How IT is used in Sainsbury's.

The picking centre operation helps to drive down costs through higher automation and improved accuracy of customer orders. Both large and medium-sized picking centres will carry a total of 15,000 lines. The medium-sized centre will be around half the size (40,000 sq ft) of the operation at Park Royal and will have a weekly order capacity of around 5,000, employing up to 250 people. The centre will be laid out in store fashion and pickers will follow the layout, building the customer's order.

Sainsbury's market research has shown that 27.5% of the population within the M25 would use a grocery home shopping service.

Systems managers/website developers

The systems managers and website developers work constantly with the aim of improving the website, solving any major technical faults which may be encountered by users, constantly getting feedback from the users on the ease of use. The website developers will communicate with and suggest ideas to the board of directors concerning improvements to the website and the financial costs. If the improvement has been approved the board of directors will give the web developers a deadline, a budget and an aim for the task. When the improvements have been made they will be presented to the board of directors and tested by users before they are "put out on the market".

The system manager constantly monitors the whole system on a day-to-day basis ensuring that the system is running smoothly and to its best ability. The type of procedures that the systems manager would have in place to handle would be:-

* Carrying out changes to the systems,

* Keeping records of any changes that are made,

* Monitoring the performance of the systems,

* Maintaining the performance of the systems,

* Handling downtime,

* Dealing with major breakdowns.

2.1.4 The hardware and the software the application requires

On the 12th November 2000 Sainsbury's signed a seven year contract with Accenture. The contract involves the designing, building, implementing and running of all IT systems and networks for Sainsbury's. Accenture has now implemented many new hardware and software solutions for Sainsbury's including the implementation of Sainsbury's To You which also required hiring a third party software development firm. Blue Martini Software who created the e-commerce solutions used by Sainsbury's To You website.

Prior to the outsourcing of Sainsbury's IT infrastructure, Sainsbury's spent over £200 million a year on IT systems and operations. This was one of the main reasons they decided to out source their IT requirement to Accenture. By outsourcing they believed they could achieve better value for money and create £35 million per year in savings. (Extracts from Accenture news archive.)

Sainsbury's To You uses mobile tasks management software at over 50 UK stores and all of their picking centres to co-ordinate and manage picking fulfilment of customer orders received from the Sainsbury's To You website.

The Sainsbury's To You website is based on Blue Martini Servers linked directly to a server running RangeGate IN-STORE-EDGE ecommerce software. All instructions for orders are passed by from the server directly to Symbol LRT 3840 and PDT 6840 handheld computers carried by stock pickers via a wireless network.

Customer orders are allocated automatically to stock pickers at each store operating the service or picking centre and displayed on their handheld computers. In addition to the grocery items required, information on the handhelds is targeted according to the fastest and best route round the aisles, the skill set of the operator and the number of items that need to be dealt with at any time.

Once an order is ready to be delivered to the customer, Taskmaster software automatically produces customer reports detailing any relevant promotions, subscriptions and any changes from the

requested order such as substitutes used. The orders are then delivered with the report and a till receipt.

Previous to the extensive overhaul of the Sainsbury's IT infrastructure by Accenture customer orders were processed and fulfilled manually, with stock pickers working from printed lists of goods orders. The system would have been very labour intensive and very inefficient.

The introduction of RangeGate IN-STORE-EDGE software has meant Sainsbury's To You has increased their market share and online presence, which has meant that web-based shopping, has doubled in many areas.

Sainsbury's also decided to replace their existing Oracle data warehouse with a NCR Teradata system on the 24th July 2001. The new data warehouse and Customer Relationship Management (CRM) solution was implemented to enable Sainsbury's to drive more targeted and personalised communications and improve decision making throughout the business (Extracts from the European Retail Analyst).

