INTERNATIONAL JOURNAL OF ORGANIZATION THEORY AND

BEHAVIOR, 6 (3), 329-353 FALL 2003

CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE

STRATEGY FOR THE RETAIL INDUSTRY?
Julie Kenyon and Maria Vakola*

ABSTRACT. This paper uses as its focus the traditional U.K. retail industry at
a time when competition from newer channels is increasing. Research
into other industry sectors has proven that well planned and executed
customer relationship management strategies can increase profitability
by improving customer loyalty. Many areas of the retail sector appeared
to have neglected the benefits of CRM strategies, and where attempts
have been made to implement CRM one or more of the vital
constituents - employees, customers and shareholders have been
neglected. The true barriers to CRM implementation are often thought
to be financial or technological, according to research into other
industry sectors. In reality however, financial and technological
barriers are less problematic than organisational change, cultural and
people barriers. The results of the retail survey carried out by the
researchers support their original idea that few sectors of the traditional
UK retail industry have implemented CRM strategies, and those that
have are still are the early stages in the cycle. The survey questioned
retailers on 3 main areas - The Company; IT Strategy and Future
Strategy. Results for each for area are presented and change
implications are discussed.

INTRODUCTION
The retail industry in the United Kingdom continues to be one of the
nation’s most important. Traditional retailers are under increasing
pressure from other sales channels such as mail order and electronic
commerce. Ubiquitous technologies, in particular, the Internet and
Internet enabled applications further force a previously unparalleled pace
-----------------
* Julie Kenyon, Senior Consultant, Cap Gemini Ernst & Young, UK. Her
research interests are in information systems. Maria Vakola, Ph.D., is Lecturer,
Department of Marketing and Management, Athens University of Economics
and Business, Greece. Her research interests are in change management
Copyright © 2003 by PrAcademics Press
74 KENYON & VAKOLA

of change. Despite the apparent protestations of retailers that customer

relations are important, many in the retail industry demonstrate
differences in their ratio of technology spending and organisational
culture. The current growth of customer relationship management (CRM)
in most industry sectors is being enabled by technology. “Once an art
practised by the best salespeople, CRM is a new science, still in its
infancy” (Cap Gemini Ernst & Young and International Data
Corporation, 1999, p. 7). There is a “relatively high level of corporate
awareness” of the benefits of CRM across industry sectors as companies
attempt to differentiate themselves from competitors (Cap Gemini Ernst
& Young, 1999).
This paper provides insights into the retail industry and available
customer relationship management tools, techniques and technologies.
This area of study has important implications if the retail industry is to
maintain current levels of turnover and profitability – in 1998, 23 percent
of the Gross Domestic Product of the United Kingdom was derived from
the sector, which remains the second largest employer in the U.K. (Cox
& Brittain, 2000). Integrated technologies providing CRM in industries
such as insurance and banking are far more advanced that those in the
retail sector, it is now essential that retailers catch up (Datamonitor and
Cap Gemini Ernst & Young, 1999). The main hypothesis of this paper is
that traditional retailers can compete with the multifarious new sales
channels, but only by applying new practices, often enabled by
technology.

DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

There are at present a myriad of definitions for CRM, yet “no one
correct definition of CRM” exists (Goldenberg, 1999, p. 10). For the
purposes of this paper the following definition provides the essence of
CRM:
A comprehensive approach which provides seamless integration
of every area of business that touches the customer – namely
marketing, sales, customer service and field support – through
the integration of people, process and technology, taking
advantage of the revolutionary impact of the Internet (Chablo,
1999, p.12)
CRM, therefore, is regarded here as the concept or business process
concerned with how retailers can increase retention of their most
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 75

profitable customers whilst simultaneously reducing costs and increasing

the value of transactions, thereby maximising profits. The need for CRM
strategies seems appropriate for the information age where, “traditional
models of competitive strategy” no longer fit the needs of a customer
centric marketplace (Reichheld, 1996). An examination of much of the
current research manifests in almost unanimous consensus as to the aims
of CRM. “A well-executed customer relationship strategy can result in a
number of quantitative benefits” (Conway & Fitzpatrick, 1999. p. 32).
Meltzer (1999) believes CRM is “a vision founded upon customer
profitability as its centrepiece.” Davids (1999, p.22) indicates that the
“new models in which customer relationships are becoming the central
business issue.”

