1) Introduction

The retail industry business has been around for centuries. It all started with a community
general shop where people of the community would shop for items of necessity. Single
general stores by local residents were the most common because specialty stores were not
really necessary due to limited population within the city and dis-connectivity of people. As
societies advanced with population increase leading to expanded cities, and new advanced
technologies gave rise to interconnectivity as well easy communication between distanced
cities or societies, opportunity for specialty stores was formed. But before the specialty stores
formed into a business, the function of the general store was most essential because they
provided the varied needs of the local community. Retailing includes all the activities
involved in selling goods or services directly to final consumer for their personal, nonbusiness use.
Retail Industry is one of the fast growing industries, meeting the requirements of people at a
large scale in terms of products. Today information systems are need of the hour in any retail
outlets without which they fail to perform and satisfy the customers.
Business Intelligence is a component of the information systems tracking the behavior and
demand of the customer in a retail shop so that consumers are more satisfied by giving what
they want in an easier manner, increasing the profitability of a retail outlet. Business
intelligence mainly refers to computer-based techniques used in identifying, extracting and
analyzing business data, such as sales revenue by products and/or departments, or by
associated costs and incomes. These technologies provide historical, current and predictive
views of business operations. Common functions of business intelligence technologies are
reporting, online analytical processing, analytics, data, process mining, complex event
processing, business performance management, benchmarking, text mining and predictive
analytics.
Data mining, a concept of business intelligence has the power to harness the hidden
knowledge present in the huge data that is got at point of sales. This data gives valuable
information, required to understand the customers buying patterns, key performance
indicators which helps retailers in making decision such as catalog design, cross-marketing
and customer shopping behavior analysis.

Todays retail business is highly dependent on information and if barriers are not met, a
thriving business will soon be doomed. Now information is considered a highly valued asset
to an organization and if businesses do not address these information barriers soon, they will
face the compound in accelerated growth in information which will drive organizations out of
business.
One of the key factors in achieving an organized and efficient retail operation is the use of
information technology as an enabler. Information Technology is the key enabler to improving
customer satisfaction, operational efficiencies and by extension, profitability. Technology has
been the great enabler of business and especially retail enterprise. We are now wireless and
seamless and cashless and everything less and can get any information we want and need.

2) Need For IT in retailing:

A typical national retail operation would have multiple regional warehouses, offices and retail
outlets. In such an operation, how does the headquarters know the daily turnover at each of its
outlets, how does it know which products are selling the most in which region at which outlet,
how does one store know if a stock out item in its own inventory is available at another
store location for whom it is slow moving item? Most of these issues can be solved by the
appropriate use of technology. Retailers need to transform their IT capabilities for a number of
reasons. These include:

To aggregate and analyze customer data to enhance differentiation.

To increase a company's ability to respond to a rapidly changing marketplace through

enhanced flexibility and speed.

To operate effectively, retailers need to have one system working across stores (sometimes
across national borders) to ensure the most effective use of stock and to support optimized
business processes.

In the highly competitive retail industry, any information about the customer spending pattern,
habits, and preferences is an asset and competitive advantage to one over the competitor.
Unfortunately, if one does not invest in acquiring relevant information that is a business
necessity to survival of the company as competitive advantage, then the company will lose
business with poor customer relationships. Todays customers are highly informative and
price sensitive, so if they are not satisfied there are many more options available to them. As a
result they will substitute to another vendor.
The critical information needs of the retail organization form the basis for critical success
factors in the retail business. The following are some of the key information areas:

Product information: catalog, availability, new releases, promotion, supply and

demand.

Customer information: profile, behavior, activities, preferences, distribution etc.

Operations information: logistics, allocation, procurement, schedule, inventory, shelfspace.

A number of factors are responsible for the need of information technology in retail out of
which four factors are more important than ever before. They are:
1) Intense Competition: Intense competition forces the organization to become more efficient
and effective. As the industry matures lack of growth and excess capacity will often result in a
share battle between the large companies. For example we are witnessing a market share
battle in steel, automobile, chemical and food industry. One way to gain the competitive
advantage is to use information technology at least in four ways.

It reduces the operating costs through automation.

It improves the product or service quality by providing quality assurance Information

technologies provide a value added services which creates a differentiation.

Information technology can be used for competitive intelligence.

