The Role of Information Technology in Shaping the Future of Retail - Case Study Example

The Role of Information Technology in Shaping the Future of Retail of the Executive Summary The future of business looks challenging and the best word to describe the scenario is ‘uncertain’. Change has always been a constant phenomenon in the business world, yet in the last few decades, it has been hit with unprecedented challenges, speed and intensity. Moreover, the forces shaping the world of business are complex, immense, challenging and surprising. More than ever, the prosperity, an individual’s, societies and organizations rely on the level to which business houses can adapt to the given changes and deploy them in creating advantages for the firm. In the current economic backdrop, companies are remaining highly tempted in focusing on fast changing and immediate events. However, one cannot afford to ignore the long term trends if wants to position themselves as a market leader. In-depth analysis of the market has shown that there are various forces that will continue to impact the business environments even in the future. This report has tried to analyze the impact of IT (information technology) in shaping the future of retail business. It has been observed that the dependence on IT by the retail industry will increase to a great extent. However, the study has also made it obvious that along with the need of development, ensuring sustainability of the business for a long period of time in the market will be a key factor in integrating technology in the retail segment. Furthermore, another key finding was that IT has the scope to enhance inventory visibility, queue management, database management, sales record and relationship management, etc. From an overall point of view the study suggests that IT has the ability to develop retail segment in the future. Introduction The robust development of technology has helped businesses expand and grow in various forms (Katkov, 1993). Technology has literally become a necessity for every business. With the passage of time, the world of business is leaning more and more towards technology, thereby making it practically impossible to segregate technology and business. Innovation breeds a business and technology is responsible for paving its way. Hence, business requires technology for the purpose of sustaining in the marketplace for a longer period of time (Jones, 2004). The existence of business can be traced back during the beginning of civilization. Even though it has begun with the simple barter system but the drive to embrace growth always remained strong among the business houses. Likewise, it is obvious that business would not be the same as it is today. All the major sectors will undergo radical changes and new business forms will appear. In the process of this transformation, the fundamental role will be played by technology. A number of industry experts have emphasized on the fact that if technology is taken out of business, various sectors will literally become void or non-existent (ONeill, 2010). For example, one cannot think of telecom sector without technology. However, nowadays this dependence on technology is being seen in almost every business sector and as per the trends the dependence will increase in the future. Studies have shown that the application of technology in business has led to robust growth in trade and commerce (Stead & Stead, 1994). Even the models and concepts of business have been revolutionized with the integration of technology with business. One of the key reasons is that technology has provided businesses with a new and better approach of doing a business. It endowed business with more convenient, faster and more efficient mechanism of performing the business operation and transaction. Some of the common activities of a business that are carried out through the help of technology are management information systems, accounting systems, point of sales systems and communication management. Hence, irrespective of the size of business or the nature of business, the application of technology has been prevalent (Suran, 2002). It seems that the dependence on information technology by retailing business is a matter of discussion among the masses as the level of integration and application of new technology is increasing every day. Hence, in this report, the role of technology in shaping the future of the retail industry will be evaluated. The report will be structured in a simplistic manner so as to ensure readers to not find much difficulty in exploring the topic of discussion. The introduction section will be followed by in-depth analysis of the trend and scenario that might develop in the future. After that the opportunities pertaining to how IT can shape the future of retail business will be discussed. Lastly, on the basis of that a conclusion to the study will be drawn. Trend Analysis & Scenario Development The retail industry is dubbed as one of the dynamic sectors and functions at a complex nexus between design, property, technology trend and logistics (Gibson & Barsade, 2003). The current context of retailing is shifting at a rapid rate and is extremely challenging. Increased commoditizations coupled with market saturation are the two biggest challenges that retailing companies will be experiencing in the future. Retailing companies are literally found fighting with multi-channel strategies so as to drive sales even in the phases of stagnant economic growth and challenging periods. In addition, retailers are under immense pressure from the government so as to comply with the social and environmental impacts of their operational activity (Taylor & Cooper, 2007). The future of retail is expected to get affected by a myriad of trends, variables and factors. Sudden shifts in the external business environment or step changes can dramatically impact the retail segment of business. The proliferation of smart phones and migration of channels from m-commerce and e-commerce are the two examples of such unruly factors (Palevich, 2012). Looking forward to this trend, contactless payment is the possible ‘next big thing’ to be taking place in the retail sector. Although, contactless payment has become predominant in many places of the world, the essence will spread across the world in the years to come. The trends clearly show that in each of these factors information technology will be spearheading the growth process. A number of scholars have therefore accentuated that IT will be the game changer for this segment (Babbie, 2012). The study has considered the analysis of future trends of retail sector and how it is being influenced by technology. As a result of that it is imperative to carry out a detailed PESTEL analysis for the future in order to get deeper insights about the sector as well as the subject of discussion. A detailed analysis is carried out below: - Political Factors: - The retailing sector is globally recognized as a prestigious sector aiding the process of comprehensive economic development and is therefore the political pressure on this industry is likely to remain low or negligible in the years to come. However, trade regulation might come into play and can hinder certain business operations and marketing activities (Ulrich, Eppinger, & Goyal, 2009). The governments of the respective countries are changing the demographics of the street market and trying to give them a more contemporary