THE U.K. RETAIL MARKET

The Current Retail Market
According to Cox and Brittain (2000), the retail industry, employing
2.5 million people, almost 11 percent of the workforce, is a major
contributor to the UK economy. In 1998, retailing provided 57,500 new
jobs representing 19 percent of the total created for the year, with 42,700
of these being full time positions. Over the same period a 96,000
reduction in the workforce of the manufacturing industry was witnessed.
Prices of retail goods in the 12 months to September 1999 fell by 0.1
percent, a significant factor in helping to keep inflation under control.
The total number of retail outlets in the UK fell from 504,781 in 1971 to
around 290,00 in 1990 (Sieff, 1999).
The industry is witnessing previously unseen magnitudes of change
and at present little parity appears to exist between customer and retailer
needs. The only certainty is that retailers “need to change the way they
manage their business, go to market and satisfy the needs of their
customers and shareholders” (Andersen Consulting, 1999. p.7). Peppers
and Rogers (1996) identify four major change factors and business
process interactions. These are increased competition, increased
customer expectations, technology advances and political and legislative
factors. Further information on each of these segments is presented
below.
Competition is being driven by globalisation, merger and acquisition
activity and market saturation. “Retailing is one of the world’s biggest
76 KENYON & VAKOLA

but most localised industries” (Cox & Brittain, 2000, p. 23), however
globalisation is affecting more and more markets (Peck, Paynes,
Christoper & Clark, 1999) including retail, creating “considerable
organisational challenges” (Corstjens & Corstjens, 1995). Merger and
acquisition activity has reduced the number of players in the market
place; acquisition growth is generally more rapid than organic growth
and serves to change the market more significantly in shorter time scales.
Market saturation may result in smaller players being forced to merge
with larger rivals, seek new niche markets or close. Globalisation and
merger activities are helping to fuel competition that is verging on
oligopoly, particularly in grocery and electrical goods retailing. The
major grocery retailers now control over 80 percent of the market in
contrast to less than 50 percent in 1973 (Cox & Brittain, 2000). CRM
strategies should address the issues arising from globalisation, merger
activity and over capacity in the market place as part of the overall drive
to improve customer service and retention.
It should be recognised that “the customer is the most scarce
resource to today’s retailer” (Harbidge, 1995, p. 21). When customers are
provided with a greater variety of retailers, delivery channels and
products then loyalty to traditional retailers will be tested to the limits.
Those retailers who become complacent often take customer loyalty for
granted (Griffin, 1995). The down turn in the fortunes of Marks and
Spencer arose largely as a result of customer defections and a belief that
“what works in Manchester will work in Milan” (Capell, 1999, p. 8). It
is no accident that the world’s number one retailer Wal-Mart uses its
leading edge information systems to best serve the customer by knowing
what they want, within an organisational culture of change (Wal-Mart,
1999).
Most modern retailers could not afford to trade without mass
utilisation of technological devices. Front and back office processes
have been automated – Electronic point of sale terminals (EPOS) [define
this word] terminals facilitate transaction processing whilst supply chain
activities have been shortened to provide increased efficiencies
(Harbidge, 1999). The next major challenge to traditional retailers
comes from the Internet and other delivery channels enabled by
technology such as mobile telephony. Despite technological barriers
having been overcome data mining techniques and other CRM initiatives
do not appear to be used effectively by many retailers (Cox & Brittain,
2000). Puckey (1999) proposes an evolved model of the customer
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 77

database that allows integrated delivery channels to access one

customer’s view.

