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Retailing

You may make many purchases online in order to benefit from greater convenience or lower prices, but you will likely set foot in a brick-and-mortar retail store at least occasionally, and you may have noticed some changes brought by technology. A few decades ago, large retail chains started introducing computerized point-of-sale inventory systems consisting of checkout computers and an inventory control system. A simple bar code scan captures a sale, and the item is automatically deducted from the store’s inventory, allowing real-time tracking of purchases so that the retailer knows when to reorder merchandise or restock shelves. In addition to a speedier checkout process, such systems help to reduce stockouts, increasing customer satisfaction. In many grocery stores, this system has been taken a step further, allowing the customers to conduct the checkout process themselves, saving time and labor costs. In Switzerland, grocery retailer Migros introduced a system that allows customers to scan items as they are placed into the shopping cart. At the checkout counter, all the customer has to do is swipe a credit card.
In the near future, many items may be equipped with radio frequency identification (RFID) tags (see Chapter 8), eliminating the need to scan each individual item, so that the total price for a cart full of merchandise can be calculated within a second, saving even more time and adding convenience for the customer. Imagine the time you’ll save when all you have to do is pass with your cart through an RFID reader and swipe your credit card.
Payment systems are also changing. A new “Pay by Fingerprint” system allows customers to complete a purchase by placing a finger onto a fingerprint scanner without the need to sign a sales slip or enter a personal identification number (PIN); this makes the checkout process extremely convenient and secure. Another innovative way to pay for a purchase is via mobile phone. Using a technology called near-field communication (NFC; similar to Bluetooth), the customer’s mobile phone communicates with the retailer’s payment terminal, and the payment amount is automatically debited from the customer’s bank account. NFC-based payment systems have already begun to be implemented; major smartphone manufacturers such as Samsung, Nokia, Motorola, and HTC actively support this new technology by integrating it into new handsets.
Further, many brick-and-mortar retailers have had to respond to the phenomenon of showrooming, in which, as discussed earlier, customers examine products in person at a store and then leave to order the same product online for less. Retailers invest billions to build and maintain their storefronts, and online retailers can often undercut physical stores’ prices; when a customer takes advantage of this, the brick-andmortar retailer cannot recoup the cost of the storefront. Some retailers like Best Buy and Target are embracing this trend, however, by encouraging consumers to browse their shelves and compare prices online. By providing perks such as superior, personal customer service and instituting price-matching policies, these retailers prevent loss of customers due to price while benefiting by selling additional products. Other new and exciting in-store technologies include smart fitting rooms that use augmented reality technology to show how an item would look when worn or suggest complementary items. Finally, retail stores are increasingly using Bluetooth-enabled sales beacons to provide customers with real-time promotional offers.
As you can see, information systems have had a huge impact on retailing, and many more changes are yet to hit the shelves.

1. How can technology help brick-and-mortar retailers compete against e-tailers?

2. Privacy advocates criticize the use of RFID, as it allows better tracking of purchasing habits. How can brick-andmortar retailers alleviate these concerns?

3. As you have read, part of the “human element” in retailing is being replaced by technology. How can brick-and-mortar stores avoid becoming too “sterile” when using information systems to compete against e-tailers?