Sainsbury's uses the Blue Martini 4 external Customer Relationship Management (eCRM) application suite to power Sainsbury's To You. This enables Sainsbury's To You to offer a highly personalised customer interaction as well as robust analytical and campaign management. The application is used to create and manage interaction with customers over many channels but it specifically used for Sainsbury's To You uses the application to centrally manage and deploy their online catalogue. The application runs on the Sun platform and provides Sainsbury's with a single view of its customers, while giving the customers a consistent and personalised view of Sainsbury's depending on the customer's requirements (Extracts from Blue Martini website).

Other Sainsbury's associated information is shown below:

* Wide Area Network between picking centres, which are all linked to the main server. Picking centres are connected to each other through leased lines, which are normally of 512K bandwidth. The main server operates a digital network of capacity 11.5MB, which send out information to the wireless

handheld computers at picking centres. The network within the headquarters uses an Ethernet cable with bandwidth 50MBps and through the server has a leased line to the Internet of capacity 34MBps. This serves all departments involved in Sainsbury's To You.

* The workstations used at the headquarters are quite basic and are mainly tailored to the requirements of the application. Only the development departments have high specification workstations, as these are required for the applications used by them where as the credit control department need only run certain basic Internet basic applications. This is so that staff cannot misuse the computers for personal pr entertainment use. There are approximately 150 workstations used in the headquarters specifically used for Sainsbury's To You purposes. The specifications vary from P3 450MHz to P4 1400MHz. Most workstations have 256MB SDRAM.

* Sainsbury's supermarkets use Electronic Point Of Sale software created by Retek.

* All PC Clients at the headquarters have the following software that are frequently used:-

Microsoft Word- its main features are:-

Allows the user to create text based documents, send them over the Internet and receive them.

Microsoft Excel - its main features are:-

Templates, Linked worksheets / workbooks, Lookup tables, Data input via form dialogue box, Form controls, Customised macros for navigation, Customised Toolbars and menu bars, Advanced functions and formulae, Consolidation, Auditing Controls, Cell Validation, Cell Protection.

Microsoft Internet Explorer- its main features are:-

Allows the user to browse the Internet in several windows if required.

Microsoft Outlook- its main features are:-

E-mail Account configuration, aids user in writing e-mails, provides a calendar service, a contacts list where e-mail addresses can be stored, ability to convert HTML messages to plain text format or Outlook rich text.

The hardware the application requires:-

* A microcomputer,

* 26.6 Kbps modem,

* Minimum hardware requirements.

The software the application requires:-

* Computer setup of any Operating System such as Windows, Apple Mac,

* Internet service provider (Internet exp 5.5 or above, Apple Mac above OS10, access through television), connection to the internet or access to one,

* Software of any type with Internet Explorer,

* A web browser such as Internet Explorer.

2.1.5 Background of the Food Industry

The first use of computing in the food industry was in the 1980's when mainframe computers were used. In 1990's Sainsbury's introduced their own system. Originally designed to facilitate stock taking, and accounts, it became more specialised in range and functionality providing combined facilities to enable front end and back end operations.

Initially, the costs were very high, so only big, well-off companies like high street names and large supermarket Companies could afford access to computerised systems. Nowadays, due to the use of more personal computers, it is more affordable for Companies. In the mid 90's, most of the manual systems had been replaced by computerised ones. Introduction of personal computers to offices enhanced the effectiveness of related operations. With constantly developing technology, more sophisticated hardware and software solutions were introduced to increase the quality of the service.

In the past three years, changes have been made to the food industry. The Internet and World Wide Web soon are now standard means for distribution and promotion of goods. The food industry relies on and is dependant on its communication with users to provide a good service. Many supermarkets have implemented the Internet, which has enabled them to become part of the online side of the industry.

Developments are still being made in the technological field that is advancing the computerised systems and providing easier access. Mobile technologies with wireless Internet connections are also being developed for implementation within the food industry. This provides benefits to both customers and supermarkets of unlimited access to the online service, which may impact sales.

Below are the impacts that have been made by online supermarkets:

> Improved efficiency

The use of online supermarkets has increased related processes which provide information about goods. Computerised ordering systems such as Blue Martini software and the Internet have increased the efficiency of supermarkets. Both online and high

street supermarkets have provided customer satisfaction, therefore leading to customer retention that increases sales and profits.