RETAIL SURVEY METHODOLOGY AND RESULTS

Methodology
The researchers undertook a survey of 40 retail organisations
selected randomly from the Financial Times’ 500 companies. The survey
was conducted in June 1999. In order to help alleviate the often-poor
response rate to surveys of this nature, respondents were offered the
opportunity to request a copy of the survey results. To maintain the
privacy of respondents, company names and addresses have been
withheld from this paper. The survey was limited to “traditional retailers”
as defined above. Restaurants and public houses were included in the
survey as they operate in retail premises and have a long history of
customer relationship management and unsociable trading hours, factors
now becoming important to other types of retailers.
The questionnaire (Appendix A) was sent to the information
technology (IT) managers of the companies with the aim of eliciting their
views and those of employees in the IT department. The researchers sent
150 questionnaires, and a 27 percent response rate to the survey was
achieved. Of these, only 28 percent of respondents elected to remain
anonymous.
The questionnaire, consisting of three main sections, attempted to
collect information about the participating companies, their IT strategies
and their future strategies. A detailed analysis is presented in the
following section.

The Company
Retailers were asked first to select the type that best described the
sector they operate in according to the main product types sold. The
major types and response levels identified are clothing/fashion – 36
percent, grocery – 27 percent, pharmaceutical – 9 percent, restaurant/pub
– 1 percent and other – 27 percent. Within the ‘other’ category are
retailers operating in furniture, cosmetics and confectionery sectors.
There are no respondents from stationery, record or book sectors.
78 KENYON & VAKOLA

Retailers were asked if they operated a customer loyalty scheme as

these are considered integral to enterprise wide CRM strategies. There
are currently over 40 million loyalty cards in use in the UK, most of
these are issued by the large grocery retailers (Lehmann, 1999). Sixty
four percent of respondents did not offer loyalty schemes, 27 percent
offer loyalty schemes across the whole product range with one
respondent restricting its loyalty scheme to petrol purchases only. All
respondents who operate loyalty schemes, including the petrol only card
are in the grocery sector. This further reinforces the consensus that
competition within the sector is intense and margins are slim (Cap
Gemini Ernst and Young Retail IT, 1998). Such economic constraints
forced major players such as Tesco to calculate the cost of each customer
over a potential lifetime of purchasing - around £90,000 per individual.
This long term view focused Tesco’s strategy to become more customer
centric, hence the introduction of their loyalty card in 1995, the first one
in the market (Peck, et al., 1999). Clothing and Fashion sector
respondents were universal in their failure to offer any loyalty schemes.
Non-food retailers do currently offer loyalty schemes; although these are
limited in number, the companies concerned are major High Street names
– Boots, WH Smith and British Home Stores are amongst them (Winnett,
1999).
To gain an understanding of current IT strategy within the sector,
respondents were asked to rate the importance of a number of areas to
the company both now and in 5 years time. Seventy percent of
respondents rate merchandising as the most important use of IT both now
(Figure 1) and in 5 years time (Figure 2). Supply chain is perceived as
the second most important use of IT with 15 percent of respondents
selecting supply chain currently, and 17 percent indicating it is most
important in five years time. Loyalty is poorly represented in both
charts, although a 2 percent increase – from 3 percent to 5 percent is
indicated in five years time. Respondents do not seem to regard
employee training as an important component of their long-term strategy,
with only 7 percent giving this priority. Investment in loyalty schemes is
projected to increase by just 2 percent of respondents. Most respondents
operating in the clothing and fashion sector placed very little importance
on loyalty schemes and employee training both now and in five years
time.
To complete the first section of the survey, respondents were asked if
they operate a call centre and if the facility is outsourced or run in house.
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 79

Seventy three percent of respondents do operate call centres, with 87.5

percent of these being operated ‘in-house’ and just 12.5 percent being
outsourced. Call centres together with loyalty cards form parts of an
integrated CRM strategy. All grocery respondents operate call centre
facilities, this is consistent with other responses from the sector
respondents with regards to loyalty issues.

