Unit 1 Blog - Retail Industry

Unit 1 Blog - Retail Industry

By

Lauren Camper

Benjamin Crump

Ryan Goodman

            The material covered in this unit provided an excellent overview and background of why MIS is important and how it pertains to competition in business. Many industries, such as the financial industry mentioned in the real word case, are heavily dependent on a small competitive edge that can be gained by top-notch information technology. The retail industry is a perfect example of an industry that is dominated by several large players who constantly duke it out for any small competitive advantage. At the present time, many retail businesses are competing for their share of the e-Commerce business. Consumers continue to migrate towards online shopping, as evidenced by Amazon's efforts to create and perfect the experience of online grocery shopping (“Amazon Expands Grocery Business”).  In particular we want to examine the barriers to commerce for a particular company, Ross Stores, Inc.

            Ross is one of the leaders in the off-price retail space, along with TJX companies (TJ MAXX, HomeGoods, etc.) (Yahoo! Finance). The main competitive force that they both face is the rivalry of competitors in the industry. Ross and TJX are the two largest players in the off-price retail space. TJX is much larger by store count and market capitalization than Ross, but Ross is steadily growing year over year. They make their living off of closeout merchandise from brand name manufacturers that Ross is able to sell at deeply discounted prices. At the present time, and for the near future, Ross is confined to brick and mortar locations. Unfortunately, TJX has won the race for e-Commerce against Ross. TJX has a functional website where consumers can purchase clothing and other items. The race to e-Commerce was a huge factor in their rivalry that Ross lost. On the other hand, Ross is still able to remain a large player due to their cost leadership strategy. Both of Ross' brands, Ross Dress for Less and dd's Discounts, offer lower average prices than TJX. Ross is content with that strategy for now, and there are many reasons for this, most significantly are the three main barriers to e-Commerce for off-price retailers:

• ·         A competitive, elegant, user-friendly e-Commerce environment/website

(TJMAXX.com)

• ·         Powerful security protection features to safeguard consumers' information
• ·         Dedicated warehousing space for e-Commerce sales for storing, picking, and shipping products that consumers order. This warehouse would have to be accompanied by a new software package specifically designed for e-Commerce warehousing to communicate with the web environment as well as the already-in-place warehouse management system for brick and mortar distribution.

            A competitive, elegant, and user-friendly website is essential to the success of any e-Commerce business. Unfortunately, this quality of website does not come cheap, nor does it appear out of thin air. IT must hire a web development team that can design and implement a website that adheres to a high level of standards regarding usability, not to mention security. As the U.S. has recently witnessed, hacking customer information at a large retail chain, Target, has resulted in a loss of consumer confidence and the loss of several key executives' jobs (“Millions of Target Customers…”). As this video below highlights, the CEO even lost his job over the breach (“Target CEO Loses Job After Security Breach”). Video - Target CEO Loses Job

            Finally, retailers must obtain a dedicated warehousing space for the e-Commerce merchandise. This warehouse would have to be equipped with material handling equipment specifically designed for e-Commerce warehouses. Additionally, a new software package would have to either be created or purchased that would be able to manage the inventory of the warehouse as well as communicate with all other existing warehousing software that the retailer has in place. Ross' IT department would certainly be tasked with handling this, but it would require a massive project to research currently available industry software, assess the viability of designing the software in house, developing a recommendation, presenting the recommendation to management, and implementing the designated course of action. All of that would require large amounts of time and money.

            One system that might be attractive to a retailer such as Ross looking to get into the e- Commerce space is a system called Magento. Magento is enterprise level e-Commerce software that could provide a number of features that are attractive to Ross for various reasons (Magento.com). Obviously, this is just one of many potential options that the IT department would explore and assess. IT would want to know several things: what does it cost, what features does it offer, how compatible is it with current warehouse management system, and how reliable is it (e.g. what other industry leaders use this software). Learning the answers to these questions would help IT assess the viability of the various software packages available.

            Ross has chosen to compete as a low cost leader rather than trying to match TJX step for step with e-Commerce. For the time being, this strategy has been successful. With the way the future is looking now, though, consumers' lust for "I want it now and don't want to leave my house" will likely overtake the brick and mortar low cost strategy at some point. For Ross, however, the benefit of their current strategy is that they don't have to devote significant IT resources to creating and maintaining all of the previously discussed requirements that come alongside an e-Commerce business such as the website and warehouse software. TJX is likely spending large sums of money on those items. As for the downside, there is a chance that Ross could get left behind with all of the other brick-and-mortar-only stores. All companies, large and small, should closely evaluate their long term competitive strategy and see how e-Commerce should or should not play a role in it.

References

"Amazon Expands Grocery Business."The Wall Street Journal. Dow Jones & Company, n.d. Web. 9 June 2014. <http://online.wsj.com/news/articles/SB10001424127887324798904578526820771744676>.

"Ecommerce Software & Ecommerce Platform Solutions." Magento. N.p., n.d. Web. 9 June 2014. <http://magento.com/>.

"Millions of Target customers' credit, debit card accounts may be hit by data breach - NBC News." NBC News. N.p., n.d. Web. 6 June 2014. <http://www.nbcnews.com/business/consumer/millions-target-customers-credit-debit-card-accounts-may-be-hit-f2D11775203>.

"Ross Store Photo." Ross Store Photo. N.p., n.d. Web. 8 June 2014. <http://media.progressivebusinessmedia.com/photo/341/341687-Ross_Store_photo.JPG>.

"Target CEO Loses Job After Security Breach." ABC News. ABC News Network, n.d. Web. 9 June 2014. <http://abcnews.go.com/Business/video/big-number-target-ceo-loses-job-security-breach-23588889>.

"T.J.Maxx - designer brands at T.J. prices™." T.J.Maxx. N.p., n.d. Web. 9 June 2014. <http://tjmaxx.tjx.com/store/index.jsp>.

"Yahoo Finance - Business Finance, Stock Market, Quotes, News." Yahoo Finance. N.p., n.d. Web. 8 June 2014. <http://finance.yahoo.com/>.