2) Globalization of business operations: In all the businesses whether it is consumer or

industrial, high tech or low tech, service or product there is at least some degree of global
competion.Global operations requires that both the time and distance barrier is to be
eliminated or reduced. As the industry become more global in its procurement, manufacturing
and marketing operations it requires a greater use of information technology to reduce the
time and space barriers.

3) Organizational changes: With the organizational reorganization and increased mergers and
acquisitions top management recognizes the need for flexibility through compatible
information technology. Some of the aspects that creates the need for information technology
are:
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Cost efficiency through consolidation and automation.

Significant number of mergers and acquisitions.

Crises management and security of physical human resources has become a major
issue in recent years

As the major industries mature and competition intensifies they are reorganizing to
become market driven.

4) Technology revolution: In a very short period of time we have seen the commercialization of
information technologies. The performance and price ratio of new generation information
technology is making them more affordable and useful to the organization. There are three
fundamental dimensions of information technology:

Sharp experiences in information technologies resulting in an increased value in use.

Information technologies have been distributed over time with respect to processing,
memory and intelligence.

Information technologies are highly integrated with the advent of end to end digital
technologies, it is possible to transmit, store, process and distribute different forms of
information on a single integrated technology

3) How Information Technology is used in Retail operations:

Information technologies can be used by the organization in variety of innovative ways. They
have become tools to meet corporate objectives of effectiveness and efficiency. They can be
used as shown in the following figure.

Some of the areas are:

1) Forecasting: Forecasting is the process of estimation in unknown situations. It is 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.

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. Largescale 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.

2) 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.
3) Store Management: Another example where Information technology can be beneficial is a
store management system that alerts out-of-place or stock-out items. A store is 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.
An in-store system uses magnetic strips or barcodes or RFID to monitor actual versus
intended product location on the floor or in the stockroom
IS provides solutions to the retail store in two different forms. They are:
1. Retail Store Front: The Retail Store front is undergoing a world of change, with product
specialization losing out to multiservice capability (ISTS). The retail Point of sale (POS) is
becoming more than the cash and is a powerful medium to deliver non-traditional services,
offer real time consumer incentives and capture valuable consumer shopping profiles for more
targeted marketing. Some of the store front technology initiatives:
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 POS and Peripheral Applications

Payment Applications
Store Management Solutions
Retail verticals like Grocery, Pharmacy and Convenience (Petrochemical and Corner) Stores
are consumer destinations for more than just the traditional essentials. Consumers are
increasingly expecting one-stop-shopping solutions at these locations, including Telecom TopUp services, Bill Payment, Gift Card POSA etc. The ability to offer these solutions in a
secure, cost-effective and scalable model can often times proves to be the single largest
contributor to retail brand differentiation and consumer loyalty.
2. Retail Store Back: The Retail Back Store, a traditional cost center rift with manual
operational processes, is undergoing phenomenal change in terms of emerging as a central
hub for managing operational excellence throughout the store. Creative adoption of
technology is spearheading this change. Innovative examples of this change are:
Store Inventory & Warehouse Management
Time & Attendance Tracker
Real Time Stock Locator
Auto Replenishment & Store Orders
Store Operations Reporting
Retail Shrink and Loss Prevention
Personnel Management solutions
Time and Attendance, Computer- Based Training
Store Inventory Management
Stock locator, Direct Store Delivery, Auto Replenishment
Store Warehouse Management
Store Receiving, Real Time Inventory Adjustment, RFID based Inventory Management
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4) Technologies used in Retailing:

1. Radio Frequency Identification (RFID):
Radio Frequency Identification in the retail industry has solved major problems related to
customer services. With the help of RFID it becomes easy for the sales staff to locate a
particular item in the store and check its availability in less time. It's a data collection
technology that uses electronic tags for storing data. The tag, also known as an "electronic
label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna.
Transmitting in the kilohertz, megahertz and gigahertz ranges, tags may be battery-powered or
derive their power from the RF waves coming from the reader. Like bar codes, RFID tags
identify items. However, unlike bar codes, which must be in close proximity and line of sight
to the scanner for reading, RFID tags do not require line of sight and can be embedded within
packages. Depending on the type of tag and application, they can be read at a varying range of
distances. In addition, RFID-tagged cartons rolling on a conveyer belt can be read many times
faster than bar-coded boxes.
RFID in retail helps in the following ways:
Improves the level of customer service
Increases customers loyalty
Better Inventory Management
Item level tracking.
The future of RFID is very bright in retail sector, as right from inventory management to
product manufacturing, this system provides a more efficient and advanced retail experience
to both the customer and the seller.
2. Smart Operating System (SOS):