FIGURE 1
Importance of IT – 1999

3% 7% 15% Supply Chain

5%
Merchandising
Admin
Loyalty

70% Training

FIGURE 2
Importance of IT – 2004

5%
3%5% 17% Supply Chain
Merchandising
Admin
Loyalty
70% Training
80 KENYON & VAKOLA

IT Strategy
Respondents were asked to identify if their IT systems were custom
built, packaged, tailored packages or a combination. Fifty-five percent
use a combination of custom built and packaged software – the most
common configuration. Eighteen percent use tailored packages, a further
18 percent use packages with no modification, and just 9 percent use
custom built software (Figure 3).

FIGURE 3
IT System Software Configuration of Respondents

9%
18% Cust om Built
Packaged
55% T ailored Package
Combinat ion
18%

Packaged software was used without any adaptations by respondents

in the Restaurant/Pub sector and the confectionery sector; this could
indicate that very good commercial packages are available, or that the
number of employees (average under 10) in their IT departments does
not permit the time to produce customised solutions. Software providers
may find areas for further research in these findings.
All grocery sector respondents implement a combination of
packaged, tailored packages and customised solutions. The grocery
respondents all have turnover in excess of £1bn and total employee
numbers in excess of 20,000 – representing a larger contribution to both
categories than any other sector respondents. Conversely the grocery
respondents’ average ratio of IT employees to total employees is 1:194
whereas the respondents as a whole demonstrate a ratio of 1:132. The
significance of these findings may impact on future development of
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 81

CRM strategies within the organisations; the researchers anticipate that

major CRM applications will be outsourced to specialised IT
consultancies.
Respondents were asked to rate a series of strategies relating to
ongoing business activities. The results have been collated and ranked by
percentage according to the total of all the scores awarded by all sectors.
Maintaining competitive advantage was ranked most important across
the board with an overall score of 64 percent. In second place was
optimise collection and use of data with an overall score of 62 percent.
In effective CRM solutions, optimising data is integral to the overall
strategy. However one respondent demonstrated a blatant disregard for
potential CRM applications, stating that improved customer loyalty
“couldn’t be done” and that “selling on the Internet is a long way off for
fashion retail”.
The third most important consideration with a rating of 57 percent is
improved return on investment. Improving internal communications is
rated in fourth place with a score of 56 percent (Figure 4). In joint fifth
position, respondents rated make better use of the customer database and
define target markets with scores of 54 percent. Making better use of the
customer database is fundamental to CRM strategies, three respondents
however ranked it a major priority – two grocery retailers and one
confectionery retailer. In contrast one other grocery retailer ranked this
issue as least important – its loyalty card is for petrol only and does not
require any personal details to be submitted to the company, hence a
probable lack of customer data. It should be noted however that this
retailer is a significant player in the sector although it does not fall into
the top quadrant that is dominated by the big four – Tesco, Asda,
Sainsbury and Safeway. With the exception of Asda, all utilise customer
data gathered via loyalty cards to optimise potential future spending by
issuing vouchers, details of special offers and so on based on previous
spending patterns and buying habits.
It is also worth noting that the IT system at Asda is currently being
upgraded to that of its new parent company, US retailer Wal-Mart. Even
without a specific loyalty card scheme in place Wal-Mart is regarded as
the most effective user of customer data in its sector (Jones, 1999). Wal-
Mart is a significant force across many retail sectors, currently 83 percent
of revenues come from non-food items (Norman, 1999) and it can
82 KENYON & VAKOLA

FIGURE 4
Importance of IT Strategies/Initiative

70
Maintain competitive
advantage

60 Optimise collection &

use of data
Improve return on
investment
50 Improve internal
comunications
Make better use of
Percentage

40 customer database
Define target markets
more clearly
Improve relationships
30 with suppliers
Maximise Internet
opportunities
20 Recruit quality IT
personnel
Change company
10 structure
Train nonIT personnel in
use of systems
Prepare for introduction
0 of EMU
Strategy/Initiative

undoubtedly use its mass buying power to become overall cost leader in
their sector. CRM strategies can help provide differentiation for smaller
retailers unable to compete on price but only if and when accurate
interpretations are made of the customer database for customer
identification, segmentation, buying patterns and profitability.
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 83

