Battle of the Heavyweights
The retail world is a perpetual battleground on which winners and losers switch positions almost every day. One minute, a company may be on top. The next, that retailer could be battling its competitor for every dollar and every scrap of consumer market share.
A retailer's market position is determined by many things. For starters, consumer trends and needs continually change. Beyond that, retailers must contend with the many factors that impact everything from pricing and operations to overseas sourcing and replenishment. Some aspects of business are beyond their control. But having the best, most up-do-date information is often not. More and more, retailers are turning to cutting edge technologies as a means of monitoring and controlling all areas of business and driving down the incremental costs and unpredictable factors that affect their bottom lines.
In the following pages, RIS News takes a close look at the technologies employed by 14 competing retailers in seven segments. Information comes from the Sophia database from IHL Consulting Group, our own data base, publicly available sources, editorial research and retail companies. Information is as up-to-date as possible. While we cover a number of key technology categories, data is not intended to be inclusive of every vendor and every technology category. For more information about Sophia, go to ihlservices.com
LUXURIOUS LIVING
Nordstrom and Neiman Marcus appeal to consumers who appreciate the finer things in life.
Nordstrom, which operates 103 full line stores and several offshoots, plans to have 140 to 150 full line stores by 2015. Via a back-end system from Oracle, the $8.8 billion retailer has aligned e-commerce with its full line stores and catalogs to provide a "seamless" shopper experience. During 2007, online sales increased 16.7 percent to $633 million.
Neiman Marcus operates 39 Neiman's stores plus two Last Call clearance centers, Horchow's and Bergdorf Goodman. In fiscal 2008, e-commerce accounted for 75 percent of $14.4 billion Neiman's direct marketing revenue. Online sales totaled $304.7 million for the first half of 2008, an increase of 19 percent over the same fiscal 2007 period. Neiman's Web site is powered by ATG's personalization platform.
VALUE-DRIVEN SHOPPING
In some retail circles, Family Dollar and Dollar General fly a bit under the radar. Both target lower middle and lower income shoppers.
Family Dollar operates 6,430 stores in 44 states. Four thousand locations were added over the past 10 years. Most products retail for less than $10. A few years ago, the $6.8 billion retailer began serving urban areas more aggressively. It invested in human resources technology to help better screen job applicants.
Dollar General operates 8,309 locations. Thirty percent of the $9.2 billion company's merchandise is priced at $1 or less. Stores, with the exception of 56 larger format Dollar General Markets, average 6,900 square feet. In 2007, Dollar General was acquired by private investment firm Kohlberg Kravis Roberts & Co.
LADIES OF FASHION
Coldwater Creek and Chico's are two of the most successful cross-channel apparel retailers around. Historically, both have operated strong catalogs as well as brick and mortar stores. In recent years, the companies' e-commerce operations have blossomed.
While the retailers' fashion palettes are different, both target upper middle income professional women aged 35 to 60. While not super trendy, merchandise is fashion-forward and unstructured in fit. Chico's is known for its bold prints; Coldwater Creek specializes in more subdued fashions.
Coldwater Creek has almost 300 stores. This year, the $1.8 billion company plans to add 50 locations. Coldwater Creek also hopes to "right size" inventories in order to decrease markdowns.
Chico's FAS Inc. runs 789 women's specialty stores in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico under the Chico's, White House|Black Market, Soma by Chico's and Fitigues names. Two years ago, the $1.6 billion company began implementing SAP for Retail as its end-to-end solution to increase speed and coordination across its multi-branded enterprise. The solution provides integrated applications for merchandising, finance, procurement, supply chain management and product lifecycle management.
SAP's NetWeaver is the strategic foundation of the system. It has allowed the company to consolidate disparate legacy systems. SAP for Retail provides Chico's with comprehensive, real-time performance metrics and planning capabilities. Chico's also relaunched the Web storefronts for each brand with ATG's e-commerce suite. The product provides personalized shopping experiences and lets Chico's stage sophisticated merchandising campaigns.
YOUNG, HIP & TRENDY
Getting the picky teen and 20-something shopper to like a store or brand is no easy task. Attracting younger siblings and subsequent generations is even harder. One "yuck" and a retailer is eternally banished from the youth click. Urban Outfitters and Abercrombie & Fitch have overcome many of these challenges. By backing constant newness and innovation with cutting edge technologies, they offer a new "flash in the pan" to each generation of kids with disposable income.
