Information Systems in the Consumer Industry/Retail processes
< Information Systems in the Consumer Industry
A case study of reengineering of information systems – industryA case study of reengineering of information systems – retailIntroduction to methodologyGeneral processesIndustrial processesRetail processesConclusionAppendix AAppendix BBibliography
We define “retail” as the set of processes which satisfy the availability need in a customer related space-time context. The difference between this set and the previous one is
  1. The subject of the process, the retailer, does not satisfy the need starting from designing and projecting the answer from scratch but he tries to solve the problem choosing the solution, among those on the market, which he thinks will better fit customer requests (sales methodology)
  2. The relation between retailer and final customer is much more “direct” than in the industrial case so many “non product” aspects are more important.
We can see the retail process from three different point of view:
  1. Final customer: form this point of view “retail” is simply the availability in a “local” form; needs and data collection are the same as for the industrial environment
  2. Retailer: problems concern both to satisfy customers (purchasing and selling) and to relate to the context
  3. Context: this relates to how “retail processes” exist in the society both as time phased phenomena (geography = shops, shopping centers; communication etc.) and structure (fiscal and legal compliances)
From the customer point of view “retail” is a service process centered around the actual sale moment but we must remember that it really consists of before sale, actual sale and after sale (preparation, actuation and conclusion).
Process Analysis: the customer point of view
We know that, generally speaking, customer needs are:
Product Aesthetics, reliability, availability
Subjectivity Problem solving, reassurance, empathy
Sociality group belonging, individual recognition
And that, for each need, direct processes imply:
The actual need coverage is through the balancing of these factors.
From the market point of view, the weight of each parameters corresponds to the positioning of the company in the market share.
In the following table we can see how a group of users has quantified their expectations as a function of the sales channel
'Expected satisfaction as a function of the sales channel
Market stallno-brandmonobrandmultibrandshopping center/ cornerLuxuryInternet
Product
Aesthetics4,95,88,08,27,28,36,3
Reliability3,75,58,37,67,18,74,2
Availability5,36,57,67,67,98,06,3
Subjectivity
Problem solving5,86,47,77,67,67,74,6
Reassurance5,06,47,97,67,28,33,4
Empathy5,95,77,57,06,17,44,7
Sociality
Group belonging4,54,57,36,66,07,54,8
Individual recognition4,34,76,76,05,38,04,7
Process analysis: the retailer point of view
From the point of view of a retailer, the definite question is:
“why does a customer comes to me and how can I satisfy him ‘”
Which means “which are the customer needs and why does he feel that I can satisfy them ?”.
In the world of retail the contact is not with a “customer” but with a “specific customer”, this means that subjective and social needs are very much stressed compared to anonymous relations. It happens that shops may live on “local” emotional realities (mono or multibrand wholesalers), some other times they have a more “diffuse” approach (department stores, large distribution).
The birth of a “sales project”, to satisfy a particular customer need at any level of Maslow scale, then is the result of a sales enterprise which evaluates the market opportunities in terms of the lack of a product in a certain area/time, the availability of structures (shops), a new sales method or the existence of an unexploited sociality.
We start from our daily experience to group elementary processes into categories; this will help us in the functional analysis of the retail system. Processes are sets of actions which satisfy needs whether these needs concern customers, retailers or the context. We assume that, if a process exists, it must have some meaning otherwise it would not exist any longer. Not every possible process exists or, sometime, we are not aware that it exists.
Our methodology starts from listing the processes and then looking for their value on customer needs; we must be very careful to distinguish between “real” value and “customer perceived” value; customer are only interested, and ready to pay for, in the second ones while there could be processes (e.g. finance control) which have no value for the final customer but are very important for the retailer. We shall be using the “perceived value” parameter.