> Distribution and promotion channels

The Internet sells food and provides information to the customer very effectively. Sainsbury's use Blue Martini as well as Xerox, Debenhams, Harley Davidson, Sprint and many more. It is thought that the Internet and mobile technology will soon carry most of the supermarket transactions.

> Increase in both small and large online supermarkets

As computers and the Internet technology are now very affordable, small and large supermarkets benefit from the growth of Internet processes. This enables all supermarkets from small high street to public Ltd Companies to provide equal competition when using a website to promote their Company..

> Market Growth

The use of online supermarkets has brought out changes to the method companies use to enter the food industry market. Companies have lower promotion and distribution costs with the power of sales direct to the customers, which are attracting more supermarket companies to join the competitive market. More companies that are involved in other markets are entering the food market, e.g. Ocado.com has established itself in the food industry even though it is part of Waitrose which is owned by John Lewis.

> Increased competition

The food industry is experiencing fierce competition amongst its players, but this is done more so on the Internet than high street supermarkets. Supermarket Companies are now using Information Technology in order to gain and retain competitiveness within the market. Due to the factor more e-Commerce companies now move to e-Business, combining the

latest technology developments into their corporate strategies. Supermarket organisations do not only use information

technology for competition purposes, because it is necessary in the day-to-day running of the Company. Due to the increasingly strong competitiveness in the market, more online supermarket providers are strengthening their strategy. For example, online providers find the need to have competitive prices within the market, provide customers with special offers and promotions and provide them with free delivery at a convenient time for the customer. This will attract new customers as well as retain the old loyal ones. Sainsbury's to you which started as a successful online supermarket has recently introduced loans, multimedia, car insurance, life insurance, pensions, and many more facilities. Therefore online companies have to diversify into other aspects in order to retain competitive edge over other Companies. It has however increased sales by 17.56%.

> Changes in sales

An issue both online and high street supermarkets are facing at present are changes in sales. Their market is no longer based in the food industry. Most supermarket companies are turning to direct sales, making use of the Internet and the global potential they could reach. By encouraging online sales, it will significantly reduce distribution costs by around £100 million in the next five years. It is possible that in the near future, the high street stores will offer customers the same facilities e.g. loans, instead of purchasing it online. This will increase sales, and may attract customers.

The food industry is one of a handful of service sectors that relates to society, because everyone uses this service. Technological changes, the introduction of information technology and the Internet, which have impacted individuals as well as society, have affected the food industry.

Due to employment of information technology in the industry, the Internet in particular, and due to the increasing competitiveness of the market associated with the Internet technology and e-Commerce,

more and more customers can benefit now from wider and better choice of goods and services online.

With increasingly efficient service, consumers feel that technology developments are a leading factor for greater customer satisfaction in the industry. This therefore means that online supermarket providers have the chance to provide increasing satisfaction as they can provide more goods and more variety than high street supermarkets.

The new media channel, the Internet and recently wireless technology gives customers unlimited and direct access to products and services, where time and place is not a factor.

Also increasing is the number of consumers benefiting from personalisation of their requirements has been achieved through direct marketing strategies applied by more and more online supermarkets when an order is placed. (The goods they purchased previously are shown, customer does not have to browse and waste time finding goods).

There are regular employment opportunities in the food industry because of the changes that are constantly being used. The current trends show that the link between IT and the food industry is allowing increasing numbers of IT professionals who have diverse skills and qualification levels to be involved in the online sector.

With information on all products available globally, and nationally, it is possible for them to benefit from low cost promotion. Being able to reach wider audiences on the Internet can encourage and bring more customers; this can provide greater economic benefits for the Company.

Information is vital to all aspects of the food industry. It connects together customers, suppliers and the Company. Information technology and telecommunication have become vital for the efficient distribution of information. This has enhanced the efficiency and accessibility of online supermarkets. This is largely due to the nature of the information processed. It is very time sensitive, requiring frequent updates (customer change of address, financial details). Information on travel products needs to be accessible from points

around the country so that users can access the goods and amend shopping lists. The products then need to be checked for availability.

