1. Module 7: Information Systems in Retail and CRM Software
Retail Management
Module 7: Information Systems in Retail and CRM Software

2. Centralized Data Hubs

3. Methods to Gather Information
Traditional methods:
Observation
Intuition
Interactive methods:
Surveys
Interviews
Focus Groups
Most popular method today: data driven technology!
To run a successful retail business, management must be able to answer questions that only information technology can provide:
Which are our most profitable store locations?
What products are selling best and are the most profitable?
How is our customer base changing its buying pattern?
Is our flow of inventory in line with anticipated sales?

4. Retail Information Systems
What is a retail information system?
Examples of retail information systems:
Point of sale (POS) transactions
Supply chain
Finance HR
CRM
A retail information system is needed to decentralize information platforms and increase ease-of-use.
POS: informs retailers of the details of sales transactions: what item was sold, where the transaction occurred, at what price, what employee performed the sale, and information about the customer making the purchase
Supply chain: tracks the origin of the product even before it arrives at store or warehouse
Finance: provide management with data concerning the organizations profit and loss factors
HR: keeps track of employees: status, title, employment type, salary, address, etc
CRM: tracks customer information

5. Data Warehousing and Data Mining
Data warehouse (DW): A system used for reporting and data analysis, and is considered a core component of business intelligence. DW’s are central repositories of integrated data from one or more disparate sources.
Data mining: The process of discovering patterns in large data sets and involves methods at the intersection of machine learning, statistics, and database systems.
Data warehouses (DW) are created to bring related information from disparate databases to one large database so that it can be easily analyzed.
With the mining of information in the data warehouse, management can gain valuable insights as to how best to run the business. This is usually accomplished through queries and reporting.

6. UPC, RFID, and QR Codes
UPC: The Universal Product Code is a barcode symbology that is widely used in the United States, Canada, United Kingdom, Australia, New Zealand, in Europe and other countries for tracking trade items in stores.
RFID: Radio-frequency identification uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically-stored information.
QR: A quick response code is a matrix barcode made up of dots. Because it is two-dimensional, it can hold substantially more data than one-dimensional barcodes, such as UPC
View video below for further explanation on codes:

7. Supply Chain Management

8. Supply Chains The supply chain is the entire sequence of
activities involved in
taking natural resources
and raw materials and turning them into a product for the consumer
What does it include?
All of the actions, organizations, materials, systems, people, and information involved in that process
By effectively managing supply chains, retailers can realize their sales goals.

9. Flow of Goods
As products are manufactured, they “move” from raw materials or components to finished goods. At some point in that process, RFID or other identification means are implemented to monitor where the product is in its manufacturing lifecycle. The movement through the supply chain process continues when products are aggregated for shipment where they can be tracked during the transportation leg of the supply chain.
Example: Zara is a large international retailer with 6,900 stores in 86 countries. While many large U.S retailers like JC Penney, Sears and Toys ‘R Us are closing stores, Zara is opening an average of 400 new stores a year over the past five years. The key to Zara’s success is their agility due to a finely-tuned supply chain. Incredibly, the company designs, manufactures, and distributes fashion products within 2 weeks from the time they appear on the catwalk. Zara does commit 15-25% of its inventory prior to the design season and fills in another 25% at the start of the season, but an amazing 50% of its clothes are designed and manufactured in season. Zara must closely manages every aspect of the supply chain in order to execute so quickly.

10. Sales and Information Systems
How can a good supply chain management system help to increase profits?
It ensures that the right inventory is in the right place to meet anticipated demand
This serves to maximize sales potential and drive profitability as the retailer’s investment is returned
It helps to drive efficiency throughout the product life cycle, reducing costs and time-to-market
Managers can make better decisions as to who/where are the best sources of supply, how much lead time is needed to ensure on-time delivery, what are the best transportation methods, etc.
Inventory turnover:
The retailer profit model is founded on three basic components: cost of goods, sale price of goods, and inventory turnover
If a product is purchased by the retailer for $10 dollars and sold to the consumer for $20 dollars, the gross margin for one sales transaction would be $10 dollars
Turnover represents how many times that transaction takes place.
If the retailer’s inventory is in the right place at the right time, turnover is increased and more gross margin dollars are generated.

11. Supplier and Retailer Coordination
How can vendors and retailers
coordinate efforts?
Planning sales and
inventory levels
Planning promotions
Sharing real-time sales
data
With cooperative planning, both retailer and vendor will realize not only predictable revenue, but revenue that maximizes profit due to efficiencies and economies of scale
Consumers will also benefit due to the same factors- more product quality due to better sourcing, lower costs due to larger buys, etc.

