SWOT Analysis for Retail Information Technology

A SWOT analysis is a useful business analysis technique to apply to a retail company. By using SWOT analysis you can consider the full gamut of strengths, weaknesses, opportunities, and threats involved with the application of information technology.

The ultimate aim of SWOT analysis is to create more effective customer sales and service processes. Information Technology, used correctly, is a major strength in the attempt to achieve these goals. IT domains that are of utmost importance include: computer networks, multiple platforms, databases, and other back-office systems.

It is essential to optimize the back-office through simplifying software creation and delivery. This will help ease business objectives into day-to-day operations. Requirements such as improved customer service, retention tactics, mail shots, and cross-selling can be standardized by an efficient IT design that maximises automation.

For instance if you want to capture a new customer by issuing a store card, all on and off-line business units should be set up for uniform sales and compliance.

This IT operations implications include need for: data quality, system integration, and departmental coordination. Yet another reengineering project might be painful for the CEO to think about, but the continuing improvement in IT means that continual reengineering should be the aim. This will keep the institution permanently agile and continually responsive to change.

Strengths

If a customer needs a question answered, IT allows the retail store to provide the answer in many different ways. The store employee should have the same answers available, through quick and efficient applications, as can be found on the website. 

Using comprehensive systems, a customer transaction on the internet can be traceable in other channels, like a call centre or store branch. Not all stores are doing this yet, but the more successful ones are gaining the software strengths necessary to do this. 

The bottom line is that all development should start and end with the customer, with applications and processes easy-to-use and with high utility for customer and personnel.

Great strengths can be attained by using packages which:

In trying to attain these strengths "IT for IT's sake" must be avoided at al costs.

Talk to anyone using IT and they will say their systems could be improved, but they do turn transactions. So it's important to remember your core systems are often a great strength. With careful planning, IT staffs can usually keep the excellence of the old core while attaining improvements in the middle tier. For instance, the old mainframe is a fast server, and usually not nearly as finicky and problematic as people often suggest. The piecemeal model of "painting the Forth bridge" is usually one to keep in mind.

What's any of this got to do with what faces the customer in the branch, at the ATM, or on the telephone?

Strategic IT management is has the biggest impact on driving cost out of the system and improving customer experiences. Some key strategic ways of increasing strength:

Retailers should look to long established industries, like banking, that benefits from a long tradition of building a consistent culture of compliance. But many processes are redundant or too manual. In these cases, paying careful attention to detail can help bank staff in automating such processes. An example is electronic bill, stores that fully adopt this will find customer service aspects improved and payments processing costs lowered.

Basic safety and soundness counts a lot in retail. Information technologists need to focus on enhancements to disaster recovery and continuity. Perceptions about security dramatically impact the public's perception of a retailer's competence and caring and should be a part of the marketing effort

Industry should move into a greater state of electronic collaboration--involving e-commerce and information sharing with partners and customers. In this model, information is fluid and critical. Global free trade is the norm , and good partnerships in bundling services are dominant. Industry could slip back into the secrecy and defensiveness that characterized earlier workings, but that would be a move towards weakness rather than strength.

Retailers need to find ways to work together, within their environments, to create high-value service for customers. For instance, payments may be most easily delivered over a mobile phone, but this needs banks, stores and phone companies to cooperate and share information. 

Examples of information technology systems that could impact on a stores success in the future:

These are all marketing activities enhanced by technologies that keep content on point and directed to the right people. Trigger messages that put valuable information in front of the customer and staff make a big difference in operational flow and revenue.

Weaknesses

Legacy IT systems are often a weakness. In the rush to get projects done, great care must be taken about how a given legacy environment operates. Maintenance costs, or design limitations, must not be forgotten. Great care must be taken if anything interesting or transformative is to happen.

Not only may the legacy technology itself be limited, but it may limit the thinking of personnel. It leads to 'we've always done it this way'.

Political turf wars and communication problems between different store units is often a significant weakness that totally stifles technological innovation. If budgets controlled by a particular faction, there will unwillingness to look at what's good for the entire store, and by extension, what's good for the customer.

Opportunities

Information technology provides an endless number of opportunities in the following areas:

What are needed are applications that work in all departments, so all aspects of the workload are accounted for and all workers accountable. 

To grasp the opportunities fully, the system design, platform choice, and user interface should follow a careful consideration of customer needs, business needs tempered and security requirements

IT provides a great opportunity to get to know exactly what customers are spending and why, or what a  supplier is charging and why. 

To grasp opportunities applications must be delivered rapidly, ideally in a few months. Longer than that and people lose sight of what they wanted, and it becomes harder to get everyone to make full use of the new technology.

In seeking to become more efficient through IT, it is paramount to remember that there is a balancing point between being efficient and friendly to the customer. It is also important to keep in mind how the store can improve its asset mix, especially IT assets and personnel, driving out process duplication and costs and driving up productivity.

Threats

The most important threats, to take into account when adopting new technologies, are the threats to the customer. For instance, identity theft and spamming are two areas that greatly concern everyone. In general, retailers have invested too little in countering these threats..

Operational risk and associated reputational risk will keep IT staff busy in the near future. Such activities as anti-money laundering and credit card checking involve critical, state of the art technology. Efficient stores need to find ways to adopt these. 

Growth by acquisition leads to difficult customer-facing transitions. Customers need to feel they are still valued when services are delivered under a new banner. This requires communication, and information technology is a major player in countering such threats to customer alienation.

And remember, strength can become a weakness if the reliance on it is too much. You can be too careful. Sometimes customer service processes and other behind-the-firewall capabilities need to be opened up, even if risks then become more evident.

References 

1 Allan C. Reddy, Total Quality Marketing: The Key to Regaining Market Shares (Westport, CT: Quorum Books, 1994)
2 Roger Courtney, Strategic Management for Voluntary Nonprofit Organizations (London: Routledge, 2002)

© Paul Evans, Free Encyclopedia Online