Improving relationships with suppliers achieved a score of 53

percent placing it in sixth place overall. Maximise Internet opportunities
received a score of 50 percent. A major consideration when companies
are integrating systems particularly where supplier retailer systems are
being set up is operating platform differences. Increased use of Internet
enabled applications, particularly for business to business transactions
can speed up integration projects, enabling efficiencies to be realised
sooner, thus improving bottom line profit. Lehmann (1999) uses the
analogy of the telephone to impress on retailers the need to adopt
Internet-based transaction systems, emphasising that it is yet another way
of communicating with customers.
Recruiting quality personnel and changes to company structure both
achieved scores of 48 percent. The least important uses of IT were
regarded as training non IT personnel is the use of systems and
preparation for EMU with scores of 47 percent and 44 percent
respectively.
Respondents were asked to rate the importance of new in store
systems used specifically for customer service. The scores have been
converted to percentages and ranked according to overall scores. Forty
five percent of respondents regard reducing out of stock items as the
prime consideration for improving customer service. There was one
notable exception to this: one respondent in the furniture sector regarded
out of stock items as least important – physical size, cost and customer
deliveries from special warehouses are attributable factors for this
ranking. The furniture retailer did place most importance on increasing
product awareness and improving customer loyalty.
Twenty seven percent of respondents regard increased speed of
service as most important, although fast service does not necessarily
equate to good service. Going some way towards offering excellent
customer service is the improvement of shopping environments, although
only 9 percent of respondents cited this as most important. Increased
product awareness and improved customer loyalty were also rated as
most important by just 9 percent of respondents, respectively.
To assess how important efficient business to business IT channels
are respondents were asked to rate their main considerations when
integrating supplier/store systems. Twenty seven percent of respondents
cite the need to increase sales as the most important consideration for
alignment of store/supplier IT. Nineteen percent consider reduced
84 KENYON & VAKOLA

operating expenses as most important and a further 18 percent would like

to see profit margins improved. These findings are consistent with the
market as a whole. The last three months of 1999 saw no increases in
average selling prices for the first time in over two decades. The
Confederation for British Industry (1999) that reported the figures now
believes that market forces are “working in the consumer’s interest”.
Eighteen percent would like to see a reduction in stock holding as a
result of store/ supplier IT systems. Nine percent regard reducing out-of-
stock promotional items as most important whilst the remaining 9
percent would like to see merchandising improved if there is integration
of supplier/store IT systems. Overall the main reasons for considering
integration of supplier/store systems are of a financial nature.
Respondents were asked if the opinions and suggestions of shop
floor employees were taken into account when new systems were being
introduced. New IT systems are often introduced with little consideration
for the end users (Preece et al., 1998, Dix, Finlay, Abowd & Beale,
1998). Forty six percent of respondents stated that they encourage
participation from sales/shop floor employees, 45 percent give
consideration to sales/shop floor staff where they feel it is relevant and
just 9 percent seek opinions sometimes. These results suggest that
system designers are now taking the views of end users into
consideration, although the researchers would be interested in extending
this area of research by questioning a sample of end users.

Future Strategies
Retailers were asked if the company operates a mail order service.
Thirty six percent of respondents do offer a mail order service, with an
even split between the clothing and grocery sector. One grocery retailer
used the mail order facility to diversify from their core business, non-
food items such as clothing form the main proportion of mail order
goods. The grocery retailer outsourced the operation to a partner
company, thus eliminating the need for major upgrading of existing IT
systems, or the introduction of new processes within the company. The
remaining 64 percent of respondents do not offer mail order facilities.
Retailers were then asked if they operated a telephone ordering
service; yet again 36 percent of respondents indicated that they offered
this service. There was correlation between the number of retailers
offering both mail order and telephone ordering amongst respondents.
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 85

