Information Technology in Retail Business

Retail business information technology implementations, benefits, advantages, disadvantages, issues, implications in strategic management and human resources
Inside the CC Mart’n shopping center in Gjøvik, Norway. Retail businesses use information technology to enhance customer experience and improve business performance. (Photo: Public Domain)

The ubiquity of information technology affects retail business performance. Technological trends involve solutions for improving business operations and the shopping experience. While retail companies have long implemented technological solutions for their business, current information technologies and related trends indicate the increasing significance of IT in retail business. For example, retailers increasingly depend on IT solutions for minimizing inventory costs in stores and other facilities. This significance of IT requires strategic planning that accounts for opportunities and challenges in integrating IT into retail operations. Retailers strategically integrate information technology to ensure their competitiveness against firms of various sizes and specialties in the market.

Various multinational firms are developing IT solutions for business applications, for their own operations or for other companies, such as retail businesses. For example, Google (Alphabet), Apple, Amazon, Microsoft, IBM, and Intel have technological products and online services that can be used to support business operations in various industries. The consumer electronics of Samsung and Sony can also influence companies’ information technology strategies and assets. These consumer electronics and IT companies compete for industry and market leadership based on their respective mission and vision statements. Retailers can enhance their efficiency and reduce operating costs through a combination of such IT solutions.

IT Applications in Retail

The specifics of IT applications in retail operations depend on the business area. For example, IT solutions differ between the areas of supply chain management and human resource management. The following are some areas notable for information technology solutions in retail business:

  1. Sales
  2. Customer service
  3. Supply chain management
  4. Inventory management
  5. Business intelligence and analytics
  6. Logistics and delivery
  7. Surveillance and security

Sales operations benefit from basic and advanced information technology. For example, IT has been in use in sales through point-of-sale systems at retail stores. IT applications for sales operations also include devices and systems that are interconnected through the Internet. These IT systems facilitate sales transactions, including payments using various cards and payment methods. These systems also allow managers to monitor sales performance and make decisions based on real-time information, thus ensuring the timeliness of such decisions.

Information technology used in sales also affects customer experience in brick-and-mortar and e-commerce operations. Advanced e-commerce systems can streamline the online shopping process. In brick-and-mortar stores, IT systems can increase the speed and efficiency of sales transactions through self-checkout and related systems. Companies, such as Walmart, Costco, and Whole Foods, as well as Home Depot, have implemented and continue to experiment with these technologies to fulfill strategic goals based on their respective business mission and vision, through service quality and customer experience in sales operations. Moreover, artificial intelligence solutions can provide fast, efficient, and cost-effective customer service. For example, AI-integrated digital assistants and chatbots, like Facebook’s, facilitate communications between companies and their target customers.

In supply chain management, retail companies use information technology to determine actual demand and forecast future demand, to match supply levels and demand. Walmart, Whole Foods, Costco, Home Depot, Target, and other retailers have effective supply chain management systems that optimize their supply chains and align retail operations with the operations and capacities of supplier. In relation to supply chain management, these retailers also use information technology to minimize costs and maximize efficiency in inventory management. For example, inventory management software and related computer hardware ensure that inventory levels at retail stores match demand to minimize the space requirement of inventory.

Retail operations are increasingly relying on business intelligence and analytics for managerial decisions and strategic planning. Retailers can collect information from sales transactions to gain insights into business opportunities and problems. The different types and areas of application of information technology in retail can provide different kinds of insights and knowledge for business management. For example, companies can use analytics and business intelligence along with accounting data to determine the best strategies to improve their performance in different retail markets.

Logistics and delivery services are major components of many retail businesses, especially when considering e-commerce. The objective of information technology in this area is to streamline logistics to minimize delays and maximize cost-effectiveness in moving goods and other materials. Multinational companies, like Amazon, have already mastered the application of information technology to support logistics and delivery. Thus, competitive pressure from e-commerce is a major push for retailers to implement IT for their logistics and delivery operations.

Many retail firms implement IT for surveillance and security. This application involves cameras and sensors that detect and record people’s movement inside store premises and other areas of retail business. Connected to servers with appropriate software, these devices relay data for processing and determining security issues and risks in retail operations. IT for surveillance and security may also include internal monitoring as part of corporate efforts to prevent questionable activity, such as the ones involving the case of Tyco’s corporate scandal.

Challenges in IT Applications in Retail

Security and reliability are among the primary concerns in implementing information technology in retail business organizations. Companies need to ensure data security and protection from online threats. Confidentiality, integrity, and availability (the CIA triad) are basic goals for developing and maintaining IT systems and networks used in retail business operations. Additional goals and principles need to be integrated into the design of the systems for business security and reliability.

The human resource aspect of organizations also poses challenges when implementing information technology in retail business. IT may lead to higher amounts of information and more tasks involving technological tools. This workplace condition can lead to overload and burnout. In this regard, a socio-technical systems approach can be used to reduce information overload and related issues in human resource management. Also, retail business strategies, programs, and decisions can be tailored to address employee burnout linked to organizational management. Moreover, in multinational retail business organizations, staffing policies need to consider the benefits and disadvantages of IT systems and tools that workers use for local sales and global internal business communications.


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