Technology in Retailing

Introduction
Scholars have divided the different technologies that influence retailing into three categories:
infrastructure technologies, communication technologies and interactive technologies.
Infrastructure technologies include, for instance, automobiles, railroads, elevators and electricity.
Communication technologies include, for example, the telephone, television and radio.
Smartphones, e-mail, instant messaging, GPS, social networking, e-commerce, web browsers,
access technologies (e.g. WiFi and broadband) and search technologies (e.g. Google) are
examples of interactive technologies that heavily impact the retail industry.

Technologies used in retailing industry

Before we discuss the various clarifications of technologies, there is the need to provide a
working description of the term technology with reference to this lesson. Our description of
technology is focused on information and communication technologies, which are systems used
for storing, retrieving, processing, and sending information. These systems require both
hardware and software components. Thus, technology are those tools or process that would
enhance the storing, retrieving, processing, and sending of information for the smooth running of
the retail store whether offline or online. This section outlines the current trend in the
technologies that has changed the narrative in retailing

 RFID Tags Radio-frequency identification (RFID)

RFID is a technology that is used for the automatic tracking and identification of objects,
such as pallets, containers, cases or individual items. RFID systems consist of a
microchip with a coiled antenna (the RFID tag) and a reader with an antenna.
Electromagnetic waves are sent out from the reader and connect with the RFID tag
antenna. This creates a magnetic field that powers the microchip in the RFID tag. Then
the RFID tag sends the waves, which were modulated by the microchip, back to the
reader. Afterwards, the reader converts the waves into digital data. This data is used to
identify and locate the object with the RFID tag on it. Besides, the data can contain
additional information, such as price, purchase date and color. Hence, this technology
enables the exchange of information between a computer system and tools, manufactured
goods, containers, transport vehicles and many more objects, which can carry an RFID
tag, without visual contact between the tag and the reader and any human intervention.
RFID tags can store a large amount of unique item information and can be read through
most obstacles and from a distance
 Point-Of-Sale (POS)
POS systems are used to record information about sales. These computerized systems are
based on the bar coding of goods. A specific identifying code number is allocated to
every item that a store has in its product range. There is a unique number for every
variation (e.g. colour and size) of a product. This number, respectively bar code, is placed
on the packaging of an item or directly on the product. At the store’s checkout, the bar
codes are read by a laser scanner. Then the bar code is transmitted to the store controller
(the central computer of the store) that instantly sends the relevant information about the
 product back to the checkout. This information usually contains a description of the
product and its price, which is displayed at the checkout. At the same time, the
information is printed on a till receipt for the customer. Moreover, EPOS systems record
and store all the information about every product that is sold. Hence, these systems
enable retail companies to establish databases and business information systems that help
to manage and monitor promotions, stock control, advertising, which ultimately enhances
the flow of information between or among organization in the retail business.
 Data Mining
Data mining can be defined as the analysis of large amounts of data through the use of
statistical methods. The main purpose of data mining is to reveal patterns in the data sets.
This technology can facilitate decision making and it can be used for the forecasting of
future market trends by providing the relevant data and statistics. Data mining is
important in the retail industry, as this industry produces large amounts of data, which
involve sales, consumption of services and goods and transportation. Moreover, timely
information about market trends, consumption trends and customer requirements is
crucial for the success of a retail company. Hence, data mining is utilized to identify
shopping patterns, customer behaviour and fraud activities in the retail industry.
 Electronic Payment (e-payment)
Electronic payment or e-payment can be defined as payment between individuals or
businesses and banks, public services or businesses that is conducted through an
electronic medium, such as the Internet and other telecommunication networks. This
payment method does not involve the use of traditional checks or cash. Instead, e-
payment uses electronic systems, such as the electronic funds transfer, to transfer money
from one bank account to another. Electronic funds transfer systems use secured
networks to send credit card numbers and electronic checks between companies and
banks. There are four different categories of e-payment systems: Online Electronic Cash
Payment Systems, Smart Card based Electronic Payment Systems, Online Credit Card
Payment Systems and Online Electronic Check Payment Systems. All of these systems
have their own benefits and disadvantages and there are crucial requirements that need to
be fulfilled in order to make the payment systems work properly. These requirements
include cost efficiency, control, traceability, security, acceptability, convenience and
anonymity.
 Electronic commerce (e-commerce).
This technology enables the purchase and comparison of products via the Internet and has
changed the way people shop entirely. Due to the emergence of ecommerce, customers
do not need to visit a physical store anymore when they want to buy products or services.
