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Group : Valeria Antonio-Policarpo Maria Grant Lashanda Gray Bonnie Johnson Marie Johnson Hisham Khalafalla John Mascaritolo EBA 612 – Issues in Cotemporary Business Professor Dr. James Coleman April 8, 2006. Retail Industry Review Use of Store Automation. Final Strategy.

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retail industry review use of store automation

Group:

Valeria Antonio-Policarpo

Maria Grant

Lashanda Gray

Bonnie Johnson

Marie Johnson

Hisham Khalafalla

John Mascaritolo

EBA 612 – Issues in Cotemporary Business

Professor Dr. James Coleman

April 8, 2006

Retail Industry ReviewUse of Store Automation

Final Strategy

problem statement
Problem Statement

The problem in the retail industry as it relates to technology is that the industry, in total, is not consistently taking full advantage of the technology that has been available.

key issues
Key Issues
  • Scanning technology in the retail store level is at a mature stage
  • Use of technology for retail companies is limited with most companies only concentrating on store level technology (e.g. self checkout)
  • Companies do not want to advance to the next level of technology because:
    • They are unaware of what they could gain from new technology
    • Implementing new technology is costly
    • Many stores can’t afford the capital required
    • If the companies can afford it, they cannot justify the ROI
  • Companies tend to adopt a “wait and see” approach to make sure that the technology they choose is the right one
wal mart having the right product at the right place at right time and at the right price
Wal-Mart “Having the right product, at the right place, at right time, and at the right price.”
  • Effective adaptor of leading edge technology
  • Utilizes scanning technology at the store point of sale (POS) level for both assisted and unassisted check out process
  • Effective user of data warehousing technology
  • Driving force for RFID implementation
slide6
Wal-Mart 5-Year Strategy“Having the right product, at the right place, at right time, and at the right price.”
  • Wal-Mart, which is a global company, is in a prime position to capitalize and propel the store automation technology forward
  • To stay competitive and a market leader, our proposed 5-year strategy focuses on total store automation to achieve the following results:
      • Increase profitability by
        • Improving forecasting capabilities
        • Increasing inventory turns
        • Selling what customers really want
        • Improving overall product margins
      • Improve efficiency within the store by honing in on product placement and store layout
      • Create a customer friendly atmosphere
      • Maintain being a low cost provider
steps to achieve the strategy

Source: www.ncr.com

Steps to Achieve the Strategy
  • Expand POS scanning and self-checkout using barcodes, financial transactions electronically (Check 21,debit and credit cards)
  • Implement electronic shelf labels
  • In parallel to #1 and #2, implement store-wide scanning capabilities
  • Place RFID tags on all products
  • Utilize Next generation of the shelf labels which will be smart shelf technology.
  • Enhance customers experience by implementing Information Terminals, Personal Shopping Assistants (PSA), intelligent scales, and electronic advertising displays.
  • What else is possible? Use smart shelf technology at home - refrigerators, cabinets, etc. Products are maintained for freshness and quality. Shopping list transmitted to grocery store.
strategy extension
Strategy Extension
  • Rapidly Developing Country – BRAZIL
  • Lesser Developed Country - SUDAN
retail industry wal mart strategy for brazil about brazil
Retail Industry – Wal-MartStrategy for Brazil – About Brazil
  • Largest and most populous country in South America
    • Area: total: 8,511,965 sq km; land: 8,456,510 sq km ; water: 55,455 sq km.
    • Population: 186,112,794; Growth rate: 1.06%
  • With its vast natural resources and a large labor pool, it is today South America\'s leading economic power and a regional leader (2005 est.):
    • GDP:1.58 trillion
    • GDP per capita: 8, 500
    • GDP real growth rate: 2.6%
    • GDP Services Sector: 50.6%
  • Brazil is the 8th world economy
  • Communications:
    • Telephone System: good working system
    • Telephone – Main Lines in Use: 38.81 million (2002)
    • Internet Users: 14.3 million (2002)
  • Other Facts:
    • Highly unequal income distribution remains a critical problem
    • Protective Labor Laws; strongly unionized
    • Population culturally values ‘Being Served’, ‘taking advantage’, ‘Brazilian Way (Jeitinho Brasileiro)’
retail industry wal mart strategy for brazil
Retail Industry – Wal-MartStrategy for Brazil
  • Wal-Mart in Brazil
    • Strong Competition with French Carrefour and other Brazilian grocery stores
    • Low-income Customer Base (low and middle class)
    • Low quality, not top-brand products
    • Relatively low prices
  • Wal-Mart Altered Strategy
    • Implement the technologies related to warehouse/store management in Wal-Mart stores (RFID, electronic shelf labels, etc ) with the following exceptions:
        • Self-Checkouts:
          • Culturally, Brazilians, specially the high class, prefer to be served. Self-checkouts may take time to be well-embraced
          • Additionally, labor laws and unions would not allow this to happen, as jobs would be lost
        • Personal shopping assistant (PSA): Consumer-base may feel scared by technology
        • Check21: not applicable in Brazil. Issues with fraud; integration of grocery stores to bank; informal use of “pre-dated checks”
    • Take advantage of economies of scale and have similar quality products as the US in the Brazilian stores.
retail industry wal mart strategy for sudan about sudan
Retail Industry – Wal-MartStrategy for Sudan – About Sudan
  • Largest country in Africa.
    • total: 2,505,810 sq km; water: 129,810 sq km.
    • Population: 40,187,486
  • Coalition government run by an alliance of the National Congress Party (NCP) and the Sudan People\'s Liberation Movement (SPLM) .
  • Sudan has turned its struggling economy with good infrastructure investments and sounding policies (most promising economy in Africa today)
    • GDP:$85.46 billion
    • GDP per capita: 2,000
    • GDP real growth rate: 8.6%
    • GDP Agriculture Sector: 80%
  • Sudan has turned its struggling economy with good infrastructure investments and sounding policies
  • First in 1999, Sudan began exporting crude oil and in the last quarter of 1999 recorded its first trade surplus
  • Much of the population remains at or below the poverty line for years (Chronic instability, adverse weather, and weak world agriculture prices)
retail industry wal mart strategy for sudan
Retail Industry – Wal-MartStrategy for Sudan
  • Wal-Mart in Sudan
    • Strong Competition from small/local retail and grocery stores. Will be first store in the Country
    • Many below poverty line
    • Growing middle class; Great and promising potential
    • Relatively low prices
  • Issues
    • American company needs to be well received ( Create a good image)
    • Address Labor issues, and work with Government and Regulations
  • Wal-Mart Altered Strategy
    • Implement basic needed technologies related to warehouse/store management to the conventional Wal-Mart stores to the extend that it will help store manageability (3 years period)
    • Implement the technologies related to warehouse/store management to the conventional Wal-Mart stores (RFID, electronic shelf labels) to the extend that it will improve efficiencies (after third year)
    • Create a good image, Wal-Mart first store must be promoted as a company that will create many new jobs and provide affordable goods to the mass
      • Points to be Considered:
        • Self-Checkouts:
          • Educate people on how to use them
          • Show that cost savings will be passed on to the people
        • Credit cards: Not widely used In Sudan. System must be able to handle cash effectively
    • Regional expansion plans
strategy financials
Strategy Financials
  • Efficient Consumer Response (ECR)
  • ROI Assessment
efficient consumer response ecr
Strategy which focuses on the total grocery system instead of individual components. Goal is to reduce costs while improving consumer’s choice of high quality products.

