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Sold on the concept but slow to take it ... Getting facts right on time for actio... Point-of-sale's flying star... |
Sold on the concept but slow to take it upTHE retail industry has trailed other businesses in spending on information technology but forecasts indicate that this will improve dramatically. Right now it spends 1,5% of turnover on information technology, compared with other sectors which spend anything between 1,5% and 7%. "Retailers need to increase their IT spend, which they are starting to do," says Brenda Longe, managing director of BACG. "It's an easy equation to justify IT expenditure to the retail industry - companies that spend money on technology as a rule earn it back in under 12 months." Longe says retailers are spending too little money on technology in a rapidly changing business environment. "There is more competition than ever before in the retail sector and a greater variety of business under one roof. An example is petrol garage forecourts, many of which now act as convenience stores. "Customers are more demanding too, they want lower prices, greater choice and more convenience. Add to that pressure from company shareholders who look for reduced costs and shrinkage and a better bottom line and retailers are forced to make some critical decisions on the run. Technology can help them," says Longe. "The benefits are tangible. For example, the average food retailer in Britain holds around 25 days' worth of stock. The good ones have managed to get that down to 10 days' worth. There are no reliable SA statistics but retailers here probably keep stock for 30-35 days," she says. Obviously there are all sorts of benefits to retailers who manage their stock efficiently. They spend less money on interest and storage, have more working capital and move goods at a higher rate - they have a better bottom line. "Computer technology is central to all of this. Retailers are better informed about all facets of their business. They know what stock they have and where it is. They know what products are selling where and when. Based on this information, retailers can work out the most effective form of distribution and storage," she says. Longe adds that some retailers who do spend money on technology, often spend it inappropriately. "Rolling out a point-of-sale system worth R40-million, for example, may make things quicker at the till, eliminate price-marking and improve reliability. But that shouldn't be the end of it. A whole lot can be done with that data - point-of-sale is just a segment of a much bigger picture. Data that's collated from transactions can be used to establish what products sell where and even assist in space planning in shops. "The only way to own a customer is to know that customer and technology provides many answers. Although the amount of information that is generated can make retailers feel they are drinking out of a fire hydrant, data warehousing systems can take that data and help make sense of it," she says.
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