Unit –II : Information Gathering in Retailing
Improved Return on Investments
Return on Assets = Net Profit margin x Asset Turnover
Net Profit / Total Assets = Net Profit / Net Sales x Net Sales / Total Assets
• An efficient supply chain and information system can help in
increasing net profits and net sales as well as in reducing total costs
and assets
• Effective information system can help in the efficient Supply chain
management and reduction in inventory costs for the retailers as
well as in enhanced CRM
Information & Merchandise Flow
Buy / Sale
Sales Information
Buyer / Planner Stores
Quick Response
system
Vendor Distribution Center
Information Flow Merchandize Flow
Data Warehousing
• Purchase data collected at the point of sales is stored in database
called as Data Warehouse
•Data Warehouse is the periodic and coordinated copying of data
from various sources both inside and outside the enterprise, for
analytical and informational processing
• The information stored in the data warehouse is accessible on
several dimensions and levels (Refer Fig 1)
Level of Merchandize - SKU, vendor, category, department
Level of Company - Store, division, company
Point of Dimension – Day, season, year
Retail Data Warehouse
Vendor
Category Ti
SKU m
e Year
Merchandise
Company Season
Location
Division Day
Stores
Data Warehousing
• These information can be accessed by the customer as well top
management at any point of time
•Data warehouse also contain detailed information about the
customers, their tastes and preferences as well as previous purchase
records
• Operations, Stores, Purchase or Marketing Managers take
decisions by extracting information from the data warehouse
• The information is used for planning the merchandize assortment,
promotional and discount schemes, displays, etc.
Electronic Data Interchange
• EDI is the computer to computer exchange of business
development from retailer to vendor and back
• Sales data, purchase order, invoice, returns, service complaints,
etc. are transmitted from retailer to vendor
• ASN (Advance shipping note) is an electronic document received
by the retailer’s computer from a supplier in advance of the
shipment
• This helps in planning the storage, assortment and sales in advance
• Retailers can also exchange information with the vendors on
change in purchase orders, order status, retail prices and
transportation routings through EDI
Modes of Transmitting EDI data
Propriety EDI Systems
• Developed by large retailers for the purpose of exchanging data
with the vendors
• It helps in faster, paperless communication, without any manual
intervention
Intranets
• Buyers can communicate and coordinate with the stores and
distribution centres personnel
Extranets
• It is collaborative network that uses internet technology to link
businesses with their suppliers, customers or other businesses
• These are private and secure and can be accessed by only the
authorized personnel
Advanced EDI Applications
CPFR – Collaboration, Planning, Forecasting and Replenishment
It is an inventory management system in which retailer send
information to a manufacturer and the manufacturer use the data to
construct a computer generated replenishment forecast that is shared
with the retailer before execution
Using CPFR, manufacturer and retailer jointly decide the
replenishment issues
Maruti, Pantaloon, Wal Mart, are doing it with large number of
vendors and suppliers
Retail Information System
RIS anticipates the information needs of retail managers
It collects, organize and stores relevant data on a continuous basis
and directs the flow of information to the proper decision makers
It directs the flow of information to the proper decision makers
In RIS, retailer specifies his objectives and business philosophy,
both of which are influenced by the environmental factors such as
competitors, economy and government
Retail Information System
Retailers philosophy Strategic
Environment
& Objectives Plans
Data collection, analysis •Data Storage & retrieval
Information control centre
& interpretation •Updating of files
Environment
Implementation Feedback
Data-Base Management
It is the procedure used to gather, integrate, apply and store
information related to specific subject areas
It is a key element in RIS and employed with the customer
databases, vendor database, product category databases
Database management involves following steps;
• Plan the database & its components & determine information needs
• Acquire the necessary information
• Retain the information in a usable and accessible formats
• Update the database regularly to reflect changing customer
demographics and recent purchase behaviour
• Analyze the database to determine company strengths and weakness
Data Mining
It involves the in-depth analysis of information so as to gain the
specific insights about customers, product categories, vendors, etc.
It purpose is to determine whether there are opportunities for
marketing efforts that could result in better company performance
Data mining relies on software to search information in a data
warehouse to uncover patterns and relationships among different
factors
Vast amount of data can be quickly searched and consolidated
through software
Universal Product Code (UPC)
In UPC, products are marked with a series of thick and thin vertical
lines representing each items identification code
These lines are read by scanner at the checkout counters
Through UPC, retailers can record information instantly regarding
model, size, colour, date & time of sale, sales person’s name, etc.
The information is also passed on to the master computer server
that keeps track of sales, inventory, customer preferences, etc
Purpose is to improve internal information system for better
merchandise planning and inventory control
Marketing Research Process
It involves the collection and analysis of information related to
specific issues or problems facing the consumers
Series of activities are involved and helps the retailers in
systematically doing the research so as to make better decisions
Each activity is done sequentially and not haphazardly
Sources of secondary data are census data, periodicals, journals,
trade magazines, etc.
Sources of Primary data are : field surveys, observations,
experiments, Simulation, etc.
Marketing Research Process
Define issue or problem to
researched
Examine secondary
data
Generate primary
data
Analyze the data
Make
Implement findings Recommendation