look. This reflects the intention of the governments to modernize the retailing segment. In fact many of the markets have now been converted into supermarkets. Hence, the political scenario is likely to remain favorable towards this sector and technological support will continue. Economic Factors: -The economic factors are obvious to play significant roles in shaping the future of the retail industry. The economy will impact both consumer spending and technology integration. The world is passing through a series of recession and as one crisis dilutes the other another one emerges from the scratch. The Dubai crisis, euro zone crisis and the great global depression are some of the examples. Hence, this segment is likely to affect the industry in the future. Social Factors: - Globally, the consumer purchasing trend is shifting. As a result of that consumer convenience has been at the top of the agenda list of the corporate houses. Similarly, demographic shifts and behavioral change have been evident in the retail segment. They are considering an online purchase more convenient than physical mode thereby reflecting the requirement of integrating technology (Haveman, Russo, & Meyer, 2001). Technological Factors: - Technological factors will be the key for this sector to embrace development in the future. Innovation and further development of technology is expected to take the industry to new levels. For example, implementation of new IT capabilities can satisfy the market treads as well as the customer requirements. Environmental factors: - The environmental factors of retail industry are characterized by waste items and recycling matters. These factors have severe impact on the environment. Pressure from the international agencies to control pollution will obviously increase in the future. Hence, in this context technology can really shape the industry outlook by reducing and mitigating the risks associated with the aforementioned factors. Legal Factors: - It is expected that governmental legislations and policies will undergo changes in the years to come and that can have a direct impact on the retail sector. One of the likely changes as per the trends is monopoly control, buyer power reduction and limiting the entry of new players. Future Shaping Opportunity In this section, the opportunities of information technology in shaping the future of retail will be identified. Some of the key trends identified in the last section and on the basis of which the future shaping opportunities are identified are as follows: - Some of the key trends pertaining to the role of information technology in shaping the future of retailing industry in this respect are as follows: - The ever rising economic and political dominance of the emerging markets will lead global companies to consider rethinking and customization of the corporate strategies which are presently being employed by the firms (King & Anderson, 2002). The change in climate will remain in the top position in the agenda list of the firms. Companies always seek to explore the resources to the highest possible level for the sake of improving the top line and bottom line of the firm. In the context of private sector, the role of government will become more prominent. The survey has shown that government will be regulating these industries on its own. Lastly, it has been observed that the role of financial scenario of a country will continue to affect the business operation. Information technology has huge scope and if properly utilized can do wonders for a firm. One of the key reasons for this is customer as well as the business houses have become highly technology dependent. This has led to increasing use of information technology. The following are the opportunities of information technology for the future: - Implementation of technology can act as the means of driving consumers in the future. Without convenience customers are not likely to explore an option. The development of online stores in the form of design, more flexible payment options and product presentation is possible with the aid of technology. Major changes are required in POS system as per the trends; in this context IT has the scope to enhance inventory visibility, queue management, database management, sales record and relationship management etc. Green business is another major factor which will become predominant in the next 5-10 years and IT in this context can be really helpful. Conclusion The study was initiated with the aim of underpinning a plausible scenario of the future pertaining to the function of information technology in shaping the business of retailing. It should be noted that while analyzing the subject, any specific retail industry was not considered nor any specific market, rather general retail sector and global perspective were considered. The study revealed that the retail sector will continue to merge technology with its business operation for the sole purpose of embracing overall development. The study has shown that information technology has the opportunity to make the comprehensive development of this industry. Hence, on the basis of the findings, it can be concluded that information technology has huge scope and has the ability to positively impact and shape the future of the retail industry. References Babbie, E. R. (2012). The Practice of social research. Connecticut: Cengage Learning. Bosomworth. (2013). Mobile Marketing Statistics 2013. Retrieved from http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/. Gibson, D. E., & Barsade, S. G. (2003). Managing organizational culture change: The case of long-term care. Journal of Social Work in Long-Term Care, 2(1/2), 11-34. Haveman, H. A., Russo, M. V., & Meyer, A. D. (2001). Organizational environments in flux: The impact for regulatory punctuations on organizational domains, CEO succession, and performance. Organization Science, 12, 253-273. Informationbuilders. (2013). Business intelligence, data integrity, and integration solutions for retail. Retrieved from http://www.informationbuilders.com/solutions/retail. Jones, G. R. (2004). Organization theory, design, and change. New York: Addison-Wesley Publishing Company. Katkov, A. L. (1993). Organizational change management in Russia. Journal of Organizational Change Management, 6(2), 51-52. King, N., & Anderson, N. (2002). Managing innovation and change: A critical guide for organizations. London: Thomson. ONeill, M. J. (2010). Measuring workplace performance (2nd ed.). Florida: CRC Press. Palevich, R. (2012). The lean sustainable supply chain: How to create a green infrastructure with lean technologies. New Jersey: Pearson Education Inc. Stead, W. E., & Stead, J. G. (1994). Can humankind change the economic myth? Paradigm shifts necessary for ecologically sustainable business. Journal of Organizational Change Management, 4(4), 15-31. Suran, S. (2002). How to implement change effectively. Journal of Corporate Accounting & Finance, 14(2), 31-37. Taylor, H., & Cooper, C. L. (2007). Organisational change — threat or challenge? The role of individual differences in the management of stress. Journal of Organizational Change Management, 1(1), 68-80. Ulrich, K., Eppinger, S. D., & Goyal, A. (2009). Product design and development. New Jersey: McGraw-Hill Education. Appendices Figure 1 – Application of IT in Retail (Source: Informationbuilders, 2013) Figure 2 – Technology in Retail: Statistics 2013 (Source: Bosomworth, 2013) Read More