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