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Role of IT in Retail Business

In the competitive field of the business environment, information systems and information technology play significant roles in business success. Information technology helps an organization every single day in all of its operations to perform more efficiently.  With the help of information, technology organizations can easily solve their problem and increase their organizational productivity (Laudon & Laudon, 2016).  Because of information technology organizations now can perform their tasks easily and in the quickest time. Most of the organizations in the current business world are maintaining their communication with the help of IT. Here our key focus will be analyzing the role of IT in Retail Business in UK.

Role of IT in Retail Business in UK

Role of IT in Retail Business in UK

Organizations are using different types of networks such as- LAN, MAN, and WAN. Some of the companies are also using Intranet, Extranet, and internet to solve their organizational operation and maintain their daily communication. Sometimes organizations are misusing this technology and share their customer’s information with third-party companies which is not ethical. In the following part of this study, the researcher is going to discuss the role of information technology in a retail business, different types of networks, the significance of the internet and intranet in retail business communication.

Organizational overview of Sainsbury

Sainsbury is the 2nd largest supermarket industry in the United Kingdom after Tesco (The Guardian, 2015). The market share of Sainsbury is nearly 14% of UK retail industry. They sell almost everything that people requires to lead their daily life. Sainsbury has a big supermarket, convenience stores as well as their petrol station. Sainsbury also has its own financial institution so its customers can get a loan and do insurance.  Sainsbury is very successful in their business because they use IT in almost every sector of their business such as- MIS, MKIS, HRIS, and AIS. By efficient use of information technology, Sainsbury achieves competitive advantages in UK retail market (Sainsbury’s Annual report, 2018)

Role of Information Technology (IT) in the retail business

With the development of information technology and information, system organizations can transform their business from local stores to international markets. Due to high competition in the market place organizations are using information technology to develop their organizational productivity. In below researcher is discuss the role of IT in business-

To maintain communication

To maintain the daily communication in the retail industry information technology plays crucial roles. Because IT organizations can easily communicate with their suppliers, customers, employees, etc. Retail companies are using information technology in their recruitment, training, and development and leveraging their employees. Companies are getting information from their suppliers and manufacturer within a second and make an effective business decision.

Example: some of the common communication media such as- Skype, Imo, Zoom uses by the organization to arrange meetings online and gives instructions to their employees who work from the remote. Organizations are using email to maintain their daily communication with their stakeholders. IT helps the organization to connect with their international suppliers and customers.

Information technology stores important information about the organization

Information management is possible only because of information technology because it helps the organization to store, preserve, and maintain organizational valuable information. IT keeps all the relevant information such as- financial data, employee records, business transactions in their system and stores it for future use which helps companies to make important business decisions.

Decrease the operational costs

Information technology helps an organization to reduce the operational costs for a long period of time. Usually, when an organization installs IT, in the beginning, it is expensive to process but in the long run, it is very cost-effective.

For example: Provides employee training online is a great example of IT application in the organization. It develops their training programs decrease the training costs, saves organizational time and employee can get training from the remote area.

Helps in organizational strategic thinking:

One of the most important aspects of information technology is it helps an organization to store data, assemble data, interpret data, and transfer information which helps the organization to make its strategic decision making. In the current world the company who are developed in their information technology they can achieve a competitive edge in the market place.

Ethical and social factors of using information technologies in an organization

In general, IT brings positive changes in the organizational activities it makes the organizational activities easy and smooth but if anyone does not use it effectively it can be a cause of problems.

There are many ethical issues arise in current times because of misusing the IT facilities among them the most common problems are stealing personal information. Sometimes because lack of IT skills hackers hack the customer’s personal and financial information from the company database and they use that information for their gain which is very unethical. The organization must keep their customers’ data safe and secure (Bynum, T. W. 2008).

Organizations also store their employee’s information in their own database there are many cases sometimes some unethical employees leak that information to a third party for their own benefit which is totally unacceptable.

There are some social issues also related to information technology among them the most common things are cyberbullying. Because of IT, people can easily attack other people personally on different social network sites. Another most common problems are identity theft some unethical people are using different names and identities for their own purposes.