12. Shopping Data Collection

13. CRM Purpose of CRM systems:
Capture internal data about customers and customer interactions and house these data in a central location
Provide business users with access to customer data in order to inform a variety of customer touch points and interactions
Conduct data analysis and generate insights about how to better meet the needs of target segments and individual customers
Deliver a marketing mix tailored to the needs and interests of these target segments and individual customers
Leading providers of CRM systems:
Salesforce.com
Oracle NetSuite
Microsoft
CRM packages also include sophisticated analytical tools to help marketing and sales analysts examine data and find patterns and correlations that help them better anticipate and address customer needs

14. Customer Database 3 Primary Categories of Information Stored in a CRM
Customer Profiles
Customer Activities
Customer Management
Customer profiles: customer’s names, contact information, birthdays, etc.
Customer activities: purchase history data: what is being purchased, how much is being spent, and how frequently the customer is purchasing
Customer management: allows the retailer to keep track of automated outreach programs, loyalty programs, and cross-marketing ties to other stores and sites

15. Collecting Identifying Information
Retailers have collected identifying information since the business of retail was born
Before modern technology, retailers would rely on their memory to know frequent customers by name and use basic technology such as pen and paper to keep track of their clientele
Today, information can be collected simply by the consumer’s use of smartphones to complete a transaction
What’s next?
Fingerprints are currently being used to authorize smart phone payments in Apple Pay. In Europe, Mastercard is promoting fingerprint, iris and facial recognition to verify identity in its Identity Check services. In China, DNA and blood type samples are being taken in the province of Xinjiang.

16. Privacy Issues Common privacy issues surrounding CRM tools:
Data breaches
Data theft
Personal data being shared
legally without the knowledge
of the customer
Examples:
Target Stores, eBay and TJX have all experienced massive data theft from hackers over the past several years
There is increased speculation that smart home applications such as Alexa and Siri have the ability to listen to our conversations for keywords in order to suggest products and services for sale on connected devices

17. Analyzing the Customer Databse

18. Identifying Best Customers
What does a business “look for” in its customers?
Purchase frequency
Average purchase amount
Lack of returns
Response to survey requests
Positive reviews on survey
Posting positive opinions on social media
What is one to one marketing?
One to one marketing:
One-to-one marketing is a CRM strategy where service is personalized for every customer in order to foster customer loyalty. One-to-one marketing has become even more prevalent with the increase in online shopping. Companies like Netflix, eBay, iTunes and Amazon record every single customer click and categorize every purchase in order to construct a detailed customer profile. With that data, these online retailers are able to construct individual marketing plans for each customer

19. Goals of Data Analysis Market basket analysis gives clues as to what a
customer might have
bought if the idea had
occurred or been
suggested to them
How can this analysis be used?
How market basket analysis is used:
Market basket analysis can be used as a first step in deciding the location and promotion of goods inside a store or on a web page
They could use this data for store layouts to place items optimally with respect to each other, they could use such information for cross-selling, for promotions, for catalog design, and to identify customer segments based on buying patterns
Market basket analysis is a strong tool in the retailers’ arsenal to increase sales using the latest data analysis techniques.

20. Frequent-Shopper and Rewards Programs
Types of rewards programs:
Point system
A purchase amount is equivalent to a number of points
Tiered reward program
Designed to foster long term loyalty
With each designation, customers receive more benefits and perks
Charging customers an annual fee in exchange for VIP treatment
Example of the third type of rewards program:
Amazon Prime would be a good example of this type of customer loyalty program. “Prime” customers pay an annual $99 fee to participate in the program. As Amazon Prime members, customers receive free two-day shipping on millions of products with no minimum purchase required. According to the Consumer Intelligence Research, Prime members spend an average of $1,500 per year on Amazon.com, compared with $625 per year spent by Amazon customers who aren’t Prime members.

21. Customer Retention Techniques
Every day, you are a participant (willingly or unwillingly) in customer retention activities used by retailers and business owners
Examples of these techniques:
Soliciting customer feedback after each interaction with the company to learn ways to improve customer experience
Notifications of upcoming sales events, additional discount offers, cross-marketing campaigns, etc.
Example of Kroger: Grocery retailer Kroger retains customers through a “preferred customer club”. To join, customers must provide their contact information and in turn receive a membership card. With every purchase, customers swipe their card enabling Kroger to record and categorize every transaction. This allows the retailer to offer coupons and promotions for their favorite frequent purchases.

22. Quick Review Methods of gathering information
Data warehousing vs. data mining
Why is it important to understand supply chains?
What are the three aspects of the customer database?
Customer profiles
Customer activities
Customer management
What should you “look for” in a customer?
Methods of retaining customers