2.2 Employment changes

The increase in online supermarkets over the past three years has steadily changed the highly employment areas within the food industry. As more and more online companies are set up, there is a need for employees within these companies. This deters away individuals from setting up high street supermarket stores compared to the online ones. Therefore the set up of online supermarket shopping has affected different areas within the food industry.

High street supermarket stores such as Sainsbury's have not been very affected through employment changes, because they have been established for several years. These supermarket stores are quite large in size, usually employing 200 - 250 employees a day. As they are a reputable high street store with an established client base, they have not had a drop in sales that have required them to create redundancies. But there have been changes within the high street supermarket stores setting up, because the food market has become fairly saturated. Due to high street supermarket stores, the chains of stores and of online stores, there is not much opportunity to do well within the market, if an individual wants to set up a supermarket chain or a store.

Another area that has been affected by employment changes is chain of supermarket stores such as Tesco and Asda. These high street supermarket stores have created small numbers of redundancies over the past few years either because the premises are being closed down or because fewer employees are needed. The majority of these supermarket stores now have an online version, which allows customers to go online at any time and order goods online. Therefore by downsizing the number of employees working on the shop floor, they are able to recruit more staff to work in their picking centres to process online orders and pick the produce for delivery. Although there are not high levels in redundancies within the supermarket chains, the increase in employment is to the picking centres.

Employment changes have dramatically influenced the growth within the online grocery providers; over the past three years, the number of employees has increased significantly. Supermarkets that are being setup online need employees at their picking centres and offices to process and take orders. The boom in online supermarket shopping

means that there has been growth in this area of the industry compared to previous years when this sector was non-existent. Within this sector, the need for employees to have good communication skills and IT skills has decreased because their job content involves processing orders and picking and packing goods for delivery rather than communicating with the customers.

The food industry is providing a service for the public and therefore increases or decreases in employment can be affected by a number or factors, not just by the online aspect. Changes in employment that are made in different aspects of the food industry i.e. high street stores have a knock on effect on other industries, and other industries can impact the food industry. Competition can influence customers, which will impact the industry as well as public holidays which would increase sales.

Most chain supermarket stores will have contacts within all areas of the industry. Therefore if major employment changes are made within the food industry, this could affect other areas of the industry. Online supermarket providers are now able to provide a variety of services for customers including banking, insurance, multimedia, loans etc. This enables customers to book with one company. An increase in these services being provided could decrease the employment needed by specific companies to deal with the above. If online supermarket providers are able to provide customers with a good service successfully, this may increase the number of customers using the service for multiple reasons. This would have a knock on effect on the insurers and increase sales for the provider i.e. Sainsbury's (as they take commission) and they would have more customers, therefore a need for an increase in employment. High street supermarket stores could also provide the same services as their online counterpoints, but it is often difficult and expensive to advertise all the services provided and create increased revenue from them. The chains of supermarkets often have deals with other chains and franchises to offer customers offers and discounted prices. But even so, the impact the food industry makes on other industries would not have significant impact in employment.

There have been a number of changes made to employment within supermarkets. Although the different types of supermarkets are providing the same service, the increase or decrease in employment

needed differs because of the sudden increase in the use of the Internet. Employment changes do not only affect high street supermarket stores, but on other industries too.

Job changes

The changes made by using online supermarket providers have not been strong enough to create dramatic redundancies with the food industry. It is fairly apparent that the job roles of employees within all types of high street supermarket stores have changed. This is primarily due to the increase of Information Technology but it is also due to the increase of use of the Internet. The actual changes in job content vary according to the sector of the food industry.

The job content for employees working at high street supermarket stores has not changed dramatically due to the use of online supermarket providers. This is because all employees need to have basic computer skills when they start working, as they use computers to scan items and record information about what the supermarket is selling to its customers. Now that the Internet is being used widely to gain up to date information, it is necessary for the employees to have a gain a basic understanding of the Internet equivalent. Therefore the main change in employee job content is for the employees to have a basic knowledge of the Internet based equivalent and have basic IT skills.