Supply chains can look very different from industry to industry. But companies across
industries share a common challenge -- finding ways to better manage growing uncertainty
and complexity to improve supply chain performance.
To improve their supply chains, companies across industries have made sizable investments in
a range of technology solutions, yet significant profitability improvements have remained
elusive. Largely unaddressed has been the opportunity to use enterprise and supply chain data
to support key inventory planning decisions that fuel execution systems and activities -something beyond a mere spreadsheet or desktop solution.
Smart Ops customers are proactively managing supply chain uncertainty across all stages to
improve their total chain inventory planning, so that their customer service levels can be
stabilized and even increased while overall costs to the business are minimized. Smart Ops
enterprise software solutions support many initiatives and challenges associated with different
manufacturing and distribution industries from Lean Manufacturing, Just-In-Time (JIT), and
Six Sigma initiatives, to postponement strategies, to Collaborative Planning, Forecasting, and
Replenishment (CPFR), and Sales & Operations Planning (S&OP) activities.
Smart Ops inventory optimization algorithms manage uncertainties in the data and offer
visibility into the drivers of inventory at the item-location-time period level of detail. Smart
Ops is able to do that because it looks at the right granularity of data to adequately manage
safety stock levels and understand where the biggest ongoing opportunities for improvement
are within their supply chains.
3. Point of Sale (POS):
Capturing data at the time and place of sale is now done with the help of Point of sale
systems. Point of sale systems use computers or specialized terminals that are combined with
cash registers, bar code readers, optical scanners and magnetic stripe readers for accurately
and instantly capturing the transaction.
Point of sale systems may be online to a central computer for credit checking and inventory
updating, or they may be stand-alone machines that store the daily transactions until they can
be delivered or transmitted to the main computer for processing.
Point of sale (POS) systems is electronic systems that provide businesses with the capability
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to retain and analyze a wide variety of inventory and transaction data on a continuous basis.
POS systems have been touted as valuable tools for a wide variety of business purposes,
including refining target marketing strategies; tracking supplier purchases; determining
customer purchasing patterns; analyzing sales (on a daily, monthly, or annual basis) of each
inventory item, department, or supplier; and creating reports for use in making purchases,
reorders, etc. Basic point of sale systems currently in use includes standalone electronic cash
registers, also known as ECRs; ECR-based network systems; and controller-based systems.
All function essentially as sales and cash management tools, but each has features that are
unique.
4. Data Mining (DM):
The application of DM techniques facilitates the retail participants to make intelligent
marking strategies on market segmentation, market targeting, market differentiation and
positioning. By analysing POS data and other research data stored in the database, the
marketing managers are able to segment customer market, evaluate market segments and
select target market segments through knowledge discovery in DM. Marketers are now
moving their focus from producing the right product to targeting the existing products to right
customers. DM can also be used to analyse the effect of changing 4Ps (Price, Product,
Promotion and Place) and market share, and predict which customer group will be most
responsive to the promotion and campaign.
The use of DM is also beneficial for efficient retail SC management, ranging from
procurement, warehouse management and distribution. The database information on historical
orders, price and supplier performance are used by the procurement department for evaluating
and selecting suppliers. DM can analyse the movement of warehouse stock in relation to
product type, product location, shelf space and improve warehouse management. Information
collected from transportation and distribution can be utilised to facilitate route planning,
scheduling and logistics company selection.
More strategically, DM tools allow the retail SC participants to collect massive quantities data
from multiple resources, and extract the useful and relevant knowledge from database to
redesign and optimise business processes. DM techniques predict futures and trends, allowing
companies to make proactive and knowledge-driven decisions. In addition, DM can be

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integrated into the existing software and hardware platform to enhance the value of the
existing information resources.
5. Electronic Data Interchange (EDI):
Electronic data interchange (EDI) defined as computer-to-computer transmission of
standardised business transitions, and it is becoming a growing technology of information
transfer system from retailers computers to suppliers computer throughout the retail supply
chain. EDI was introduced to use by the trucking industry in the early 1970s and since then
has been widely adopted by many other business sectors.
EDI is highly accurate and very efficient to collect information over the internet and
facilitates a company to speed up their transaction and order process. By sharing customer
sales figure and forecast EDI can enhanced its planning and control to a lower inventories
with timely information. EDI is mainly used to place electronic purchase orders; generating
bills of lading/freight bills and invoices; transmitting sales/inventory data, and giving
advanced shipping notice.
Two features set EDI apart from other ways of exchanging information:

EDI only works for business-to-business transactions, and individual consumers do

not directly use EDI to purchase goods or services;

EDI involves transactions between computers or databases, not between individuals.
Therefore, individuals sending e-mail messages or sharing files over a network does
not constitute EDI.