Instead, they can simply access the online store of the retail company that offers the
desired products or services by using a (mobile) device of their choice, such as a laptop,
tablet, smartphone or personal computer. Hence, customers can shop anytime and from
any location that offers an Internet connection. Furthermore, online shops provide
information about their products so consumers can inform themselves and compare
different offers. Customers are also able to look up additional product information, such
 as details about the manufacturing process of certain goods or the exact origin of an
article.
 Mobile applications (mobile apps)
These are computer programs that can be installed on smartphones and also on tablet
computers (portable PCs). These apps can offer a range of features and functions, such as
completing purchases, sharing and receiving information and comparing offers.
Smartphones and mobile apps can be used for numerous commercial purposes. In the
retail industry, the emergence of mobile apps and smartphones is leading to various
marketing innovations. Customers can use mobile apps, such as Google Shopper and
Amazon’s Price Check, to compare prices by scanning the bar code of an item or by
taking a photo of an article. Furthermore, smartphones and mobile apps can be used to
quickly look up customer reviews and other information about the desired product and to
receive discounts and coupons.
 Quick Response Code (QR code)
QR codes are two-dimensional digital images, which can be placed on the packaging of
products or directly on articles. The QR code can contain information, such as text, geo
coordinates, product information and web-links. Mobile QR code scanner applications,
which can be installed on smartphones, can quickly detect these QR codes by using the
camera of the smartphone. Once detected, the mobile application rapidly displays the
information that is embedded in the QR code. Customers of retail companies can use QR
codes, for example, to receive information about the origin of vegetables or fruits and
additional information, such as cooking recipes. All they have to do is to scan the QR
code on the packaging of the product with their smartphone’s camera.
 Social Media
Social media is not a technology by itself; however, it is closely related to ICT and can
have a significant influence on the retail industry. Social media sites are websites where
people can communicate and interact with each other by sending and receiving messages,
sharing opinions, ideas and news, uploading photographs, joining groups, writing blogs
and posting personal information. Social media has the potential to create considerable
business value, as companies can use it as a new innovative way to interact, communicate
and collaborate with business partners, customers, suppliers and other stakeholders. The
creation of virtual customer environments is enabled through social networks.
 Multichannel Retailing
Multichannel retailing can be described as “the set of activities involved in selling
merchandise or services to consumers through more than one channel” and also claim
that the retail industry is dominated by multichannel retailers. Thus, multichannel
retailing enables customers to interact with retailers via different channels. Besides,
customers visit different retail channels for different reasons and purposes. Retail
customers can, for example, gather information about products online, purchase products
offline in a traditional physical retail store and contact the customer support by using a
telephone
 Mobile global positioning systems(GPS)
This is used for tracking store traffic. The technology helps brands and retailers keep up
to date with wild shifts in shopper behavior during peak and off peak periods.
 Customer Data Integration (CDI).
This keeps a current record of customer information across a business’s platform and
channel. Integrated customer view has proven to improve sales and customer service (as
employee can use the stored date to understand a customer specific concern better. For
example Domino’s Pizza created AnyWare to serve as a single point of tracking orders
from smart watches and uses this information to improve overall business performance.
 Omnichannel Customer Engagement.
Omni channel retailing is an evolution of multichannel retailing and combines all
available channels in order to provide a smooth, unified and seamless customer
experience. All channels of distribution are managed together and there is no division
between the online and physical store, as it is the case with the multichannel approach.
This enables customers to shop at any time and at any place and improves the
convenience, speed and flexibility of the shopping experience. Omnichannel retailing
includes services such as “order online, return to store”, “click and collect”,
“showrooms”, “order in-store, deliver home” and many more combinations of traditional
and online retail activities. This technology enables customer to interact with the retail
business over various channels- online searches, social media, phone calls chars etc
making it difficult for a company to synchronize the channels to get a consistent view of
customers, not to mention tailoring a personalized experience with each other.
 Virtual Fitting Software
This technology allows retailers to create custom-size charts enabling customers to find
sizes and style profiles that best fit the customers’ needs. This technology is especially
beneficial for apparel companies, granting customers’ the ability to try on and purchase
clothing without having to leave the comfort of their homes. Big retailers like Macy’s and
Adidas are taking advantage of it with positive result. According to virtual fitting room
software company Zeekit , their retailer’s return rates by 36%

 In-Store Customer Analytics

This technology allows the business to gather information about the customer behavior
while visiting a storefront, analytics includes noting things like the number of visit per
time of day, the volume of new and returning customers, and how different advertisement
affect customer visit.