Different types of networking technology:

Organizations are using different types of networking technologies to maintain their communication. It is difficult to find out the differences between different types of computer networks. The size of the computer network can be identifying by the geographic area they cover and how many computers is connected with the network. Some of the common networks seen in the organization are-

  • LAN (local area network)
  • MAN (Metropolitan area network)
  • WAN (Wide area network)

LAN:

Local area network or LAN is used for small space for example offices, manufacturing factories, small stores, etc. The main reason people prefer to use it because it can be designed easily and troubleshoot the problem easily. Computers and main workstations are connected to each other with LAN technology. Organizations use various kinds of topologies for their LAN connection such as- Star, Ring, Tree, and Bus. The organization can share their information through LAN connection, using one printer for all office computers is only possible because of LAN connection (William, S. 2014).

MAN:

MAN (metropolitan area network) was introduced in the business world in 1980 usually it is a larger version of a local area network. This network covers the whole city. MAN is connected with many different LANS with a fiber cable. MAN is usually used in small private limited companies. MAN is usually covering the whole towns (within 50 KM).

WAN:

WAN means wide area network is a type of network used by the organization to cover the whole country or a big state. Creating and maintain a wide area network is quite complicated and the organization uses PSTN / satellite links to manage its network connection (William, S. 2014).

Example: Most of the big organizations are using the WAN connection to manage their information such as- employee portal, cash management software, and providing training to their employees, etc.

 Importance of intranet and internet in the organization

Intranet and internet bring revolutionary changes in the organizational communication channels. Because these two organizations can easily communicate with their stakeholders and their partner organization.

Intranet:

An intranet is a private networking system that is used by large organizations to maintain their communication with their different branches. In an intranet, most of the organization store different types of information that is useful for their staff and they can use to complete their tasks (William, S. 2014). An intranet is a very secure system because only authorized persons can access the organizational intranet server. The organization started this technology from 1994 organizations are using LAN (local area network) and WAN (wide area network) technology to set up their intranet system in their organization.

Importance of intranet:
  • Intranet provides all the relevant information to their employees and business partners which increase the workforce productivity in the organization;
  • Intranet helps an organization to manage internal communication between different departments and different branches;
  • Communication through the intranet is very hast and cheap;
  • Can promote a good corporate culture because every individual can get the same information;

Internet:

Internet is a public network that the organization can use for many purposes. In modern business, world organizations cannot think of their business a single day without the internet. Most organizations are using the internet to advertise their products and services, develop their brand image. Organizations also sell their products using the internet which is known as e-commerce. There are many organizations that provide customer service through the internet (Katz, J.E., et al., 2001).

The organization develops its MIS (management information system), HRIS (human resource information system) with the help of the internet. The Internet helps an organization to communicate with its suppliers and manufacturer easily and in a less expensive way. Now a day organization can send e-mail to their customers, suppliers and other people to manage their communication and all of this is possible only because on the internet.

Analysis and discussion of the chosen retail organization’s information technology

Role of Information technology in Sainsbury

Sainsbury is the 2nd largest retail supermarket in UK and they are market leaders in UK supermarket industry because of their good IT team. Their IT team is very efficient and because of this, they can do their organizational activities easily and effectively. Sainsbury’s use IT in almost all of their activities which are discussed in detail below-

Product bar code and inventory management system:

Sainsbury uses product bar code it means every single item has a unique bar code and when people go to the till people just scan the item and the price comes automatically so the colleague does not need to know anything or need to enter anything manually which saves a lot of time for organization and customers.

The barcoding system not only just tells the price it also sends the sales information to the inventory management system and it helps an organization to know what is their stock level and how many new stocks need to order which makes the whole supply chain process effective and less expensive.

RSS:

There is a method called RSS that used by the Sainsbury in their store it gives all the delivery and stocks update. In this method when the manager scans any products with RSS it tells the previous delivery quantity, time as well as future delivery date and quantity which helps Sainsbury to make their order effectively.

EDI:

Sainsbury POS system is also connected with their supplier’s network so suppliers can know the sales amount and send the new delivery to the stores.

Online sales:

Sainsbury also sells its product online and online selling is increasing day by day it is only possible because of information technology.

Employee loyalty schemes:

Sainsbury has its own loyalty card called Sainsbury’s nectar card they give points to their repeat customers. Because IT Sainsbury can know their customer’s shopping preferences and shopping frequency which helps them to make their important product decision.