Retailers were asked if the company currently operates a web site. In

contrast to the minority percentage who operate both mail order and
telephone ordering the number of respondents who currently run web
sites is 73 percent.
Those retailers who do not currently run a web site were asked when
they expected to develop one. Sixty six percent had no plans to develop
one within the foreseeable future, whilst 34 percent were already in the
process of developing a web site. Fully integrated CRM solutions
require transactional sites as opposed to merely promotional or content
sites (Forrester Research, 1996). Transactional sites use the full power of
the web’s integration with complex database systems. Encryption
technology is a major consideration and along with other security
elements requires adequate planning and resources.
To establish the extent of investment in their web sites, respondents
who operated web sites were asked a series of questions relating directly
to their sites. Respondents were first asked to indicate what services they
currently offer on line. More than one answer could be chosen and this
accounts for total numbers exceeding 100 percent (Figure 5).
One hundred percent of respondents who operate a web site provide
information on products and services. Fifty four percent had the facility
for customers to contact the company via the web site and a further 54
percent offered information on the history of the company. Only 36
percent of respondents have transactional sites for customer sales. No
respondents currently operate web-enabled transactions with suppliers.
Just 18 percent of respondents make use of their web site to promote
current offers and activities.
Amongst those operating fully transactional sites were a major
grocery retailer, a confectionery sector respondent and one of the smaller
clothing retailers (under £50 million turnover). Respondents were
unanimous in their use of the web for providing information on products
and services, but they were equally unanimous in their lack of use for
transactions with suppliers. Business to business use of the web is set to
be a major growth area, one area where supply chain costs can be
reduced.
There is no one overwhelming benefit cited as the reason for
operating a web site. Reducing floor space and staff costs are rated as
86 KENYON & VAKOLA

FIGURE 5
Facilities and Information Provided on Web Sites (of the Companies
Which Participate in the Survey)

Information on
120 products and
services
100 Contact with the
company

80
Compnay history
Percentage

60
Transactions with
40 customers

Transactions with
20
suppliers

0 Promotional offers
Web Site Facility & activities

main benefits by 16 percent and 15 percent of respondents respectively.

Attracting higher net worth customers is regarded as most important by
14 percent of respondents. Retaining existing customers and increasing
the customer base are both regarded as most important by 12 percent of
respondents. Financially it is more cost effective to retain existing
customers than it is to attract new ones (Anton, 1996); long term
customers tend to buy less ‘loss leader’ items thereby generating more
bottom line profit from sales than new customers (Reichheld, 1999).
Eleven percent of respondents believe their web site will increase
turnover, whilst maintaining competitive advantage and improving
customer service are ranked last, each with a 10 percent rating.
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 87

Retailers were asked what they consider to be the main problems

associated with electronic commerce. Technology constraints were not
cited by any respondents as a major consideration. The two main areas
for concern are poor return on investment and organisational change
requirements; both are rated as most important by 23 percent of
respondents but interestingly represent different ends of the change
spectrum (Figure 6).
Twenty percent of respondents regard the logistics of delivering
goods as the most important concern. Security is the main concern for
only 15 percent of respondents and possibly reflects the apparent
insignificance of technology constraints. A further 15 percent of
respondents believe there is insufficient consumer interest in web sites.
The remaining 9 percent cite storage of goods as the main problem.

FIGURE 6
Main Concerns of Respondents Regarding Web Sites

25 Poor return on
investment

Technology
20
constraints

Security
15
Percentage

Organisational
change
10 requirements
Delivery of goods

5
Storage of goods

0
Insufficient
Concerns Regarding consumer interest
Web Sites
88 KENYON & VAKOLA

To sum up the attitude of respondents, they were asked to agree or

disagree with the following statement: “IT applications, including the
use of databases, data warehousing and the growth of e-commerce will
change the face of British retailing for good.” Despite their apparent
resistance to change elsewhere in the survey, 73 percent of respondents
agreed with this statement, believing that IT would change British
retailing. Twenty seven percent of respondents disagreed with the above
statement.
To conclude the presentation and discussion of the results, it should
be noted that the research was undertaken during some of the worst
trading conditions for UK retailers in the last two decades. Throughout
the above section, suggestions have been made for areas of further
research based on the results presented in each of the three main areas –
the company, IT strategy and future strategy. In analysing the results of
the survey the researchers have found that there is little evidence
amongst most sectors of existing CRM applications and that retailers are
generally unaware of CRM as a strategy for future expansion and
growth. The main exception to this is the grocery sector respondents
who all offer loyalty cards and operate call centre facilities. These
strategies give them considerable competitive advantage and pave the
way for expansion away from core business areas.

