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Role of Information Technology in Retail Sector - Tesco

University: University of Edinburgh

  • Unit No: 3
  • Level: Post Graduate/University
  • Pages: 12 / Words 3039
  • Paper Type: Assignment
  • Course Code: ITC506
  • Downloads: 67
Question :

This assessment will cover following questions:

  • Identify the role of IT in the success of Tesco.
  • What are the type of networking used by the Tesco.
  • Explain the importance of social media in Tesco.
Answer :
Organization Selected : Tesco plc

1.0 INTRODUCTION

Retail sector deals in selling consumer goods and services to customers through multiple channels of distribution so that high profits can be earned. The goods that are sold are not meant to be further resold by the customers and are usually consumed by them. With the increase in globalisation the role of IT in retail sector has increased as it helps in collecting and analysing the customer data with enhancing differentiation, global data synchronization, increasing the market knowledge etc. which helps the retail business in achieving a competitive advantage in market. This report is based on the role played by IT in the retail sector with a special focus on Tesco plc which is a British multinational groceries and general merchandise retailer and has its headquarters in London, UK. Tesco is the third largest retailer having its outlets in many countries acros the globe. In this report the issues related to use of IT, different types of networking technologies which can be used, importance of social media etc. will also be discussed.

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2.0 LITERATURE REVIEW

2.1 Role of IT in the success of retail business

 According to Arthur Zaczkiewicz, (2018) the success of retail industry can be hinged by the strategic use of technology and data. As per the author use of right type of technology along with making better informed decisions can help the retail businesses to survive the increasing competition in the market (Retail business hinges with use of technology .2018). The use of technology in retail business is important as it helps in the following ways:

  • Reduce inventory costs: Technology can be used to monitor and control the stock of company so that the number of items that are sold and unsold can be monitored. Also the fast moving goods can be tracked so that a sufficient amount of inventory is maintained in the stock. Technology can also help in eliminating the goods which have expired or become outdated so that customers can be provided with high quality items.
  • Improve customer satisfaction: Technology can be used to provide online shopping platform to customers so that their convenience of shopping can be improved which can help in highly satisfying the customers.
  • Automate inventory control: Use of technology can help in eliminating over buying or under buying of required items and stocking them in retail stores. This can help in maintaining an appropriate amount of stock in the store which can be made available to customers.
  • Customer data can be stored and analysed: Technology can be used to store customer data and analyse it along with synchronising the global customer data which can help in tracking the customer buying pattern. This is essential so that strong customer relations can be maintained which can help in increasing the company sales and improving its brand image.

2.2 Ethical and social issues related to IT

As per the author Luppicini, R. (2010), technology has raised many concerns related to ethical and social issues like protection of personal information from being misused, tracking of the customer data and their usual habits, likes and dislikes through internet, influencing customers in a negative manner etc. All these issues can also occur when technology is used in retail sector which can affect the customer buying behaviour and cause losses to retail industry (Ethical and social issues in IT .2010). Ethical issues arise when decisions made by a business does not favour the customers or cause harm to them which also affect the business image in the market. Technology can be misused by a business in various ways like stealing the data of other companies, negatively impacting the decisions of customers by influencing them to purchase goods and services which do not produce the claimed value etc. Apart from the ethical issues there are also some social issues related to use of IT in retail sector like customers find it more convenient to shop online which affects the retail market and has lead to the shut down of many retail brands. Also IT has reduced the number of jobs as the human resources are being replaced by the new techniques which are being used at retail stores. Also the competition has increased which means that the retail stores are forced to offer their products at lower prices so as to increase their sales and survive in the market.

2.3 Different types of networking technologies used by retail business

According to Margret Rouse, (2020) networking technologies can help in connecting many computer systems together so that information can be shared between and better communication can be established (Networking .2020). Networking comprises of design, construction and use of network along with maintenance and operation of network infrastructure, software and policies so that the businesses can utilise it to achieve their goals and objectives. Some of the network technologies which can be used by retail businesses are:

  • Cradlepoint: This technology can be used by retail businesses to develop cloud based wired and wireless WAN solutions for any network related problems for companies. This network help in connecting all the computer systems of the retail business so that the information can be shared on cloud computing. It also help in providing greater network reliability as it offers greater router hardware.
  • Big Switch networks: This technology can help in providing solutions for network monitoring and network switches which can help in receiving, processing and sharing of data between other devices.

