Retail Industry Review Use of Store Automation NCR

1. Group: Valeria Antonio-Policarpo Maria Grant Lashanda Gray Bonnie Johnson Marie Johnson Hisham Khalafalla John Mascaritolo EBA 612 – Issues in Cotemporary Business Professor Dr. James Coleman March 11, 2006 Retail Industry ReviewUse of Store AutomationNCR Situation Analysis

2. Topics • Retail Industry – Use of Store Automation • Effects, Major Threats and Opportunities of Rapid Deployment of E-Commerce Networks/Net Enhanced Organizations (NEO) • Effects, Major Threats and Opportunities of Economic Globalization and Outsourcing

3. Retail Industry Rapid Deployment of E-Commerce Networks/Net Enhanced Organizations (NEO) Effects, Threats and Opportunities

4. Source: www.ncr.com Source: www.ncr.com Effects of Rapid Deployment of NEO over Last Five Years • Maximization of Store Productivity & Performance: • Immediate price changes and increased competitiveness. • Reduction of incorrectly priced products. • Better control of inventory. • Predictions of out of stocks on fast moving or volatile merchandise data mining tied to store performance. • Reduction of operating expenses. • Warehousing and supply chain efficiencies. • Reduction in inventory misplacement and theft. • Cost control. • Technologies: • NCR NCR RealPrice (Electronic Shelf Labels) • NCR Teradata (Data Warehousing, CRM, E-business, Financial Management, Profitability Analytics, Demand Chain Management and Supply Chain Intelligence) • NCR EasyPoint (Web Kiosk) • RFID tags • Check 21

5. Source: www.ncr.com Effects of Rapid Deployment of NEO over Last Five Years - Cont • Customer Service & Satisfaction Enhancement: • Redeployment of labor from the front-end to other areas within the retail environment better assisting customers with purchases. • Increased customer loyalty and improved customer service throughout the store. • Shortening lines and wait times. • Self-service, providing customer integration, with the goal of customer outreach (i.e. placing deli order in a supermarket with a kiosk rather than an employee; price checkers). • Convenience of online shopping. • Technologies: • NCR FastLane - Self-Checkout machines • NCR EasyPoint (Web Kiosk) • Online shopping

6. Source: www.ncr.com Effects of Rapid Deployment of NEO over Last Five Years - Cont • Labor Costs Reduction & Enhanced Productivity: • Redeployment of labor from the front-end to other areas within the retail environment. • Reduced labor costs. • Identification of cashier productivity optimization. • Training time reduction for new employees. • Customer self-service. • Technologies: • NCR FastLane - Self-Checkout machines • NCR POS Operator Interfaces • Teradata (data warehousing) • NCR EasyPoint (Web Kiosk) • Competitive Advantage: • Operational and historical detail data connectivity into a centralized data warehouse. • Effective inventory tracking. • Technologies: • NCR Teradata (Data Warehousing, CRM, E-business, Financial Management, Profitability Analytics, Demand Chain Management and Supply Chain Intelligence) • RFID tags

7. Continue Deployment of NEO over Next Five Years • Opportunities: • Create closed wireless network which broadcasts store-related information on services and advertisements to consumer’s PDA, cell phones and laptops. This advertising can be localized and eventually personalized. • For those areas without a high PC concentration, but high cell phone usage, integrate mobile services with websites. • Streamline operational functions by electronically routing all functions that were once manual.  Also links between retail and banking services creates a "straight-through" processing. • Threats: • Bandwidth, access, and storage not contemplated. • An Avalanche of Data. • Implementation costs. • Downturn in ROI.

8. Retail Industry Economic Globalization and Outsourcing Effects, Threats and Opportunities

9. Effects of Globalization and Outsourcing over Last Five Years • Five years ago, people were just getting comfortable with the internet and how to purchase products on-line with confidence. • On-line retailers were not that abundant offering merchandise on-line for sale. Their activity and presence was just as limited as that of the consumer looking to buy. • What made the growth in on-line purchase activity was the role outsourcing companies took that helped make the sell to buy process very transparent. • The outsourcing companies brought the expertise of warehousing, order fulfillment, transportation, and help desk/customer service support to the major retailers. • Retailers had their suppliers drop ship merchandise directly to the outsource partners, thus eliminating major investments in capital assets. • Outsourcing offers the way the retailer can become more focused on developing a solid strategy for growth without carrying extra costs.

10. Effects of Globalization and Outsourcing over Last Five Years - Cont • Outsourcing lets the retailer concentrate on their core business and eliminate the hassles of doing time wasted functions like warehousing and order picking. • Brick and mortar is not the way to expand in today’s competitive market. It is faster to have your product warehoused remotely when people place orders on-line to the retailer’s web site. eCommerce has allowed this expansion capability that stationary businesses are not able to do. • The outsourcing companies have developed and expanded globally over the past several years and through this grow the opportunity for globalization became a reality for the retailer. Outsourcing coupled with the use of the internet allows the retailer’s product to be available anywhere in the world. • The increased demand for information technologists in today’s economy and shortage of skilled labor and global business expansion, promoted US retail companies to outsource many tasks to other countries. 

11. Effects of Globalization and Outsourcing over Last Five Years - Cont • Currently, jobs are outsourced to many countries including Egypt, India, Ireland, Israel, Malaysia, Hungry and the Philippines. Goods are manufactured all around the globe and mainly in China.    • Outsourcing is a trend that is driven by necessity in most cases and it is clear that in the companies benefit from outsourcing by reducing their operating costs and expand to new and emerging markets in many cases. • Substantial savings can be achieved for retail companies by outsourcing activities and manufacture goods around the globe.  • Retail companies are able to offer relatively low prices to consumers regardless of their location.  Consumers now can expect to pay almost same prices for goods in their home country as well as when abroad.

12. Continued Economic Globalization Over the Next Five Years • Threats: • Failure of timely Store Automation Implementation. • Failure to take advantage of 3rd party outsourcing opportunities. • Cost of Store Automation investment. • Increased rivalry threatens market share. • Global demand for food products stagnates. • Opportunities: • Emerging countries (Chile, China, and India) are experiencing impressive GDP growth rates creating tremendous opportunities for retailers. • Growing middle class in emerging countries – purchasing power on the upswing - enabling consumers to buy more products and become increasingly demanding. • Global consumer growth due to the increasing use of the internet. • Foreign markets have increased profitability for retailers which can be leveraged. • Tenant shops at airports are growing as the percentage of people traveling through airports worldwide are growing in double digits. • Interactive mail-order shopping terminals are becoming increasingly popular.

13. Q&A