Employees working for an online supermarket provider have a vast difference in their job content compared to high street supermarket stores. For this section of the travel industry, a different level of skill is required in order to carry out the necessary tasks. It is essential for employees to have computer skills, especially for data entry. Usually customers using an online supermarket can book using two methods, either book online if the facility is available or speak to an employee at a call centre who then makes the order for you. If the employee is working in the customer services department, they need to be able to make bookings and possibly search for product availability, whilst speaking to the customer on the telephone. If the booking is made online, with no call necessary, then firstly the Company needs fewer employees and secondly processing the booking easier. This is because the customer is entering all the necessary information including customer details, order details, delivery time, payment details etc. which means that employees are not needed for data entry as the customer does it themselves. Also, once the information is entered, it is processed immediately by searching through the Company's database for goods and ordering the relevant ones. The

data about the customer will also be held in the database so that when they make the next order, they will not have to re-type their information in again. They will be given a user name and password, all their data will be held in the account and they will be able to amend it if necessary. Therefore the job content of online supermarket providers has not changed to when they initially began operating as employees still need the same skills as they had required when they were hired.

Training

All supermarkets provide a service to the customers. This service is provided through the sales staff that are able to inform a customer about goods. Staff working at a supermarket need to have knowledge of where certain things can be found. As well as have a basic knowledge of computing skills to allow them to use the Electronic Point of Sale i.e. the checkout till. Most High street supermarkets often send their employees on a course about how to interact with the customers in a polite way and provide good customer service which is very important. This is not as common with online employees who work with the online service. This is because there is not face-to-face interaction between the client and the employee, it is done using e-mail. Customer interaction is very important in the high street stores as if the employee treats the customer with respect and aids them, the customer will feel like the service that they received was good and they will return to the store. The store may then be recommended to other people, therefore more people going to the store .i.e. higher income and profits.

Whether an employee is planning to start work at a high street or online supermarket, they do not need any specific qualifications except possibly GCSE's. Many online supermarket providers send their employees on a course that provides a basic understanding of the food industry. All supermarkets also have on-the-job training for their employees. With online supermarkets, an important part of this consists of computer training. Computer skills are required by all employees to operate the online ordering facility.

When an employee joins a high street supermarket, like Sainsbury's, they are provided with on the job training carried out by the manager, as they are not expected to have previous knowledge of the industry and how it works. The main training that is necessary is for the employee to learn how to use the EPOS (tills), to process information. This can be fairly complicated because there is no manual booklet and it will take the employee some time to get used to all the functions available as the user interface is bespoke. The employee needs to be comfortable with using the applications, this will come with time, and the employee will be able to use them with ease.

The training received by employees at the online supermarket differs according to the size of the Company. If the Company has a high street store or stores, such as Tesco, they tend to be sent to an outside training Company, not only to learn how to use certain applications but also to learn about the Company's objectives. Smaller online supermarkets may use a similar method to high street supermarkets by providing the job training. Employees working at online supermarkets need to be able to have fast typing skills as well as good telephone skills as a number of customers will use the telephone to place orders. There will also be a need for a technical line so that customers having problems with the online site can speak to an operator and hopefully get a solution to the problem that they are encountering. The employees working for the online service providing technical assistance will be required to have previous references and a high knowledge of computers. Therefore the training required by employees at online supermarkets will differ to the needs of the employees at the high street supermarkets.

2.3 Legal Issues

Online supermarket providers need to put in place high security levels on their websites to ensure customers are satisfied their data is kept confidential. Information such as customers' personal details and their credit card information can be kept secure through the use of the secure server software (SSL). This ensures that information can only be exchanged between the customers and the supermarket; therefore no third party can access the data. Pages that use the security system have a padlock symbol on the browser. This means that the website is a registered VeriSign Secure Site i.e. Sainsbury's is one. The information typed in is encrypted, which means that it protects the information from being disclosed to a third party. This would mean that each time the customer wants to make a booking online; they will be re-required to enter their payment details.

