The importance of information technology in retail stems from the importance of data. Data is nothing but information that aids decision making. The right data, in the right form to the right setoff people at the right time, is one of the greatest tools in the hands of the retailer. Information is always with reference to a particular time frame.
The items purchased provide information on merchandise sold in the store; this is the basis of sales analysis and decisions on replenishment re-ordering and merchandise planning. If this information is passed on to the manufacturer; it can help reduce production time. This is particularly true in case of fashion items, which have a very short life cycle. For example data gathered in this manner may indicate youngsters buying certain styles in Jeans or colors, in the tee shirts from the store. To service this section of the audience the retailer may need replenishments faster. The use of technology aids the collection and transmission of information. The trends in sales can be analyzed. This helps avoid situations of stock out helps spot merchandise or products timely markdowns and higher inventory turns.
The use of technology aids data collection. Data can be collected about consumers, their purchases the frequency of their buying and the typical basket size. This information helps the retailer distinguish the customers who shops at his store frequently and also reward them. For example information gathered about a customer may reveal preferences for certain brands; this may be used for further communication with the customer regarding promotional offers etc. The data on purchase made is also passed on to the credit card organization for payment to the merchant establishment and also for billing the customer.
The use of information technology serves as a basis for integrating the functioning of various departments. When a retailer decides to use the power of technology to aid business, the investment in terms of money is usually high. However the benefits of the use of information technology are many. As the process gets automated the time involved in particular task is reduced. For example, a person manually billing a customer for purchase made will take a longer time as compared to a person who is needed to scan in the items using the point of sale systems.
Communication within the organization can be faster with the use of software like Lotus Notes. Retail stores can also communicate with each other and with the warehouses. This can be done 24 hours a day and seven days a week. Electronic Data Interchange (EDI) can also be used for communication with suppliers and vendors.
The information needs of the retailer largely depend on the size and the spread of the organization. In most cases a small boutique operator or a small retailer like the baniya can do manual billing and gather a fair amount of information making a phone cal or making a personal visit to the store.
With an increase in the number of stores and /or an increase in the number of products sold in the store, gathering of information becomes crucial Technology plays a vital role in gathering this information and making it available to the right set of persons.