Apart from using the technologies which can help in connecting and sharing of data so that retail stores of a company which are located in different countries can make use of the information so that strong customer relations can be maintained. Also various kinds of technologies can be used by retailers so that they can become digitised which will help them in increasing their sales are :

  • Digital marketing: It is the use of internet so that the company can market its products and services like social media advertising, mobile apps etc. so that customers can be influenced to buy the company products and services.
  • Artificial intelligence (AI): Retail businesses can use artificial intelligence so that the customers can get a better shopping experience and they can be kept updated with the store offers and discounts.
  • Cloud services: With the use of cloud computing retailers can cut their costs of software development and can also process their data at a faster rate. It can be use to check inventory, details related to shipping and orders etc. hence making the process easy and accurate.

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2.4 Importance of social media in retail business

According to Venkatesan, (2012), social media is being increasingly used by people nowadays spending most of their time on it. This is an effective media which can be used by retail businesses so as to influence customers and affect their buying behaviour (Influence of social media in retail industry .2012). Various sites such as Face Book, Twitter, Instagram etc. can be used by companies to advertise extensively their products and services on these sites. Following are the importance of social media in retail industry:

  • Direct contact with customers: A direct contact can be established between customers so that their complaints, queries, enquiries etc. can be quickly addressed.
  • Promotional activities: Social media can be used for marketing and promoting the company products and services easily so that more number of customers can be attracted and company sales can be increased.
  • Customer loyalty: Social media can help in establishing a strong brand image of the company which can increase the customer loyalty and can help in increasing company profits.
  • Understanding market: The customers like and dislike pattern can help in understanding the needs and wants of customers which can help it in formulating strategies so that customer attention can be gained.

2.5 Different stages of system development life cycle

 According to Motea Alwan, (2015), system development life cycle determine the stages in development of hardware system or software system or a combination of both so as to meet the customer expectation (System development life cycle .2015). following are the stages which are involved in SDLC:

  • Planning: In this the extent of a problem is identified so that required sources can be determined which can help in dealing with the problem efficiently like resources, cost, time etc. This stage helps in determining the problems and finding ways in which they can be solved.
  • Systems analysis and requirements: At this stage the end user's requirements are identified along with running a feasibility testy so that it's economic, technological and social feasibility can be determined.
  • Systems design: At this stage a design of system is defined, the components, security level, different interfaces etc. are designed so that the developed system is able to fulfil the requirements of customers in an efficient manner.
  • Development: At this stage the actual code is written for software system and in case of hardware the configuration and fine-tuning is started so as to meet the requirements and functions.
  • Integration & testing: At this stage different components and subsystems are brought together so that a well integrated system is established. After this testing of the system is done so that customer satisfaction can be achieved.
  • Implementation: The system so developed is fully implemented so that desired results can be obtained.
  • Operations & maintenance: Maintenance of system is done so that performance can be boosted, new capabilities can be added and new requirements can be met.

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3.0 ANALYSIS OF TESCO

3.1 Role of IT in success of Tesco

 As Tesco is the biggest supermarket retailers, for that they use information technology tools and technique for management purpose. Some of these are as follows as:

  • Provide information: Information is related to the both employee and the company as well. Where Tesco get information about their employee work that how much efficiently they perform their task, the confirmation of working hour of an employee. Tesco also get all its financial reports for decision making. Also helpful to analyse customer feedback which help in price distribution (Balaji and Roy, 2017).
  • Implementation of strategy: Tesco made their strategy after knowing the feedback of customer's, need and demand of product which is provided by the IT. Strategy always changes according to the need and requirement and that information is provided by IT. Thus it is used to implement the strategy.
  • Customer relationship management: To manage the relationship between the company and customer is important for Tesco. It is required to solve the customer's issues and focused on their need and wants which builds the healthy relationship. To manage the relationship of two IT provides a platform where company and employee can directly contact to each other.
  • Communication: Communication is the most important factor between the employee and the customer as well. It builds the spirit between the employee if they easily contact to each other and that shows the effective result in Tesco. Thus Tesco believes that communication is needed because it clears the differences. And one gets the direct feedback which is helpful in terms of performance.