To be completely correct from a methodological point of view we should define each process to the very detail, in fact we adapt to evaluate the cost/effectiveness of a process, this means that the value of a process is a function of
In the following tables:
Processes are grouped by areas
Coding is such that
Effect on the process: H = high, M = medium, L = low, blank = not applicable
Grouping level: C = customer, G = group, T = context
Area: P = product, S = subjectivity, C = sociality, O = organization, F = fiscal
Process groupProcessProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: preliminary analysisAnalysis of product market request (sales)HLHMGP
Analysis of product knowledge by the operatorHHGS
Analysis of product availability on the market (purchasing)HMHHMGP
Analysis on customer classificationHHHHGC
Analysis on service level to be offeredHHMHGC
Analysis on location availabilityHHHHGC
Organization definitionHHHGC
Process groupProcessSProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: starting processFinancial means researchMTO
Fiscal and legal obbligationsMTF
Shop works and upgradingT

Exhibition spacesMMT
Sociality spacesMMMTO
Suppliers choice and relationMHHTO
Signs and bannersMLLGC
Opening communicationLLMMGC
AdvertisingMMGC
Community (mail list)MMMGC

Process groupProcessProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: purchasing orderBudget per supplier/per category (category definition)MMGP
Comparison supplier offer vs expectation and product choiceHMHGP
Analysis of purchasing order vs spece and financeLTF
Vendor analysis on punctuality and terms of deliveryMMGP
Sale context support (POP material)LMMHLTO
ReordersG
Process groupProcessProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: goods receivingAdvance shipping noticeLTO
Receiving authorizationMTO
Receinving operational: physicalLTO
Content control (per box or per delivery)LTO
Delivery acceptance or refusalLTO
Garments quality control, relabeling and shop floor readyLTO
POP material receivingLMTO
Supplier invoice controlLTF
Process groupProcessSProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: goods arrangementArrangement logic decision
Quantity per garment on showMMMGS
Grouping per theme, supplier, priceMMGS
Path definitionMMMGS
Emotional spaces/product combination definitionMHMMGS
Emotional customer/product comb definitionMHHGC
Shop windowsMMHGS
Prices and rebatesMMMMGS
Process groupProcessProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: customer relationCustomer welcomeMHHHCC
Customer-garment relation: trial onHHHCP
Customer care: number and quality of sales executiveHHHHCS
Customer brand identificationHHHGC
Customer recognitionHHHCC
Sales: operational (fiscal, finance)LMLTO
Sales: operational (transports)LMTO
Social: brand imageMMHHGC
Social: packagingMHHGC
Process groupProcessSProductSubjectivitySociality
AestheticReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: customer relation, after saleQuality
Product qualityHMMMGP
Follow up: customer care
Company to customer: campaign and groupMHHMGS
Customer to company: returnsHMHHHGC
Unfair returns
Process groupProcessProductSubjectivitySociality
AestheticsReliabilityAvailabilityProblem solvingReassuranceEmpathyGroup belongingDistinctionGroup levelMacro area
Group: general adverstisingGeneral adverstisingMHHLGS
TestimonialsMHHLGC
ShowsLMHLGC
PapersHMMLGC
General purpose
Stock keepingLTO
HRMTO
Real estatesLTF
PatrimonyTF
Fiscal regulationsTF
Customer need – process existence relation
Let us look at the processes we just quoted (remind that needs belong only to the final customer); to fulfill them we need to operate on three different levels (not to be confused with operating entities):
The “retail” system does not consists only of processes related to customer relation but it has to cope with many levels of activities; this is the meaning of the “group” attribute in the former table.
Retail support systems: the information processes.
We speak explicitly of “support” and not of software because, as you can saw from the process listed, the content is not a pure “data” parameters but if often connects to physical or psychological aspects.
We also saw that final customer and retailer needs somehow differ both in content and in relative weight.
From an industry point of view the retailer is “the customer” and this is why we need to understand which are the needs he needs to satisfy and he is willing to pay if satisfied.
We can think of retailer needs general schema as:
Data collectionAnalysisSotisfactionCommunication
Customer processes
ProductTo be anlyzedTo be anlyzedTo be anlyzedTo be anlyzed
SubjectivityTo be anlyzedTo be anlyzedTo be anlyzedTo be anlyzed
SocialityTo be anlyzedTo be anlyzedTo be anlyzedTo be anlyzed
Group processes
ProductTo be anlyzedTo be anlyzed
SubjectivityTo be anlyzedTo be anlyzed
SocialityTo be anlyzedTo be anlyzed
Context processes
OrganizzationTo be anlyzedTo be anlyzedTo be anlyzedTo be anlyzed
FiscalTo be anlyzedTo be anlyzedTo be anlyzedTo be anlyzed

What we derive from this table is that “single”, “final” customer needs have been largely disappointed in the industrial attitude; companies tend to focalize on “customer groups” as their ability to solve needs is essentially related to product/social and not to subjectivity capabilities.