 Cloud computing:
This refers to the practice of using a network of remote servers to store, process, and
manage data. This also allows for Inventory tracking, stock availability, shipping details,
and orders are all moving to the cloud. With cloud computing, retailers can cut the cost of
software development and process data at a much faster rate. For example, Hallmark
Cards uses the cloud-based Retail as a Service solution that allows employees check real-
time stock availability, inventory, shipping details, and store orders.

 Internet of things (IoT).

The Internet of Things involves the connection of physical things (e.g. bicycles,
banknotes) to the network of the Internet. Typically, this is done by attaching RFID tags
or embedded sensors to the objects. All parts of the network (also the physical things) are
identifiable and able to exchange information about their surroundings and themselves
 through the use of wireless sensor network technologies. Hence, all objects in the Internet
of Things can communicate and interact with each other and with the network and the
end-user. This enables instantaneous access to data and information about the objects in
the physical world and their environment. Areas where the Internet of Things can be used
commercially include business process management, logistics, automation, industrial
manufacturing, intelligent transportation of goods and people and also retailing. The
Internet of Things enables innovative services and 20 productivity and efficiency
enhancements. ). In the retail industry, the Internet of Things can optimize supply chain
logistics by making the relevant information and data immediately available.

 Augmented reality (AR)

Augmented reality (AR) can be defined as a technology that uses mobile devices, such as
AR glasses and smartphones, to augment elements from real life with additional visual
information. AR devices are able to recognize the environment and can provide important
information about close objects. Augmented reality is also capable of augmenting images
or videos from the real environment with virtual elements, such as images, text, videos
and 3D models, in real time. In order to operate, augmented reality applications require
three main components: a camera, a computing unit and a device that can display the
augmented information. The camera captures the real environment. Almost every camera
that can be connected to a network (e.g. smartphone, USB camera) can be used for
augmented reality applications. Some augmented reality devices, such as AR glasses, do
not require cameras, as they use 3D positioning systems or GPS. The computing unit (e.g.
smartphone, laptop) processes the captured video, spatial acquired information and the
virtual information. At the end of the process, the augmented information can be
displayed on a suitable device, such as a smartphone, laptop, flat screen and AR glasses

Importance of Technology in Retailing

Technology influences both the demand and the supply sides of the retail business. Technology
also influences delivery, which connects the two sides with supply fulfilling the demand. On the
demand side, these technologies create digitized services such as AI-enabled consumer choice
assistance, recommendations, and ecommerce. They also help retailers build delivery capabilities
such as buy online and pick up offline and develop support and payment competencies through
automated customer service, digital payment service, and telemedicine service. Increasingly,
these technologies are delivered through mobile devices and platforms that leverage the growing
use of mobile technology by shoppers for purchase research, purchase execution, and order
tracking. Shoppers spend more time on the mobile than on other media. At three hours and 43
min a day, the average time spent by U.S. individuals on mobile overtook that on TV during
2019

Benefits of technology in retailing:

 POS databases offer a high strategic and tactical potential for retailers, as the collected
data can be analyzed in order to facilitate strategic decision making.
 Data mining can help retail companies to enhance their service quality, use of resources
and distribution strategies. The effect of advertisement (e.g. price discounts for a limited
 period of time) on the turnover of a retailer, for instance, can be analyzed by data mining
tools.
 RFID leads to a decrease in labor costs and shrinkage, improved control, efficiency,
accuracy, security and management and enhanced customer service
 E-payment systems have the following advantages, such as compatibility, simplicity,
privacy, transaction efficiency, anonymity, mobility and convenience. Customers only
need to send the details of their credit cards to the provider of the service if they want to
pay for a service or product. Then the credit card organization completes the payment
 E-Commerce has the potential to enhance the shopping experience of consumers
significantly and to improve convenience for shoppers.
 QR codes can increase the trust of the consumer in the quality of the products that a
retailer offer
 Social media is a powerful marketing channel that can be used for online advertising.
Social media has essential benefits over traditional marketing channels, such as
newspapers or television, as it helps companies to easily reach their desired customer
groups. Facebook, for instance, enables companies to reach the desired target groups with
their online advertisements with just a few clicks. Retail companies can gain a lot of
value by using social media, as it can improve their marketing strategy substantially.
Social networks, such as Facebook and Twitter, enable retailers to learn about the needs
of their customers, so that they can adapt accordingly. The interaction between retail
companies and customers can create insights that were not available before. Hence, most
retail companies have adopted a social media marketing strategy Retail companies can
gain a lot of value by using social media, as it can improve their marketing strategy
substantially. Social networks, such as Facebook and Twitter, enable retailers to learn
about the needs of their customers, so that they can adapt accordingly. The interaction
between retail companies and customers can create insights that were not available
before. Hence, most retail companies have adopted a social media marketing strategy.