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Use of IT in the Retail Industry

Retail industry is one of the most prominent business categories in the modern world. It is spread all over the world, and has a history that is almost as long as human nature. The definition for Retail is ‘Sale of goods in small quantities to the public, usually not for re-sale’.

Historical existence of the industry is clear by the definition itself. Today it has a wide scope which spans from house hold items such as bread, sugar to electrical and electronic items, jewelry etc. Stores also range from large supermarkets to small village boutiques.

Retail industry drives the economy of a country. While manufacturing industries create the goods and services that people need, the retail industry provide a marketplace where people as consumers, have convenient access to those products and services.

The retail sector is one of the largest industries worldwide. And it is the second-largest industry in the United States both in number of establishments and in the number of employees. Retail trade accounts for about 12.9 percent of all business establishments in the United States.

Wal-Mart is the world's largest retailer and the world's largest company with more than $256 billion (USD) sales annually. Wal-Mart employs more than one million associates in the United States and more than 300,000 internationally. The second largest retailer in the world is France's Carrefour.

Customer handling is a critical aspect of retailing since it deals with customers directly. Retail Information Technology, commonly known as Retail IT has become very important in this sense, since traders have understood the ease it could give for large volume of customer handling.

Computerizing retail stores became a common practice some years ago, but research and development in the areas have not ended. IT evolves day by day, and it is wrong to believe that technology, which we use today, is the best, since development is never-ending. Therefore, even for the retail industry, application of advanced IT solutions would go on.

A basic retail system would have a Point-of-Sale (POS) system to sell goods to the customers. This can be considered as the front-end of the retail system. A POS would normally allow cashier to issue goods and tender. The back-end of the system should manage stores, update accounts, allow periodic reports etc.

The system should be able to handle customer returns, apply special discounts, handle special categories of customers etc. A good retail system should be competent in enabling users to tender in different types. The number of new tender types is on the rise with the advancement of technology.

As an example, few decades back, cash was the only mode of tendering, but later, payment types such as credit cards came in to play and systems in the future would need to handle tendering offered through mobile phones(May be a payment order bound to a bank sent through a SMS(Short Message Service) of mobile phones).

The system depends on the business requirements. It is the business that requires systems and adopts suitable ones for them and not the other way round. Therefore, functionality scope of a system is purely driven by the business itself. Complexity of the system would increase with the complexity of the business

 


requirement.

As an example, a small supermarket having a single store would be well off with a standalone system operating on a single machine. But imagine a large supermarket chain having several stores and within each store, several terminals. In such a situation, networking and communication would also be issues that need to be addressed.

Database updates related to store management would become quite tricky with both software and hardware advancements needed.

It is difficult to discuss about business today without taking e-business in to consideration. It is electronic business every where today and no wonder that retail industry is also affected. Therefore, new retail IT systems need to have facilities to this effect as well. Online payments and online ordering are two obvious examples.

Management of the entire supply chain has become a requirement nowadays. This was not the case at the beginning of retail IT systems. Companies have identified that it is more advantageous and appropriate to have the entire chain computerized rather than just the final end. This helps in better accounting, reporting and controlling and obviously increasing the efficiency of the whole process.

A company has two options in incorporating a Retail IT system into their business. That is in-house development or off the shelf buying.

Retail IT systems are one of the most common types of systems that are available to be bought off the shelf. There are some vendors that supply standard products while much retail IT companies would customize their base product to suit the specific customer requirements.

World famous Microsoft also has retail IT products. Microsoft Retail Management System (Store Operations) POS Software is a comprehensive retail solution designed for the independent merchant. The business software of choice for small and medium-sized retailers, equips retailers to run, control, and plan the growth of a single- or multi-store business.

In a Sri Lankan context, retail industry is one of the fore going businesses of the entire economy. IT revolution within the sector is happening silently but solidly. Sri Lanka has only few retail store chains and even they have very few stores under their belts. Therefore Simple systems might be enough for companies to survive on but it is important that technological advancements are also incorporated.

Most companies are yet to use the entire supply chain computerization and just manage with front-end of computerization by using a POS. This is mostly due to the fact that most retailers in Sri Lanka are small scale traders. Retail industry is highly dependant on volume of markets. For most types of retail goods, Sri Lankan markets are small which results in smaller size of companies and in turn results in less advanced systems being required.

Anyway functionalities such as online ordering, tendering (paying) using various types and use of wireless technology should come in to play to help uplift the quality of life of Sri Lankan people.


About the Author

An IT professional with experience in both as a Software Engineer and Business Analyst. Started career as a Software Engineer and currently permanantly in the bsuiness analysis area of the premier US based IT company in Sri Lanka.