This aspect of the end customer need is mainly covered by the “retail” structure.
To be methodologically correct we should now take into consideration all the 32 cells; out of these only 6 (“customer group”, data collection and analysis) have already been taken into consideration in the industrial analysis. In the following pages we shall group some cells to avoid being too long even though we realize that we make a methodological approximation.
''''Customer processes
Personal needs are, by definition, very “personal” so they need a very “local” application of general principles stated by the company. The information content is actually very little formalized: we are moving in a very unexplored field.
Product: data collection, analysis and satisfaction
We are talking about the behavior of a specific customer in a specific sale situation: a very elementary context.
Assuming that we want to satisfy customer need, I think that the only information instrument which can be used is the sales executive capacity to support requests on product (fashion, quality) and customer (decision process). Time length and variability of relation, in my opinion, make impossible for a formal information system to be really useful.
Measuring system can only be indirect through a total evaluation of the sale executive.
Product: communication
The aim of this process is to make the specific customer understand that it is possible to help him in choosing the right product. Assuming that we think that the correct local instruments are sales executive, we want the customer to trust sales executive in their knowledge of product and can help him in determining the product coverage of his needs.
As far as information supports, we must give the actual instrument (the sale executive) the knowledge he needs both on the product he is selling and on competitors so that he can help the customer to judge correctly the answer to his needs.
Subjectivity: data collection, analysis and satisfaction
We are talking about elementary processes which concern ability to answer, personal assurance and empathy to a particular customer.
Information support: The sale executive must be empathetic with the specific customer so he must fit his way of acting to the actual situation. Information content must then relate to the sociological world of sales and, eventually, to the social and fashion trends.
Subjectivity: communication
This topic is fairly delicate because customer expectations can be very different from company policy and very often we saw a large gap between the two approaches.
Sociality: data collection, analysis and satisfaction
From an information system point of view the first problem is related to customer recognition. Sometimes we can find some sort of “fake” personal recognition (e.g. intimate friendship) which annoys the customer, the real cases I can think of are either related to the high luxury environment, where quite a few customers are well known from social news, or small local retail with a consolidated personal knowledge of the customers. In other contexts we must rely on some personal interactions supported by CRM systems not to loose company knowledge.
Sociality: communication
The information object includes the content (“welcome”), the form (direct or indirect message) and the destination (actual or prospect customers).

Group processes
Customer group needs are those industry relates to. As far as data collection and analysis processes, we can refer to the first part of the book as we are talking about collecting and categorize common customer needs; retail is a different way of solving them.
Product – satisfaction.
Customer satisfaction is “the process” of a retail system as it has to conjugate market availability and specific customer request. From an information point of view it asks for a huge amount of informations (see appendix B).
Product – communication
What: we are talking about the process which makes the customer understand that, in that place and at the right moment, he will find the answer to his product needs (group level). We thus deal with an information content.
How: we can use formal systems (commercials, press, window presentation) or informal (word-of-mouth) in large social contexts and personal systems (human relations) in limited environments.
Who: usually we cope with professionals in large scales and sales executive in small environment.
Where: Social contexts mean the whole society, up to world scale, and especially in aggregation area while small environment means essentially shops.
When: product satisfaction is not a one shot process, it needs to be created before and fed also after sale, this means that communication has to be time calibrated.
How much: without any communication product access is essentially stochastic so we can have a first guess relating amount of communication to sales increase.
Why: because it might be that the customer doesn’t know that we can solve his need.
This whole topic should be analyzed by itself.
Subjectivity - satisfaction
Informations related to this process are various and need a separate study.
Subjectivity – communication
What: this topic is about how we can communicate our ability in satisfying customer subjectivity
The information request set is too large to be analyzed here, further studies are needed.
Sociality – satisfaction
This process is concerned with smaller groups of customers than those addressed by industry, retail is more “locally” concerned either from a geographical (customer in a certain area) or from a social (customer of a certain type) point of view.
