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Roberto Vona » 11.Technological innovation in retail management

Lesson content

Learning outcomes

Provide an overview of the technology used as support in the retail industry.

Lesson content

  • Product innovation and process innovation;
  • POS and barcodes;
  • Direct and indirect benefits of using POS-scanner system;
  • EDI and vertical interconnection;
  • Electronic money: from Electronic Funds Transfer to Near Field Communication;
  • Use of shopping and fidelty cards to get user profiles;
  • RFID technology and EPC code;
  • Advantages of RFID compared to barcode;
  • RFID – related innovation in the retail industry.

Product and process innovation

Product innovation

Involves the introduction of new forms of distribution – and therefore new professional roles – and this phenomenon has marked the way the retail sector has developed on a global level, redefining the characteristics of competitiveness.

Process innovation

Directly related to production within the commercial sector, therefore involves any component within the supply chain that competes to provide distribution services.

Innovation and NIT

New information technology has changed the competitive balance on an intra-sector as well as inter-sector level, leading to new process innovation.

For example:

Point of Sale (POS) [payment system]
Scanner [reading of bar code]

Types of liquidity

Intrinsic liquidity

Considers any company assets and liabilities that are liquid, or liquidizable within twelve months, part of working capital.

Functional liquidity

Only includes the resources necessary for balanced running of the operation (buying, transformation and selling).

Benefits of POS-Scanner system

Direct benefits

  • Reduces workload at cashouts;
  • eliminates costs involved in pricing and repricing goods on sale;
  • inventory differences are contained;
  • simplification of routine operations;
  • better rationalization of use of sales personnel time.

Indirect benefits

  • Valuable data on sales dynamics;
  • evaluate how promotional or merchandising events or initiatives performed;
  • permanent inventory of stock;
  • specific information on contribution of goods;
  • get a precise indication of company profitability;
  • render other company functions automatic.

Management of working capital

Management of merchandise credit

To manage credit successfully, detailed procedures need to be in place as follows:

  • investigation into applicant’s credit status;
  • agreement of loan and negotiation of methods and terms of payment;
  • chase up and collect non-payments;
  • collect disputed credit (unsettled debt).

Bank loan

The loans procedure generally terminates as follows:

  • The application is rejected because the client is considered too high a risk;
  • The loan is agreed within certain credit limits, and corresponds to the highest degree of risk the company is prepared to take on behalf of a client;
  • Unlimited loan, generally awarded to public organisations or companies that have a good reputation and financial standing.
Management of working capital

Management of working capital

POS-EDI binomial (EDI)

Electronic technology that allows for constant transfer of data relating to administration and also to commerce and markets.

POS-EDI binomial

The ready availability of up-to-date marketing information that the retail company obtains from its POS-EDI systems becomes in itself a merchandisable good which can be traded with industry. Manufacturing companies who wish to establish downstream links with operators in the supply chain, can use this kind of information to exploit their productive capacity, maximizing on economies of flexibility.

POS-EFT These systems connect POSs with the banking system so that funds can be transferred (Electronic Funds Transfer, EFT). With an EFT-POS system, when a customer wants to pay the POS carries out the following:

  • Decodifies client information;
  • Checks that customer identification code is correct;
  • Requests authorization to accept payment;
  • Prints to different receipts:
    • One normal till receipt;
    • One special receipt that the customer needs to countersign to accept.

Technological trends

Contactless payment

With RFID tags. By mobile phone with Near Fields Communication.

Increase in store loyalty

Shopping cards. Fidelity cards.

Data mining

Cluster analysis.

Link analysis.

Benefits of POS-Scanner system

One of the technologies for automatic identification. Allows store to trace individual specific object.

Basic structural elements:

  • Tag (label) or transponder that sends Electronic Product Code (EPC) that identifies the individual specific object.
  • Reader that reads the EPC at a distance.
  • An elaborator that reads and filters the data the reader picks up.

Types of  TAG RFID

Read Only Microchips

“Read only” tags only store information that was inputted when they were created.

Read-Write Microchips

Tags whose information content can be modified over time, which means that a multiplicity of events that define a product’s history can be associated with it.

Advantages and disadvantages of RFID technology

Advantages and disadvantages of RFID technology

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Progetto "Campus Virtuale" dell'Università degli Studi di Napoli Federico II, realizzato con il cofinanziamento dell'Unione europea. Asse V - Società dell'informazione - Obiettivo Operativo 5.1 e-Government ed e-Inclusion