MKT320 Retailing - Information Gathering and Processing

Information Flows in a Retail Distribution Channel

• Information flows bi-directionally between suppliers, retailers, and consumers.
• Suppliers:
  • Provide product information, availability, pricing, and promotions to retailers.
  • Receive consumer demand data and sales feedback from retailers.
• Retailers:
  • Receive information from suppliers and pass it on to consumers.
  • Collect consumer preferences, complaints, and feedback, relaying them to suppliers.
• Consumers:
  • Receive product details, promotions, and availability from retailers.
  • Provide feedback on product experience, demand, and satisfaction, which flows back to suppliers via retailers.
• The bi-directional flow ensures exchange of demand forecasts, inventory updates, customer insights, and promotional strategies.

Suppliers Need to Know

• Suppliers need data from retailers to understand sales trends, inventory performance, and competitive positioning.
• Key Insights Include:
  • Estimates of category sales: Helps gauge market demand and adjust production.
  • Inventory turnover rates: Indicates how quickly products are sold, impacting supply chain and stock replenishment.
  • Feedback on competitors: Provides insights into market positioning, pricing, and product differentiation.
  • Level of customer returns: Helps suppliers assess product quality and customer satisfaction.
• From the Customer:
  • Direct consumer insights allow suppliers to develop products that align with market preferences.
  • Attitudes toward styles and models: Helps refine product design and innovation strategies.
  • Extent of brand loyalty: Determines whether customers repeatedly purchase their brand or switch to competitors.
  • Willingness to pay a premium for superior quality: Guides pricing strategies and premium product development.
• Analyzing this information enhances product offerings, pricing, inventory management, competitive advantage, and increases sales and customer satisfaction.

Retailers Need to Know

• Retailers rely on suppliers for critical business insights for inventory management, sales planning, and customer engagement.
• From the Supplier:
  • Advance notice of new models and model changes: Helps retailers prepare for product launches and update inventory.
  • Training materials: Equips sales staff with product knowledge for better customer service.
  • Sales forecasts: Assists retailers in planning inventory levels and promotional strategies.
  • Justifications for price changes: Helps retailers communicate price adjustments to customers and maintain transparency.
• From the Customer:
  • Retailers need direct feedback from consumers to tailor marketing strategies, improve customer satisfaction, and stay competitive.
  • Why people shop there: Helps retailers understand their competitive advantage and key selling points.
  • Customers’ likes and dislikes: Guides product selection, promotions, and service improvements.
  • Where else people shop: Provides insights into competitor strategies and consumer preferences.
• Gathering and utilizing this information aligns product offerings with market demands, enhances customer service, builds stronger supplier relationships, drives sales and customer loyalty.

Consumers Need to Know

• Consumers need information from suppliers to ensure proper product usage, warranty support, and complaint resolution.
• From the Supplier:
  • Assembly and operating instructions: Helps customers understand how to set up and use the product correctly.
  • Extent of warranty coverage: Provides clarity on what is covered under the warranty and for how long.
  • Where to send a complaint: Ensures consumers know where to address product-related issues or defects.
• From the Retailer:
  • Retailers provide store-related information that influences purchasing decisions and convenience.
  • Where specific merchandise is stocked in the store: Helps customers locate products quickly.
  • Methods of payment acceptable: Informs customers about available payment options (cash, credit, digital wallets, etc.).
  • Check and other policies: Educates customers on stock availability guarantees, returns, and exchange policies.
• Access to this information enables informed purchasing decisions, smooth transactions, and effective post-purchase issue resolution, leading to higher satisfaction and brand trust.

Retail Information System (RIS)

• A Retail Information System is a structured system used by retailers to collect, store, analyze, and distribute data for decision-making. It includes real-time data on sales, inventory, customer behavior, and market trends.
• Key Functions of RIS:
  • Anticipates the Information Needs of Retail Managers:
    • Helps managers make strategic and operational decisions by knowing market trends, consumer behavior, and inventory needs.
  • Collects, Organizes, and Stores Relevant Data on a Continuous Basis:
    • Gathers sales data, customer preferences, supplier details, and market trends to provide real-time insights.
    • E.g., Noon tracks real-time customer behavior, including product searches, abandoned carts, and purchase patterns.
  • Directs the Flow of Information to the Proper Decision Makers:
    • Ensures relevant data reaches store managers, supply chain operators, and marketing teams for informed decision-making.