3.2 Ethical and social issues arising as a result of Tesco's use of IT

Ethical issues arises as a result of Tesco's use of IT are as follows as:

  • Privacy: People share their personal information as name, address, number, email id, etc. And it is need to be safe and secure and doesn't to any other party.
  • Digitalisation: Through this all the information will be easily circulated and it cause an ethical and legal issues. By sharing, copying the contexting makes it even more ethical.
  • Gathered data: As costumers were always change but there data's are safe, thus whether the customer is with the company or not their data must be safe and secured (Castaldo and et. al., 2016). 
  • Control: Tesco controls the factor which is related to their employee information like which web sites they are searching, address their email but when it comes to customer their data can't be checked unnecessary or only relevant data is circulated.
  • Security: Hacking of websites, crimes these are the negative effects of IT. So for that the individual data is being confidential and only used for company purpose rather then other personal purpose of employee.

Social issues arising as a result Tesco's use of IT:

Employment will be decreased by maximum use of technology. As technology reduced the man workforce. Some people doesn't use advanced technology by which they are not able to learn or know the things, as they are traditional and doesn't believe in advanced technologies.

3.3 Types of networking technology used by Tesco

 Tesco uses a variety of networking technology so that it can share data and information between all its branches and save the vast customer data securely so that strong customer relations can be maintained along with increased customer loyalty. Following are the ways in which Tesco uses technology to achieve its objectives:

  • RFID: Radio frequency identification uses electromagnetic fields to identify and track tags attached to objects so that their stock counting can be done and their details can be easily known by scanning the codes (Lai, Lui and Tsang, 2016).
  • Connected devices: This can help the customers to connect various apps to Tesco's app which can help in automating their shopping experience. This also help in tracking their shopping patterns and exploring more potential customers so that customer base can be increased.
  • Maximising mobile's potential: It means that Tesco is making its online apps more customer friendly by making the way in which people shop more easy. This involves expanding the variety of goods and services which are offered to customers along with making the shopping experience more attractive.
  • Mobile payments: The mobile payments is being made easier for customers of Tesco so that they can easily shop for the items online and can be more attracted towards purchasing from the company.

3.4 Importance of social media in Tesco

 Social media plays an important role in the success of Tesco as it can promote its products on the social media easily and can reach to a large number of customers through each social media site. The social media can be used by Tesco to make loyal customers by tracking their patterns of searches on search engines so that they can be offered with the products which are majorly liked by customers. This help in building strong relations with customers which can help in increasing the sales of company (Lueg, Pedersen and Clemmensen, 2015). Social media can also be used to reach to a large number of customers all across the globe which makes this method less costly to promote the company's products. Also the offers of company can be easily made available to customers so that they can shop online which enhances the customer experience and also increases customer satisfaction.

3.5 Discussion of findings

From the above discussions it can be found that IT plays an important role in the globalised and competitive market where all the businesses are trying to exist sustainably in the market. The companies can use information technology in an efficient manner along with the use of appropriate system so that they can become more modernised so as to reach to a large customer base which can help in increasing its presence in the market. Also the use of social media and other internet applications can help in increasing the convenience of customer to make purchases and also gives competitive edge to the company.

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CONCLUSION

From the above report it can be concluded that information technology needs to be installed in the retail business it provides a lot of opportunities to the business to grow in the market. Also it help in dealing with the competition in market and make loyal customer base so that company sales can increase. Tesco is able to increase its global presence by the efficient use of IT which has helped it to increase the customer satisfaction by providing them with the goods and services they want and at prices which create value for them.

REFERENCES

  • Balaji, M.S. and Roy, S.K., 2017. Value co-creation with Internet of things technology in the retail industry. Journal of Marketing Management .33(1-2). pp.7-31.
  • Castaldo, S. and et. al., 2016. The missing path to gain customers loyalty in pharmacy retail: The role of the store in developing satisfaction and trust. Research in Social and Administrative Pharmacy .12(5). pp.699-712.
  • Lai, J., Lui, S.S. and Tsang, E.W., 2016. Intrafirm knowledge transfer and employee innovative behavior: the role of total and balanced knowledge flows. Journal of Product Innovation Management .33(1). pp.90-103.
  • Lueg, R., Pedersen, M.M. and Clemmensen, S.N., 2015. The role of corporate sustainability in a low‐cost business model–A case study in the Scandinavian fashion industry. Business Strategy and the Environment .24(5). pp.344-359.
  • Petermans, A. and Kent, A. eds., 2016. Retail design: theoretical perspectives. Taylor & Francis.
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