THE RETAIL
INFORMATION SYSTEM
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.
Applications of IT in Retailing
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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.)
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Tools to Plan the Business: Software to plan,
budget, forecast.
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
• Additional selling space coz of reduced
stockholdings
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Electronic Point-of-Sale Systems (EPOS)
Electronic Funds Transfer at Point of
Sale (EFTPOS)
Point-of-Sales (POS) applications
The place where a retail transaction occurs is called a point of
sale e.g. checkout counter at departmental stores, kiosks,
shops etc. A point-of-sale system combines hardware and
software to enable a retail transaction to take place. The
hardware components in a POS system include credit card
devices, bar code scanners, invoice printers etc. The software
component is the application that integrates various hardware
components during a sale transaction. It includes point-of-sale
tasks as well as integrated accounting, CRM and inventory
management solutions. The POS application also includes
invoicing features to generate bills and invoices. The invoicing
feature includes items and prices in a sale and also handles
taxes, discounts and various payment options .
CRM is a business strategy that helps companies in
increasing their profits by putting customers’ needs at
the center of the organization. CRM involves managing
and storing customer related information, both sales
and service related, to enable companies to provide
better services to them. CRM solutions enable
companies to create and maintain relationships with
customers by tracking their interests, requirements and
buying patterns.
The Universal Product Code (UPC) or
Barcode
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First 3 digits: Country code
Next 4 digits: Company code
Next 4 digits: Product code
Last digit: Check digit
UPC vs SKU
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While some may haphazardly interchange the terms UPC and SKU, they are
actually two quite different entities. They are both numeric-based codes assigned
to products, but UPCs, or Universal Product Codes are standardized for business
use and provide a product description that, once scanned, anyone could read. In
contrast, a SKU, or Stock Keeping Unit, is a number assigned to a product by the
company for stock-keeping purposes and internal operations.
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The UPC code is affixed to a product wherever it is sold, remaining a constant
throughout the product’s shelf life. Since a SKU is unique to the company, the
same product would have different SKUs if sold by different companies, but they
would have the same UPC.
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Another difference is that SKUs are typically eight alpha-numeric digits, while UPCs
are 12 digits, numeric only.
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In conclusion, SKUs are for internal use, and UPCs are for external, or universal,
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
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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.
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.
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Data Bases
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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)
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Product Category Data Bases: Total
category sales per period, retailer profit
margins, percentage of items
discounted etc.
Steps in Data-base Management
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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
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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
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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
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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
firm’s current performance) either in the form of a
report or online access.
-Usually involve pre-specified questions, simple
summaries and comparisons.
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Types of Information Systems
(contd.)
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Decision Support Systems (DSS): IS
designed to assist manager in non-routine
semi-structured or unstructured decisions.
-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.
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