such data can be retrieved using IoT
devices like sensors in shopping carts, RFID tags in items, mobile phones etc. Using these
observations, you can set up a store layout that directs customers to relevant products based on
their purchases.

Better Geo-Tracking; Geo tracking is not a new concept. In fact, you won’t need high-end IoT
devices to track the location of your shipments. So how does IoT make a difference? When we
combine internet of things with GPS systems we can track the location of a shipment at a much
more granular level. IoT sensors can also help track the condition of the shipment and the impact
of outside environment like temperature, the time taken in delivery etc. on its quality. This is
especially helpful in case of managing the transport of perishable commodities and delicates.

Price Auditing; always been a time-consuming process for retail businesses. Looking up price
labels on products and verifying them with the prices charged to the customers is definitely a
hard thing to do. With wireless devices like a tablet or a notebook, the store keeper can check the
price labels of all the products by scanning the shelf labels using a barcode scanner. These
devices can be linked to the store’s central database of products which are also linked to the POS
terminals in order to track the prices of products being sold. If there are any differences between
the POS prices and the database prices or the shelf prices, corrective action can be taken
immediately. Hence, accurate pricing can be achieved and a lot of time can be saved, plus it adds
to the trust factor for customers as well.

Security; Businesses seek to grow by avoiding losses, protection from both internal and external
personel is key, dishonest staff do exist as well as malicious customers therefore application of
CCTV cameras helps to reduce on the levels of physical loss of stock/ inventories from either
display, shelves or stores. Even intruders can be identified by security cameras installed in the
premises. This technology can be networked therefore being managed by external parties to the
business to avoid conflict among parties in the business premises.

Also PCI (Payment Cards Industry such as Visa Debit Cards) Security Compliance addresses the
retailer’s internal security setup and practices, in order to mitigate payment security risks. Every
business engaged in credit card payment processing is required to comply with PCI Security
Standards. If a retailer collects or stores credit card information that becomes compromised, the
retailer may lose the ability to accept credit card payments. Other possible consequences include
lawsuits, insurance claims, cancelled accounts, and government fines.

Conclusion

With the dynamic market trends businesses have to embrace Information technology to be able
to gain competitive advantage over competitors, cut operational costs and also achieve customer
satisfaction. The elements of IT in retail discussed above are some of the ways technology can be
used in the retail business to improve profits. Even though a lot of these technologies are not
being adopted by a number of businesses due to various reasons, it is pretty clear now how
important they are. As a matter of fact, with time a lot of the traditional methods in retail are sure
to get phased and you will be left with no option but unfamiliar technology such as artificial
intelligence which is sought that customer services such as interaction shall be handled by
robotic-machines which are sought more effective and efficient as compared to human beings.
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