Customers that use a credit card to make an order are provided with extra security. This is due to the Consumer Credit Act 1974. The main credit card companies such as IBM and Netscape Communications are providing other methods to prevent hacking and interception of data which will improve the security of online transactions.

Certain online supermarket providers use tracking software to enable them to monitor the customer traffic patterns and site usage. This software however, does not enable the supermarket provider to capture information that can identify an individual; it is used to develop the design and layout of websites in order to meet the needs of customers. When orders are made online, the provider may use secure server software (such as SSL version 3, being the most recent version) which encrypts all the information input by the customer before it is sent to the Company.

Customer details must be kept private and confidential at all times. However, they can be kept using the necessary precautions under the Data Protection Act. Both online and high street supermarkets have to follow strict security procedures in the storage and disclosure of information given by customers in order to prevent unauthorised access to data. Tight security procedures can sometimes request that customers provide proof of identification before sensitive information is disclosed. The online supermarket providers may share the

customer's personal data with Sainsbury's Supermarkets Ltd or any Company from time to time forming part of the Sainsbury's Group fro market research, statistical analysis, and so that the customer can be contacted with details of special offers and products that may be of interest.

Once a customer has visited a website cookies will be stored. They are small pieces of information that are stored by the browser on the computer's hard drive. This enables Companies to provide features such as remembering customers e-mail addresses, so that the customer does not have to enter it each time they make an order. It is possible to delete cookies from the hard drive if the customer wants to. Most web browsers automatically accept cookies, but this can be changed on the customers' browser settings to prevent it. The cookies do not contain any information that identifies any individual.

2.4 Effect on small businesses

The largest online shopping sites are benefiting from the network effect, the growth in use of the Internet. Sellers want to be where the most buyers are, and buyers want to be where the most sellers are. I.e. the people using the Internet seem to prefer to shop at the more widely known websites rather than the small or medium less well known sites.

Examples of this include: - Customers have been overwhelming the most popular places to shop online, such as auctioneer eBay, merchandiser Amazon, Web browsers such as Yahoo, search engines Google, Lycos, and comparison-shopping sites like BizRate.

This year has been the biggest Internet selling year ever.

Also booming are the travel sites where people shop for aeroplane tickets and hotel rooms for the holidays, such as Interactive Corporations - Expedia, LastMinute.com, Travelocity, and Opodo.

On the whole, the Internet is good for the economy. By recording the trends of buyers, sellers can produce better quality goods more efficiently at more competitive prices than before. The big retailers are cutting billions from the annual cost to society of transacting business.

Also thriving are people who figure out how to utilise the power of the network effect. E.g. a 25-year-old graduate in a few years could become a major broker or "trading assistant" on eBay.

For others, though, the network effect is something to fear. Smaller retailers who do not provide the online equivalent have a harder time luring customers who are used to finding everything they want with a few mouse clicks while sitting at the comfort of their own home. Unfortunately, for some smaller retailers the effect of the Internet has meant loss in business as competitive prices are even harder to achieve. So, not only do they have to compete for customers who shop online but they have to try and lure customers in by providing competitive prices within the market which is difficult to achieve when it is a small business not selling in big quantities.

Nowadays, with the lifestyle of professional people leading very hectic lives, time for shopping is limited to unfriendly hours as small businesses cannot stay open to serve these customers. The smaller businesses are losing out to the online shopping equivalent. Even if the smaller businesses would go online, they would have to provide many services which would be a costly expense if they did not have many customers to provide them with business.

Smaller online shopping sites are easy enough to reach, but they are also losing share because so many potential buyers prefer the bigger sites with the most selection. Of course, there's still room for doing business on the Internet as it is very cheap, one does not need to be huge or have a well known name to make money. However, it is getting harder and harder to be a serious player. Everyone is competing in a bigger marketplace.