Along the booming development of Internet, it is expected that there will be a rapid move to
deliver EDI via the Internet. This would happen rapidly and could allow more widely
distributed participation.
6. Enterprise Resource Planning:
Enterprise resource planning (ERP) is business management softwareusually a suite of
integrated applicationsthat a company can use to collect, store, manage and interpret data
from many business activities, including:

Product planning, cost

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Manufacturing or service delivery

Marketing and sales

Inventory management

Shipping and payment

ERP provides an integrated view of core business processes, often in real-time, using common
databases maintained by a database management system. ERP systems track business
resourcescash, raw materials, production capacityand the status of business
commitments: orders, purchase orders, and payroll. The applications that make up the system
share data across the various departments (manufacturing, purchasing, sales, accounting, etc.)
that provide the data.ERP facilitates information flow between all business functions, and
manages connections to outside stakeholders.

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5) Scope and Opportunities of using IT in retail analytics:

The great functionalities and features of implementing these IT technologies bring the
companies opportunities to improve performances, however, the adoption of them are still
complicated and costly. Much research has discussed the benefits and obstacles of adopting
these IT technologies.
Information

Opportunities

Technologies
EDI

Quick access to information

Decreased administrative and transaction cost
Improved communications and information accuracy
Improved cash flows
Increased productivity
Improved tracing and expediting
Better customer service
Enhanced competitiveness

Reduced check-out time and error

Improved inventory management
Increased traceability
Improve collaboration between partners

Improve information quality, accuracy, relevancy, completeness

Improve business responsiveness and customer service
Reduce operation cost Optimize the assets Reduce shrinkage
Increase traceability

Intelligent marketing strategies

Supply chain management
End-to-end optimization or redesign of business processes

POS

RFID

DM

6) Wal-marts Information Technology:

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Wal-Mart Stores, is an Americanmultinational retail corporation that operates a chain of

discount department stores and warehouse stores. Headquartered in Bentonville, Arkansas, the
company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. It has
over 11,000 stores in 27 countries, under a total 71 banners. The company operates under the
Wal-mart name in the United States and Puerto Rico.
Wal-Mart demonstrates how a physical product retailer can create and leverage a data asset to
achieve world-class supply chain efficiencies targeted primarily at driving down costs.
At that size, its clear that Wal-Marts key source of competitive advantage is scale. But firms
dont turn into giants overnight. Wal-Mart grew in large part by leveraging information
systems to an extent never before seen in the retail industry. Technology tightly coordinates
the Wal-Mart value chain from tip to tail, while these systems also deliver a mineable data
asset thats unmatched in U.S. retail. To get a sense of the firms overall efficiencies, at the
end of the prior decade a McKinsey study found that Wal-Mart was responsible for some 12
percent of the productivity gains in the entire U.S. economy.

[2]

The firms capacity as a

systems innovator is so respected that many senior Wal-Mart IT executives have been
snatched up for top roles at Dell, HP, Amazon, and Microsoft. And lest one think that
innovation is the province of only those located in the technology hubs of Silicon Valley,
Boston, and Seattle, remember that Wal-Mart is headquartered in Bentonville, Arkansas.
Some of the Information technology tools that Wal-mart uses are:
1)Retail Link: The Wal-Mart efficiency dance starts with a proprietary system called Retail
Link, a system originally developed in 1991 and continually refined ever since. Each time an
item is scanned by a Wal-Mart cash register, Retail Link not only records the sale, it also
automatically triggers inventory reordering, scheduling, and delivery. This process keeps
shelves stocked, while keeping inventories at a minimum.