CONCLUSIONS
This paper aims to analyse the retail industry in the UK as a sector
undergoing cataclysmic change in a dynamic wider environment. This
wider environmental change is not planned by the traditional players in
the sector but is being forced by catalytic effects of global markets and
technological impacts. Central to future success is the need to adopt
different strategies that provide sustainable long-term competitive
advantage.
Central to this paper is the notion that the UK retail market is doing
little to implement CRM initiatives and plan strategic change. The
implications that arise both from the research results and existing
literature highlight an apparent ignorance of the impact of competition,
lack of planning for integration of existing technology, and an
unwillingness to invest in the ‘right’ technology to improve the current
situation. Also, the results emphasise weakness in capabilities for dealing
with organisational change effectively.
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 89

Technology is serving to provide methods of reducing costs in

operating procedures for retailers, whilst the Internet opens up a global
store to consumers. Competitive advantage must now be sought by
applying the differentiation that CRM can provide. Certain retailers in
the grocery sector have furthered the cause of CRM more than their
competitors and as a result are now in the enviable position of having the
infrastructure and resources that enable a move away from their core
business area into profitable niche markets. In the wake of threats from
US giant Wal-Mart and major European retailers, the U.K. retail sector
must adopt drastic measures to remain profitable. The re-engineering
philosophy underlying CRM allows for the radical change necessary to
meet current market conditions.

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APPENDIX A
Retailer Questionnaire
Please complete all sections of the questionnaire, some questions require
more than one answer.
Section A – The Company
1. Which retailer type best describes your company – select one only.
Clothing/fashion ____
Grocery ____
Pharmaceutical ____
Restaurant/pub ____
Other (please specify) ___________
2. Does the company operate a customer loyalty scheme?
Yes ____ No ____
92 KENYON & VAKOLA

3. How many employees does the company currently have in total?

Under 1,000 ____
1 – 5,000 ____
5 – 10,000 ____
10 – 20,000 ____
20,000 + ____
4. How many employees are currently within the IT department?
Under 10 ____
10 –50 ____
50 – 100 ____
100 – 200 ____
200 + ____
5. Please indicate which of the following are most important to the
company now and which are perceived to be important within the
next 5 years. 1 indicates very important and 5 indicates little
importance.
Now 5yrs
Merchandising
Forecasting Requirements ____ ____
Planning Promotions ____ ____
Measuring Promotional Success ____ ____
Other ____ ____
Supply Chain
Supplier Relations ____ ____
Logistics/Transport Control ____ ____
Inventory Control ____ ____
Other ____ ____
In Store Activities
Employee Training ____ ____
Loyalty Programmes ____ ____
Inventory Security ____ ____
Other ____ ____
Administration
Payroll Functions ____ ____
Auditing & Security ____ ____
Supplier Payments ____ ____
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 93

Other ____ ____

6. Does the company run a call centre?
Yes ____ No ____
7. If yes, then is this run in house or is it outsourced?
In House ____ Outsourced ____
Section B – IT Strategy
1. Which of the following applications does the company currently
use? Please tick all that apply.
Stand alone/cash register EPOS ____
PC based EPOS ____
Other EPOS type system ____
CCTV ____
CCTV linked to EPOS ____
Customer Flow Monitoring System ____
Electronic Article Surveillance ____
Electronic Data Interchange ____
Internet Based Communication ____
Internet Based Transactions – Supplier ____
Internet Based Transactions – Customer ____
2. Are the systems within the company:-
Yes No
Custom Built ____ ____
Package Software ____ ____
Tailored Packages ____ ____
Combination ____ ____
3. What is the company’s main Operating System?
Please state__________________________________
4. What is the company’s main database application?
Please state__________________________________
5. Please rate each of the following, according to their importance
within the company. 1 being most important and 5 being least
important.
IT will allow us to / require us to…..
Make better use of our customer database ____
Address Year 2000 problems ____
94 KENYON & VAKOLA