Significance of RIS

• Enhances inventory management by preventing stockouts or overstocking.
  • Enhances stock management, reducing out-of-stock issues.
  • E.g., Carrefour uses advanced RIS to predict customer demand, ensuring optimal stock levels during peak seasons such as Ramadan and Dubai Shopping Festival.
• Improves customer relationship management by tracking purchasing patterns.
  • Noon employs RIS-powered customer data analytics to track consumer preferences and recommend personalized deals, improving customer engagement and retention.
  • Noon One, is tailored based on consumer purchase behavior.
• Supports pricing and promotional strategies based on market data.
  • Amazon.ae uses RIS to dynamically adjust product pricing based on competitors’ rates, customer demand, and seasonal trends.
• Helps in competitive analysis by monitoring industry trends.
  • Majid Al Futtaim’s SHARE Rewards Program collects customer spending data across various brands and malls in the UAE, helping the company track consumer behavior, compare trends with competitors and refine marketing strategies accordingly.

Data-Base Management

• Database management is a core element of Retail Information Systems that helps retailers gather, integrate, apply, and store relevant data efficiently.
• It is used for:
  • Loyalty program management (e.g., Carrefour’s SHARE rewards program)
  • Customer analysis (e.g., Noon.com tracking purchase behavior)
  • Promotion evaluation (e.g., Dubai Shopping Festival sales impact tracking)
  • Inventory planning (e.g., Lulu Hypermarket optimizing stock levels)
  • Trading area analysis (e.g., Emaar malls analyzing foot traffic patterns)
  • Retail marketing strategies (e.g., Amazon.ae using personalized dti)

Five Steps to Approaching Data-Base Management

• Plan the particular data base and determine information needs: Identify what data is required (e.g., sales, customer preferences, stock levels).
  • Noon.com collects customer search history to suggest products.
• Acquire the necessary information: Gather data from sales transactions, online behavior, loyalty programs, etc.
  • Carrefour gathers shopping data through SHARE loyalty cards.
• Retain the information in a usable and accessible format: Store data securely and ensure it is accessible for analysis.
  • Amazon.ae maintains a cloud-based customer database.
• Update the data base regularly: Ensure the data reflects new trends, demographic changes, and purchase behavior.
  • Lulu Hypermarket updates inventory based on real-time sales.

Data Mining and Micromarketing

• Data mining: the in-depth analysis of information to gain specific insights about customers, product categories, vendors, etc.
  • E.g., Noon.com & Amazon use AI-driven data mining to recommend products based on past purchase behavior.
• Micromarketing: an application of data mining whereby retailers use differentiated marketing and develop focused retail strategy mixes for specific customer segments.
  • Talabat & Deliveroo implement geofencing and past-order analysis to push real-time restaurant deals based on user location and cuisine preferences.
  • Offer exclusive promotions (e.g., free delivery) for frequently ordered food categories.

Applying Digital Technology to Gain Better Information

• Digital technology, specifically barcode scanning and data collection tools, is used in retail to enhance inventory management, customer experience, and operational efficiency.
  • Used for product identification, pricing, and tracking at checkout and in warehouses.
  • E.g., Carrefour UAE uses barcode scanners at self-checkout stations, reducing queue times.
  • Reduces human errors and speeds up transactions.
  • Helps track stock levels in real-time, ensuring shelves are always replenished.
  • Integrates with retail information systems to automatically update sales data and customer purchase records.

Marketing Research in Retailing

• Market research is the process of collecting, analyzing, and interpreting data about consumers, competitors, and market conditions to make informed retail decisions.
• Retailers operate in a fast-changing environment where consumer preferences, economic conditions, and competition evolve constantly.
• Market research helps retailers:
  • Identify Customer Needs – What products/services do customers want?
  • Trend Forecasting – Identifying emerging shopping habits and market trends.
    • E.g., The rise of sustainable fashion in the UAE led Splash Fashions to introduce eco- friendly clothing lines.
  • Understand Shopping Behavior: When, how, and where do people prefer to shop?
  • Improve Pricing & Promotions: What price points and offers drive purchases?
  • Analyze Competitors: How do rival retailers attract and retain customers?
  • Optimize Product Selection: Which categories are growing vs. declining?
  • Store Location Analysis: Selecting the best locations based on footfall demographics and spending power.

The Marketing Research Process

• Retailers use systematic research to make informed decisions, reduce risks, and better serve their customers.
• The six-step process ensures that decisions are based on data rather than assumptions.

