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Retail ERP Software: 5 Great Benefits With 8 Implications & 2 Challenges

Retail industry & ERP software

In today’s competitive market, the consumer society welcomes the retail industry with red carpet.

Retail refers to the sale of goods to the end-users, but it doesn’t mean to resell them.

Moreover, these goods and commodities can only be used and consumed by the purchasers.

Manufacturing companies sell large quantities of these manufactured goods to retailers, while the retailers sell small quantities of these supplied products to the end consumers.

A consumer, looking forward to buying a product for his/her personal use, will typically choose to purchase it either from a retail store or any other marketing channel.

Now the question arises what is the role of using the ERP system in the retail industry, what key challenges the retail sector has to face when it comes to effectively implementing this software solution in your company, and what kinds of competitive benefits a retail business can consistently enjoy from using ERP system.

But before you know all about the role, benefits, challenges of an ERP software in the retail industry, let’s first learn about the Enterprise Resource Planning (ERP) system.

What is Enterprise Resource Planning (ERP) system?

ERP software is an integrated computer-enabled system that helps in managing external and internal resources such as tangible assets, materials, financial resources, and human resources.

Its major goal is to streamline the data transfer between all business processes taking place inside an organization and manage the connections to outside stakeholders.

Built on a central database and typically using a normal computing platform, it integrates all business functions into an enterprise-wide and uniform system environment.

What is retail ERP system and how it benefits the retail industry?

The ERP system actually means the software packages that consolidates all the information and the associated processes of a company into a unified Information System (IS).

It uses a centralized database that consists of all the data related to several system modules.

To get perfect integration, the system makes use of multiple software and hardware component.

The larger retail chains heavily depend upon the ERP packages. Built to administer and optimize an organization’s core internal business processes, the ERP packages have turned out to be the competitive means for the majority of large retail enterprises.

The system utilizes a single database that enables the various departments to interact with one another via data sharing. The system helps in comprising operation-specific modules that are created to interact with the other components including the order entry, accounts receivable, accounts payable, distribution, purchasing etc.

It consolidates various components like sales, purchase, order entry, finances, inventory management, DRP (Distribution Resource Planning) and human resources.

Which contemporary challenges the retail industry is facing?

In today’s competitive business environment, the retail industry has to face two major problems that pose threats to its profitability and long-standing survival prospects.

The twin problems are:

  1. Market competition

To overcome the competition, retail companies need to take into account consumer needs while interacting and act upon the multiple inputs in real-time throughout the enterprise.

Here the retail companies need to be proactive so that they can sense the particular demands of the consumer ahead of other competitors and reply to them in real-time.

  • Regulatory pressures

To complement the regulatory standards, the retail companies need enterprise-wide process visibility, immediate performance reporting and data access. However, the requirement for flexibility, reliable data, responsiveness, and efficient process is extremely tough to get taking into account the current portfolio of legacy, packaged and homegrown software applications that most retail organizations put to use.

Which are the key components of the ERP software for the retail industry?

Some major modules of a retail ERP software for the retail industry are:

  1. Supply chain planning & execution – This module supports the internal and external supply chain process by covering both the planning and the execution part of the supply chain management in retail.
  2. Merchandise management – This component for the retail ERP software helps in supporting the merchandise management operations taken on by the retailers.
  3. Corporate administration – This element of ERP facilitates the data needs of the administration and typically comprises the process management and compliance reports that top management for the decision-making purposes needs. 
  4. Store operations – This module handles all functions allied to the store management function.
  5. Retail planning – This element helps retailers in undertaking the planning functions at a small as well as large scale according to the demand of the situation.

What are the business implications of using ERP software in the retail industry?

There are immense business implications of a retail ERP software. The ERP packages allow the retailers to manage their enterprise-wide operations in a better way.

It gives a perfect solution to the majority of retail information processing challenges by facilitating a detailed solution to take care of a complex retail business.

A few major yet highly competitive advantages of an ERP software in today’s retail sector are:

  1. Reduction in the overhead and Inventory
  2. Graphical User Interface (GUI) support
  3. Knowledge transfer between industries
  4. Optimum utilization of the resources
  5. Easy scalability and adaptability
  6. Integrated work environment
  7. Enterprise-wide solution
  8. Timely responsiveness


An ERP software allows retailers in managing their core businesses activities efficiently and effectively by facilitating consistent and integrated information flow.

Not only does it simplify the tasks of tracking transactions but also automates the recording of the transactions in a real-time environment. For larger retailing organizations, it has now become the most essential tool to survive and increase profitability.

Plus, a retail ERP software simplifies a retail business by leveraging the computing power the advanced Information Systems (IS) offer in a consistent and integrated manner.

Serge Janssen Daalen
I love business operations and the magic of great tools. How we can improve the quality of the work and pleasure doing it.

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