Optimise collection & use of data ____

Define target markets more clearly ____
Improve relationships with suppliers’ ____
Improve return on investment ____
Maximise Internet opportunities ____
Maintain competitive advantage ____
Improve internal communications ____
Recruit quality IT personnel ____
Change the company structure ____
Prepare for the introduction of EMU ____
Train non IT personnel in use of systems ____
Change geographic location ____
6. Is it envisaged that the company’s focus with regard to IT will
change after December 1999?
Yes ____ No ____
7. When new systems are introduced in store how are these expected
to affect customer service? Please answer all areas with 1 to 5 with
1 being the most important and 5 being the least important.
Increased speed of service ____
Reduce out of stock items ____
Offer more efficient payment methods ____
Improve shopping environment ____
Increase product awareness ____
Improved customer loyalty ____
Other ____
8. What are/would be the main considerations when introducing
applications that integrate supplier/ store systems. Please answer all
areas with 1 to 5 with 1 being the most important and 5 being the
least important.
Reduce stock holding ____
Improve merchandising ____
Increase sales ____
Reduce risk of out of stock promotional items ____
Reduce operating expense ____
Increase profit margins ____
Other ____
9. Are the opinions/suggestions of sales/shop floor staff taken into
account when new systems are being introduced?
Never ____
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 95

Sometimes ____
Where relevant ____
If staff offer suggestions ____
Participative development is encouraged ____
Section C – Future Strategies
1. Does the company operate a mail order service?
Yes ____ No ____
2. Does the company accept telephone orders for home delivery?
Yes ____ No ____
3. Does the company have a Web site?
Yes – Please go to Question 5
No – Please answer Question 4
4. Does the company have any plans to develop a Web site within –
12 months ____
12 months – 2 years ____
2 years + ____
No plans at present ____
Do not intend to develop ____
Please go to Question 6
5. What services does the company currently offer via the Web site?
Please tick all that apply.
Information on products and services ____
Contact with the company ____
Company history ____
Promotional offers and activities ____
Transactions with customers ____
Transactions with suppliers ____
6. What are the main benefits of a Web site to the company? Please
answer all areas with 1 to 5 with 1 being the most important and 5
being the least important.
Increase turnover ____
Maintain competitive advantage ____
Increase customer base ____
Improve customer service ____
Retain existing customers ____
Reduce staff costs ____
96 KENYON & VAKOLA

Reduce floor space costs ____

Attract higher net worth customers ____
Other ____
6. Is/would the company web site stand-alone or be integrated with
other systems?
Stand alone ____
Integrated with some systems ____
Integrated fully ____
7. What are considered the main problems associated with electronic
commerce?
Poor return on investment ____
Technology constraints ____
Security ____
Organisational change requirements ____
Delivery of goods ____
Storage of goods ____
Insufficient consumer interest ____
8. Which department is or would be responsible for maintaining the
company Web site?
IT ____
Administration ____
Purchasing ____
Sales/marketing ____
Other ____
9. Does the company expect to generate a significant proportion of
future income via the Web/telephone/fax? If so roughly what
percentage?

Yes No
Under 5% ____ ____
5 – 10% ____ ____
10 –20% ____ ____
20 – 50% ____ ____
50% + ____ ____
10. Please say whether you agree, disagree or have no opinion on the
following statement:
CUSTOMER RELATIONSHIP MANAGEMENT: A VIABLE STRATEGY FOR
THE RETAIL INDUSTRY? 97

IT applications, including use of databases, data warehousing and

the growth of e-commerce will change the face of British retailing
for good.
Agree ____
Disagree ____
No opinion ____
11. Will future IT developments be instrumental in allowing the
company to move away from its core business area?
No ____
Possibly – if demand exists ____
Possibly – if competition exists ____
Yes – the company are keen to expand ____
Thank you for your time in completing this questionnaire.