Efficient Store Assortment

Efficient Replenishment

Efficient Promotion

Efficient Product Introduction

Efficient Consumer Response (ECR)
efficient consumer response ecr15
Efficient Consumer Response (ECR)
  • Four basic strategies:
    • Efficient store assortment – Focus on a limited number of broad product categories instead of many individual products (Space utilization improved)
    • Efficient replenishment – Attempts to improve inventory control and ordering processes through automation (Electronic Data Interchange (EDI) utilized)
    • Efficient promotion – Change a selling strategy commonly used in the food industry. Promoting a product to offer lower pricing for steady stream of purchasing of product.
    • Efficient product introduction- Effort to reduce unnecessary costs associated with the introduction of new products that eventually fail by concentrating on “Preferred Shopper” buying habits.
retail industry store automation
Retail IndustryStore Automation
  • Store design and product access will be affected in a positive way. The front of the house components will be powered by technology that was previously used in the back of the house.
  • The store of the future will entail the following technology:
    • Wireless Networking: Already a prominent reality in commerce and consumer locations, wireless network provides the engine for the future of retailing. Some technologies which will be effected by wireless networking are as follows:
      • Personal Digital Assistant (PDA)- this will increase communication and information access regardless of location for the store employee
      • Components will allow the communication to the main database wirelessly as well as in a wired network fashion
      • Manager’s Dashboard- using this application, store managers can view all pertinent information regarding, store sales, product movement and consumer habits

video

Manager’s Dashboard

Source: www.futurestore.org

retail industry store automation20

Source: www.ncr.com

Retail IndustryStore Automation
  • Radio Frequency Identification (RFID) will be a backbone in the future of retailing. This contact-free technology does everything from inventory control, customer monitoring, to seamless cashier checkout.
  • RFID also quality assurance because product’s age is being monitored.
  • Enhancements to store design and layout using RFID will feature innovations such as the following:
    • Personal Shopping Assistant (PSA) – trolleys are equipped with terminals which are akin to a portable computer. The PSA is used to track purchases, display special offers and makes checkouts faster because items have already been scanned.
    • The PSA is handed to the cashier for closeout. When used in conjunction with a Future card, the PSA provides a personalized shopping experience for the consumer.

Source: www.futurestore.org

video

Source: www.futurestore.org

retail industry store automation21
Retail IndustryStore Automation
  • Smart Shelves-monitors inventory levels and displays relevant advertisements to the consumers. Electronic price labels provides timely and reliable pricing to the consumer and products.

Source: www.futurestore.org

  • Intelligent scales- camera recognizes product and prints appropriate label. This can also be used to assign scales to the appropriate employee for credit.

video

Source: www.futurestore.org

  • Information Terminals- These terminals, located throughout the stores will supply information pertinent to that particular section of the store.

Source: www.futurestore.org

retail industry store automation22
Retail IndustryStore Automation
  • Electronic Advertising displays – Used to provide reliable up-to-date information to consumers through interactive video and/or animations.
  • Everywhere Display – When used in conjunction with the information terminals, these displays which are projected from the ceiling in on the floor. This serves to direct the consumer to the product as well as provide additional information.

Source: www.futurestore.org

video

  • Self checkout- already a reality in many store chains. In the future, check out will consist of rolling the trolley pass the sensors which will then print up receipt because charges will automatically be made against the consumer’s account. Customers can de-activate the sensors at checkout if they choose.

Source: www.futurestore.org

retail industry store automation23
Retail IndustryStore Automation
  • RFID plays an important role in the functionality and efficiency of the back of the house operations. Using readers and RFID responders, warehouse workers can manage inventory effectively.
    • Portals for Incoming and Outgoing Goods -RFID readers register merchandising coming in and populates inventory database records
    • RFID handheld readers allow detail inspection of the product and can be read up to 4 meters away
    • RFID labeling in the on cartons, pallets using Electronic Product Codes (EPC) which contain additional information about the products

video

Warehouse Inventory Management

Source: www.futurestore.org

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