The Marketing Research Process - Steps

1. Define the Issue or Problem to be Researched: Retailers must identify the key issue they want to solve.
   • E.g., Carrefour UAE notices a decline in foot traffic at certain locations and wants to understand why.
2. Examine Secondary Data: Before conducting new research, retailers analyze existing data (e.g., reports, sales records, government data, industry studies).
   • E.g., Before collecting new data, Carrefour reviews existing reports and analytics.
3. Generate Primary Data: If secondary data isn’t enough, retailers collect new data through Surveys (Online, in-store, email), Focus groups (Customer panels, feedback sessions), Interviews (Face-to-face, phone, or online), Observation (Tracking shopping behavior via CCTV & heat maps).
   • E.g., Carrefour asks customers why they shop less in-store
   • Competitor Store Visits: Carrefour sends analysts to observe what Lulu Hypermarket and Union Coop are doing differently.
4. Analyze Data: Once data is collected, it needs to be processed and turned into insights using statistical tools, AI analytics, or machine learning.
   • E.g., Carrefour organizes and interprets the collected data to identify trends and root causes.
   • They can identify key insights such as customers prefer online shopping for essentials, foot traffic is lower due to parking challenges, or Lulu offers in-store-only flash discounts, attracting deal-hunters etc.
5. Make Recommendations: Retailers translate insights into actions to improve business strategy.
   • Based on research findings, Carrefour’s team proposes strategies to attract more foot traffic.
6. Implement Findings: The final step is to put research findings into action and monitor results.
   • Carrefour UAE implements changes based on research findings and tracks the impact.
   • E.g., Carrefour launches a “Shop & Save Fridays” campaign, offering in-store-exclusive discounts.

Secondary Data

• Advantages
  • Inexpensive
  • Fast
  • Several sources and perspectives
  • Generally credible
  • Provides background information
• Disadvantages
  • May not suit current study
  • May be incomplete
  • May be dated
  • May not be accurate or credible
  • May suffer from poor collection techniques

Secondary Data Sources

• Internal
  • Sales reports
  • Billing reports
  • Inventory records
  • Performance reports
• External
  • Data bases
  • Academic Search Premier
  • Government
  • Dubai Chamber of Commerce
  • Public records

Primary Data

• Advantages
  • Collected for specific purpose
  • Current
  • Relevant
  • Known and controlled source
• Disadvantages
  • May be more expensive
  • Tends to be more time consuming
  • Information may not be acquired
  • Limited perspectives

Primary Data Decisions

• Retailers must make critical decisions before collecting this data.
  • In-house (company resources) or outsource (External agencies bring expertise & objectivity)?
• Sampling method?
  • Probability (Random, unbiased selection)
  • Non-probability (Selective, based on researcher judgment)
• Data collection method?
  • Survey
  • Observation
  • Experiment
  • Simulation

Survey Methods

• In person
• Over the telephone
• By mail
• Online
• Disguised survey: The purpose of the survey is not revealed to avoid bias in responses. Used for consumer behavior studies (e.g., testing reactions to ads). E.g., A disguised survey asking about grocery shopping habits without mentioning Carrefour’s involvement.
  • Disguised surveys reduce bias but require ethical considerations.
• Non-disguised survey: The respondent knows the purpose of the survey. Used for straightforward feedback collection. E.g., Dubai Mall directly asking visitors for feedback on store facilities.

Mystery Shoppers

• Retailers hire people to pose as customers in order to evaluate aspects of the store environment (e.g. sales presentations, display maintenance, and service calls).
• Helps brands understand real shopping experiences.
• Ensures staff are following service standards.
• Compares in-store experiences with rival retailers.
• Reveals areas needing improvement, such as slow checkout or poor assistance.

Experiments

• An experiment is a research method in which one or more elements of a retail strategy mix are manipulated under controlled conditions.
• An element may be a price, a shelf display, store hours, etc.
• If a retailer wants to find out the effects of a price change on a brand’s sales, only the price of that brand is varied.
• Examples:
  • Does a 10% discount increase sales more than a Buy 1 Get 1 Free offer?
  • Does a wider aisle encourage customers to shop longer?
  • Do in-store digital screens drive higher engagement than printed flyers?

Simulation

• Simulation is a computer-based experiment that allows retailers to test different strategies virtually before implementing them in real stores. This helps in reducing risks, improving efficiency, and enhancing customer experiences.
• E.g., Dubai Mall uses AI simulations to predict peak shopping hours and optimize store placements.
• Noon.com uses data simulations to recommend the best product placement on its homepage.

Exercise Time

• Students will apply concepts from the Chapter by designing a Market Research strategy for a fictional retail store.
• Each group is assigned a retail company as below:
  • Group 1: fashion retailer (Issue: low customer traffic)
  • Group 2: electronics store (Issue: declining sales)
  • Group 3: grocery chain (Issue: competitor pricing strategies)
• Each group must:
  • develop an information gathering strategy to enhance decision making in their retail business.
  • Each group will identify what key information do they need from suppliers, consumers, and within their store?
  • How will they collect, store, and analyze sales, customer behavior, and inventory data?
• Each group will present a summary of their market research strategy.