1. Executive summary
2. Global Village to Global Market
The Information Revolution
An Overview of Retailing
The Competitive Environment
The Expressive Revolution
Retailing in a Market Economy
The Impact of IT
3. The Technologies
Mainframes and Downsizing
Types of Distribution and Client/Server Computing
EPoS: The Key Technology
The Market for EPoS
EPoS: Organizational Impact and Critical Success Factors
Electronic Shelf-Edge Labelling
Wide Area Networks and Satellite Communications
Electronic Funds Transfer
Bar Code Readers and Scanners
Back-office Database Systems
Massively Parallel Processors
Data-mining, Executive Information Systems,
Rule Induction and Neural Nets
Multimedia, CD-Rom and Virtual Reality
4. IT Applications: Drivers of Change
The Transformation of Consumer Demand
The Supply Chain
Merger, Acquisition and Alliance
Management Techniques and Management Information
5. IT Applications: From Support to Strategy
DP to IT
Issues: Outsourcing, Productivity,
and Profiting from Information Systems
[Seven-Eleven Japan Case]
6. The Global Context
The European Union - a Case Study in Globalisation
The Single European Market
Limits to Expansion
The Commission's Work Programme
New Technologies - Who Benefits?
7. Delivering the Goods
The Dissemination of IT
Social and Demographic Change
Retail Environments of the Future
Global Parameters of Trade
The Impact of IT
Chapter One - Executive Summary
Retail operations for the foreseeable future (five to ten years) will be subject to two overarching forces - the globalisation of the market and the need for customer focus. In this respect, retailing is similar to a number of other industries faced with the spread of competition across borders and increased customer-awareness fostered by aggressive competitors.
Globalisation - and the new forms of computer and communications-based retailing which it supports - must be seen within a geopolitical context. The success of retailers in the global market will depend on their ability to think globally and act locally . In many local markets, retailers have to cope with cultural differences, legal or regulatory frameworks, and the growing sophistication of consumers themselves.
The peculiar character of globalisation and customer-focus in retailing is technologically determined. Information technology (IT) has produced trabsaction processing and data communication infrastructures, and analytical and marketing tools, which will not just facilitate but define the forms of globalisation and customer-focus.
Retailing is still very parochial and labour-intensive compared to activities like manufacturing, process industry, and financial serviuces. In the recent past, IT has been used largely to enhance productivity, cut costs or manage the supply chain, but it now provides tools for all aspects of management and marketing. Computer and communications technology gets smaller, cheaper and faster, so that even the smallest retailers can adopt sophisticated solutions and business aids. In large organizations, computers have emerged from centralised data processing departments and - in different guises - become distributed, from desktops to checkouts, and telephones to handheld bar code readers. Communications technology, meanwhile, is following the price-performance lead set by IT, and cheaper, faster networks are beginning to link all these different systems together on a previously unimagined scale.
Expansion is often seen as an all-purpose business strategy, but in retailing - particularly - it requires elaboration. In some markets, simple quantitative growth is harder to achieve than qualiotative readjustment - consumer demand changes its character. Some markets are saturated - driving competitors out of the market may be a more successful tactic than seeking to expand. In some markets, cutting your cost base remains the best tactic for survival. The only constant is that retailers need the information and the information systems to support their tactics and strategy.
New technologies, both hardware and software, will help control the retail organization, communicate with customers, facilitate promotional activity, and administer routine operations. The most important of these technologies (some newer than others) are:
Electronic point-of-sale (EPoS)
Electronic funds transfer (EFT or EFTPoS)
Massively parallel processors,
Electronic data interchange (EDI),
Satellite and wireless communications,
New network infrastructures (for example, structured cabling),
Electronic shelf-edge labelling, and
Many of these technologies are already used to some degree in retail organizations, but taken together or in advanced forms they promise to transform retailing.
IT has traditionally played a support role, directed largely at underpinning the conventional critical success factors, but it is increasingly becoming strategic, generating new business opportunities and shaping new ways of doing business and business processes. It has already allowed direct product pricing (DPP) and category management to change the face of many stores, and now EPoS networks, the single most important technological development in retailing, are enabling targeted marketing and sales promotion through the continuous analysis of sales transactions as they happen. The ultimate goal is "micro-managing" - the control of store operations at shelf and sales counter level, even to focus on identifiable individual customers.
The growth of multiples and the consolidation of the "expressive revolution" have already changed the way IT is viewd by all retailers. They increasingly believe that technology should help win and retain customers in a global market. The old idea of delivering "the right merchandise to the right place at the right time" is being transformed from an article of faith into a programme of action.
While regional, national and even local differences can present obstacles to global expansion, the new technologies, and new environments and means of exchange, are beginning to break down barriers. The emphasis today is on alliances and partnerships to manage cross-border operations effectively, particularly inview of cultural and regulatory considerations. There are different forms of alliance, which may be more-or-less appropriate to different situations. Typically, they are all cemented and enhanced by communications and information systems.
But the adoption of IT is never simple and may prove to be both more expensive and more rewarding than traditional strategic thinking might allow. The transformation of business can take directions which are not necessarily predictable, but which can be unpredictably profitable.
For example, the convergence of IT and telecommunications promises the arrival of the virtual store, combining multimedia computing, high-speed data communications and computer-telephony integration. Retailers may no longer need to be located anywhere - or, rather, they can be located everywhere. They may no longer need to hold any stock - or, rather, they can be thought of as holding unlimited stock. This could overcome the singular problems of culture, language and face-toface interaction, as well as the expense of real estate and inventory management. It will, of course, require a degree of organizational flexibility which only IT can support.
The success of home-shopping TV channels and programmes, the growth of telephone-based retailing, the spread of warehouse clubs, and the increasingly evident cross-border activities of many retailers are pointers to a future which may not be as imminent as IT enthusiasts often make out, but which cannot be indefinitely delayed. However, size or reach alone are not guarantors of success and retailing's recent past has deminstrated that growth may bring as many problems as it solves. Increasingly, retailers must learn to maximise the choice they offer customers, enter partnerships with suppliers (and even with competitors), be prepared to diversify, and adjust their market positioning frequently and rapidly.
Controlling shape-shifting organizations such as the next generation retailer creates serious pressures for traditionally centralised and integrative functions, like IT management. The abilities to delegate control and distribute information are critical to the success of what must be called knowledge-based retailing. Perhaps the most serious obstacle in the way of success is the confusion which IT marketing often engenders and the lack of understanding on the part of general and IT management of how IT can realistically be used to further corporate strategy and how corporate strategy needs to adapt to the changing competitive and technological environments.
-end chapter one-