The biggest losers from the network effect are companies that used to thrive in a secure market by charging high prices to people who didn't know how to shop around. Airlines are the most prominent example. Not long ago, customers would go to a travel agency and seek their holidays by looking at travel brochures. They put their reliance in the customer service agent who would find them a holiday on his/her computer terminal connected to a mainframe, which would produce expensive fares.

Here the customer would choose from one of the holidays offered. However, nowadays services like Expedia make it possible for consumers to compare airlines like for like. More and more, when people think of flying, they think Expedia, not travel agents!

Sainsbury's to you has now had to diversify their products and go into drugs and pharmaceuticals as from the initial food products. This is a direct result of the larger firm such as Wall-mart who have come over from America and bought the third largest supermarket in England - Asda. This has led to greater buying powers of these companies, hence, cheaper prices from competition.

As a direct result of diversifying the smaller businesses, such as the local pharmacy in the high street, traders have started to feel big competition and loss of customers due to the price war. This may, in the near future, lead to closure of small stores. The price war started

in Oct '99 when Asda announced it would cut 10,000 items by between 5 and 10%. On Saturday, Sainsbury joined in and promised to match 1,500 goods at the lowest price available. Not to be outdone, Tesco has now cut the prices of 1,000 items by up to 20%.

Lower prices are good for the customer in the long term but one must remember that there any drawbacks. They are fine in the short term but there is a danger that the number of smaller supermarkets on the high street will drop in the long term, providing less choice for the consumer. It is not certain that the big three chains - Tesco, Sainsbury and Asda will be able to go on cutting their profit margins. The high street may change in the long term either because some of the retailers may become bankrupt or be taken over by a foreign company or a larger firm.

One can expect prices to go low and stay low for a while. But doubt must remain over the very long term as any closures on the high street will mean less choice and that is when we may see prices start to rise. A direct example of this can be seen in the forecourts of the petrol stations; many have now ceased business as the supermarkets have offered petrol at reduced prices. As a direct result of this, the prices of petrol are inflated due to lack in competition.

2.5 Conclusion

The increase in use of Information Technology has changed the way the food industry operates. There have been effects on the different types of supermarkets: high street, chain stores and online. The changes that have been made vary according to the supermarket and the extent to which Information Technology has been used.

Online supermarket providers would not have been able to operate without the use of the Internet and a market that wanted a service. Although online and high street supermarkets provide the same service to customers, they operate in different ways. High street supermarkets communicate directly with customers and are able to provide relevant information according to what the customer needs. With an online supermarket, the customer interacts with an application where they can find a lot of information which may not always be relevant. Supermarkets have to communicate with a variety of sources. This includes customers, manufacturers, and companies. The main source of communication that is now used by online companies is e-mail.

The issues that have arisen because of the increase in online shopping fall under social, moral, legal and political aspects. As the food industry is a service provided for society, it is very much affected by social issues. Moral issues are to do with dilemmas people face; it includes security and customers opinions regarding their orders. Legal issues are very important when dealing with customers. The use of both the Internet and high street supermarkets requires legislation to be followed. Although political issues are not a big aspect of this report, it can affect employment in both online and high street supermarkets.

The increased use of the online supermarkets could have an effect on employment. Redundancies could have been made as the high street supermarkets were not making enough sales to cover costs. Research has shown that there have not been massive job changes due to the Internet, but it is necessary for all employees who work with the online facility to have IT skills. Although it is apparent that employees working for the online facility need to have skills so that they can enter delete, edit and amend data entry. Online supermarkets need higher security because data is being entered on a user interface and

therefore data may be interceptable by third parties. All employees need training in order to use the applications and with data entry. Although training provided is different provided is different because online shopping need high data entries.

Therefore the increase in online supermarket providers has grown because it seems more and more customers are doing their shopping online, making it a fast growing popular trend.

It may seem a bit surprising to see that the online supermarkets have not affected the high street supermarkets massively. This is because some customers prefer the method of going to the supermarket and doing it themselves.

A2 Information and Communication Technology Coursework (Task 3)

Report

Rahul Shah

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