2)Data Mining: Wal-Mart also mines its mother lode of data to get its product mix right under
all sorts of varying environmental conditions, protecting the firm from a retailers twin
nightmare: too much inventory, or not enough. For example, the firms data mining efforts
informed buyers that customers stock up on certain products in the days leading up to
predicted hurricanes. Bumping up pre-storm supplies of batteries and bottled water was a no
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brainer, but the firm also learned that Pop-Tarts sales spike seven fold before storms hit, and
that beer is the top pre-storm seller. This insight had lead to truckloads full of six packs and
toaster pastries streaming into gulf states whenever word of a big storm surfaces.
Data mining also helps the firm tighten operational forecasts, helping to predict things like
how many cashiers are needed at a given store at various times of day throughout the year.
Data drives the organization, with mined reports forming the basis of weekly sales meetings,
as well as executive strategy sessions.

3)RFID technology: Walmart has grown to be the worlds largest retailer by seeking every
opportunity to streamline its supply chain and cut costs in order to live up to its promise of
everyday low pricing. Getting there entails more than smart merchandising, however.
Walmart also is a leader in pioneering technologies to achieve operational efficiencies that
ultimately bring savings for its customers.
One such technology is radio-frequency identification, or RFID, which transfers data stored
on tags on a product or other object, facilitating identification and tracking. One use of RFID
technology familiar to many people is in vehicle transponders for toll collections.
Walmart has been using RFID technology for about a decade and cites numerous benefits,
including more efficient inventory management. The company initially introduced RFID to
track pallets of merchandise traveling along its supply chain, including at warehouses. In
2007, executives credited the technology with, among other things, cutting the volume of
excess inventory in Walmarts massive supply chain and slashing out-of-stock occurrences
by almost one-third.
In 2010, the retailer announced the next phase of its RFID strategy: placing tags on
individual garments.
RFID tags offer a broader array of advantages compared with traditional barcodes. They
store more data, provide real-time information, and can be scanned from a distance and
without a clear line of sight.

7) Use of IT by Walmart:
1) Sharing data and keeping secrets:
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While Wal-Mart is demanding of its suppliers, it also shares data with them. Data can help
firms become more efficient so that Wal-Mart can keep dropping prices, and data can help
firms uncover patterns that help suppliers sell more. P&Gs Gillette unit, for example, claims
to have mined Wal-Mart data to develop promotions that increased sales as much as 19
percent. More than seventeen thousand suppliers are given access to their products Wal-Mart
performance across metrics that include daily sales, shipments, returns, purchase orders,
invoices, claims and forecasts. And these suppliers collectively interrogate Wal-Mart data
warehouses to the tune of twenty-one million queries a year.
While Wal-Mart shares sales data with relevant suppliers, the firm otherwise fiercely guards
this asset. Many retailers pool their data by sharing it with information brokers like
Information Resources and ACNielsen. This sharing allows smaller firms to pool their data to
provide more comprehensive insight on market behavior. But Wal-Mart stopped data sharing
data with these agencies years ago. The firms scale is so big, the additional data provided by
brokers wasnt adding much value, and it no longer made sense to allow competitors access to
what was happening in its own huge chunk of retail sales.
Other aspects of the firms technology remain under wraps, too. Wal-Mart custom builds large
portions of its information systems to keep competitors off its trail. As for infrastructure
secrets, the Wal-Mart Data Center in McDonald County, Missouri, was considered so off
limits that the county assessor was required to sign a nondisclosure statement before being
allowed on-site to estimate property value

8) Conclusion:
EDI, POS, RFID and DM are the prevalent IT technologies being adopted by the retail
organizations to capture data, automate data transmission, increase data transmission speed,
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improve data quality, extract knowledge from data and facilitate decision making. The advent
of the IT technologies offers the retail SC many opportunities, and is acknowledged for
improving business performance and optimizing business processes. However, the extent and
speed of the adoptions of these IT technologies are impacted by many challenges. Among
them, EDI and POS are more widely implemented in the retail SC compared with RFID and
DM, and this is attributed to high setup cost of RFID and complexity of DM. The public
perceptions and acceptance of the IT technologies also impacts the decisions of companies.
The concerns on privacy and security issues associated with the IT technologies need to be
addressed by the retail industry to avoid legislation matters.

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9) Bibliography:

http://catalog.flatworldknowledge.com/bookhub/reader/9?e=gallaugher-ch11_s07
http://www.usanfranonline.com/resources/supply-chain-management/rfid-technology-

boosts-walmarts-supply-chain-management/#.VP4MmofDFSU
http://www.journalcra.com/sites/default/files/2418.pdf
http://www.pomsmeetings.org/confpapers/011/011-0026.pdf

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