Information system used by HSBC to manage their operation

Management Information System:

The management information system is the information system that helps an organization to store their data, process their data, and create meaningful information that helps an organization to make its operational and strategic decisions (Shajahan, S. & Priyadharshini, R. 2004).  In Sainsbury, their MIS department gathers all the relevant information, store it in the system, and produce an important information top management can use to make the right organizational decisions.

  • Top management of Sainsbury collects all their required data from their MIS and make important decisions;
  • Management information system stores all the information such as- employee record, a sales record, comparative sales figure, future projected sales amount. Sainsbury can easily communicate with their suppliers, customers, and other parties by using their management information system network;
  • Sainsbury also stores all their sales transaction record in their MIS system and they also keep the backup files so management can use this information at any time just a click of a mouse;

Marketing information system (MKIS)

Sainsbury also developed its own MKIS (marketing information system) which helps Sainsbury’s marketing team to make better marketing decisions.

According to Robert, R. (2013), MKIS is a system that helps an organization to collect information, saved information for later use, analyze those data, and provide the marketing managers to help them to design their promotional strategy.  Sainsbury collects its customers’ buying habits, frequency of their buying products and brands, seasonal sales, promotional offers, etc. Most of the cases Sainsbury collects information though their market survey, online survey and also collects information through their nectar card.  On the basis of this information, Sainsbury keeps products in their stores, design their promotional activities, and advertise their products which can attract a large number of customers towards Sainsbury and increase their sales.

The different network used in Sainsbury

There are different types of network system used in Sainsbury which are-

LAN: Local area connection is the most popular method that is used by Sainsbury to share files, information, and communication purposes. In most of the stores, Sainsbury connected all of their PCs under one workstation and share information easily. The most important reason they use LAN technology because they can easily send data and data transmission speed is very high.

E-mail: E-mail is the most popular method that Sainsbury uses to communicate with its suppliers, customers, and employees. Email communication is less expensive, faster, and most effective.

Telephone: The telephone is also used in every store in Sainsbury as a purpose of communication. The telephone allows Sainsbury to call instantly whoever they want which is easy but expensive than the e-mail.

 Ethical and social issues related to the IT department of Sainsbury

Ethics helps an organization to differentiate between right and wrong. Sainsbury also follows the right course of action to manage its customer’s information. Some of the cases hackers hack the customer’s information from Sainsbury’s database and because of this people blame Sainsbury but the true story is Sainsbury tries their best to keep their customer’s data safe and secure.

Importance of internet intranet

Sainsbury uses the internet to increase their sales. Internet connection is very important for Sainsbury because it helps the Sainsbury management team to collect important information about the UK retail market, their suppliers, different products, and services. That information helps their management people to set their business strategy to achieve their market objectives.  Sainsbury also advertises their products in online and sells their products in online which increase their sales figures. Sainsbury provides customer service to its customers online which is very effective and they can give 24/7.

Conclusion

Information technology brings big changes to the retail business. Organizations are using in every department to increase their efficiency level. In the above report, researchers use Sainsbury as a case organization and they use IT to manage their employee’s information, they use IT in employee recruitment, training, etc. Sainsbury also sells its products online and their online sales are increasing day by day. Sainsbury is successful in UK market because they provide better customer service and their strong marketing strategy and in their customer services and marketing, they use IT.

References

Shajahan, S. & Priyadharshini, R. (2004), ‘Management information system’, New page international

Robert, R. (2013), ‘Marketing information systems’, Encyclopedia of the information system, Vol.3, No. 1

William, S. (2014), ‘Computer networking with internet protocols and technology’, Pearson education international

Bynum, T. W. (2008), ‘Norbert Wiener and the Rise of Information Ethics’, Information Technology and Moral Philosophy, Cambridge University Press

LaMee, James A. (2002), ‘Intranets and special libraries: Making the most of in house communications’, University of South Carolina

The Guardian, (2015), ‘Sainsbury’s becomes UK’s 2nd biggest supermarket’: https://www.theguardian.com/business/2015/jul/28/sainsburys-becomes-uks-second-biggest-supermarket (Access: 22/06/2019)

Sainsbury’s annual report, (2015): https://www.about.sainsburys.co.uk/~/media/Files/S/Sainsburys/documents/reports-and-presentations/2018/sainsburys-ar-2018-financial-statements.pdf

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