Let get into more details for this area. Our analysis could take into consideration:
Customer reasoning:
What qualifies myself from the context?
How much does belonging to that group cost ?
Which are the group identities and testimonials?
How can I avoid being considered “standard” and yet belong to the group?
Retailer reasoning
How much does it cost to create the “group”?
How much does it cost to maintain the “group identity”?
How much do I get in terms of new customers or upsales form the “group”?
Generally which is the “group” trade off?
I think we can look at two possible ways of approaching the problem:
Internal: a “group” needs to have times and places it can exists (like happy hours in bars etc.) and archetypes it can recognize, testimonials defining the “group characters”
External: a “group” needs symbols like shopping bags or reserved events.
From an information point of view we can measure
Customer retention both in number and quantity
New customers entries
PR costs.
These data are very difficult to obtain as they are much perturbed by product data, at the moment I do not know of reliable analysis on this topic.
Sociality – communication
While industry communication is essentially based on product, retail communication underline the idea of service, of problem solving. This idea implies that it is more of an institutional then technical communication.
The informations we need to control are various and often not explicit : imagine we talk of teen-agers buying clothes. Clothes are not just a way of dressing, it is also a request for meeting similar. This means that a shop is a meeting point and it has to fulfill this need so that the teen-ager likes to stay in the shopping area. Places where you can only buy, in my opinion, have little chance against the web-offer, on the other hand satisfaction places are more expensive than normal shops.
From an information point of view the problem is thus to quantify the ratio between the capacity of satisfying customer social need and economical balance.

Context processes
Context processes group all those operations which have no direct relation with the customer so these processes create no customer perceived value but are necessary for enterprise functioning.
A rough classification could divide them into “fiscal” processes (related to external existing rules and laws) and “organizational” (related to process “best practices” in the business area).
Context process are the one which are best known from an informational point of view as they derive either from formal rules (fiscal) or from repetitive experience (organizational); they are also the best information system supported processes. It is not the aim of this paper to describe more deeply this set of processes; I only would like to point out that, as they create no customer value, they must be considered a pure cost driver and the information system goal should be to satisfy the enterprise need reducing these costs. Typically this goal is achieved using methodologies as standard as possible introduced in the company via education and/or consultancy.
Retail: the solution architecture
As we discussed in the industry part of this paper, in retail also we can create a schema for the set of processes related to the company information strategy. The matrix needs-functions is the retail phase space where each cell has its own cost and value; the complete figure is the company positioning strategy.
Data collectionAnalysisSatisfactionCommunication
Customer needs
Product
Subjectivity
Sociality
Group needs
Product
Subjectivity
Sociality
Context needs
Organizzation
Fiscal
Some of these cells need to analyzed at a more specific level (e.g. group-product satisfaction) ì; we should then sum the subprocesses cost to derive the total cell cost while the value is available only at an upper level.
We can think at the “true value” of the need as the product of the need importance multiplied by the channel expectation for the market we are operating, we find a result like the following table:
Valore di canale
Weighted expectations
Market stallno-brandmonobrandMulti-brandshopping center/ cornerLuxuryInternet
Product
Aesthetics31,237,051,052,345,952,940,1
Reliability33,349,574,768,463,978,337,8
Availability37,145,553,253,255,356,044,3
Subjectivity
Problem solving42,446,756,255,555,256,233,6
Reassurance36,947,258,355,753,361,524,9
Empathy39,438,150,146,840,849,531,4
Sociality
Group belonging26,726,743,039,335,644,528,2
Individual recognition27,029,742,337,833,350,429,7
Total274,2320,6429,1409,2383,4449,270,2
Based on this schema, a retailer, as long has he decided which one is his operating channel, can find the relative value of customer need, his problem is now to decide “how much do I want to invest in satisfying this request”.
As we saw, each of these cell is made of many elementary processes with its own contribution to the final cost; this allows us to derive total cost as the sum of the whole solution.
The information technology goal is both to detail the information content and the analysis of a single subprocesses and to reduce the cost of each of the processes itself using technology in the right way (where possible).
It is obvious that we start from processes which have the highest customer value so that they have a quicker return.
Last edited on 14 November 2019, at 07:14
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