In 2007, $4 billion Abercrombie & Fitch began replacing aging technology systems with an Oracle platform. Rollout of the new ERP system is being completed in three phases. The final part is slated for completion in 2009. The retailer, which operates 1,000 stores, also launched a Netzza data warehouse.
Other new applications include an identity and access management application from Novell, a biometrics tool for staff and a back-of-store wireless network. The latter allows store associates to use hand-held scanners to monitor and replenish stock levels. Scanners are synchronized with POS systems. Stores stock up to 20,000 SKUs.
Urban Outfitters runs 108 stores under the Urban Outfitters brand. It also operates 100 Anthropologie locations and 14 Free People stores. In 2006, it implemented Manhattan Associates' Supply Chain solutions. The product has helped increase productivity, visibility and product flow in the supply chain and has improved collaboration with trading partners. Turn time has gone from three days to less than 24 hours.
Urban Outfitters has also been aggressive online. During the fourth quarter of fiscal 2008, Web and catalog sales increased 39 percent to $72.9 million. ATG's personalization platform facilitates product searches and checkouts.
BUBBA'S FIRST STOP
When it comes to beer, fountain soda and pay-at-the-pump, Circle K and 7-Eleven are among the most aggressive and recognizable of North American gas and convenience store chains.
At 7-Eleven, developing products from scratch is a way of life. The retailer, whose annual sales are more than $40 billion, created the Big Gulp, America's first giant (and very high margin) fountain drink. Years later, many C-stores are still trying to emulate a success story that, essentially, transformed a paper cup into a highly recognizable household name.
7-Eleven was ahead of its time in technology, too. In the early 1990s, it developed a proprietary retail information system. By 1999, the system was in use at all stores, handling everything from POS functions and credit card authorizations to reporting and payroll. It also tracks the fastest and slowest moving items. Recently, 7-Eleven began installing cash terminals from Wincor Nixdorf.
In the U.S., 7-Eleven operates and franchises 7,100 convenience stores under the 7-Eleven name and other brands (1,200 of is locations are in California). Stores range from 2,400 to 3,000 square feet and carry about 2,400 items. Worldwide, stores total 30,000 and are located in 18 countries.
Circle K has set its sights set on owning 10 percent of the U.S. convenience store market. But this goal was not always in sight. It was acquired and sold several times during the late 1980s and early 1990s. It also filed for Chapter 11 bankruptcy protection. In 2003, it was purchased by $12 billion Montreal-based Alimentation Couche-Tard and has spent three years beefing up its store base and technology arsenal.
Circle K has updated stores' POS systems, implemented labor scheduling and productivity technology and launched a gift card program. A data warehouse conversion system allows the company to conduct market basket analysis in all stores. It also joined forces with DemandTec to implement the supplier's Price and Promotion software. In the U.S., there are more than 2,100 Circle K's. Alimentation Couche-Tard also operates stores in Canada.
GEAR & MOTOR HEADS
The automotive after market is one of the most SKU and service intensive retail businesses around. In addition to carrying the right products and accessories for do-it-yourselfers and professionals in stores and via Web sites, retailers must offer top quality, efficiently scheduled repair and maintenance services.
AutoZone is the only national player in the game. It is rapidly putting many regional competitors to shame. It recorded 2007 sales of $6.2 billion and operating margins of 17.1 percent. Last year, it opened its 4,000th store. Much growth, says the company, came from the commercial side of its business. It has made ongoing investments in this area.
On the technology side, it implemented Z-net assortment planning software in all U.S. and Mexican stores in 2007. The electronic parts catalog offers enhanced diagrams and schematics to help shoppers with repairs. The retailer also installed new assortment planning software.
Pep Boys operates 592 stores in 36 states and Puerto Rico. Over the last 18 months, it began using SPSS Inc.'s predictive analytics software to create forecast models for determining future sales probability by part number and by store. The product can also help the retailer micro market by location.
But $2.1 billion Pep Boys faces challenges. Following a period of declining sales and earnings, the company launched a "hub and spoke" plan that involves opening smaller neighborhood service shops. Stores, which are alternatives to the company's larger, 18,200 square foot supercenter format, can serve smaller markets. They leverage existing inventories, distribution networks, operations infrastructure and advertising. The company began a store leaseback program to raise capital for the initiative.
SOFAS & SCENTS
It is a tough time to be in the furniture business. Across the board, many major furniture retailers are reporting disappointing sales and earnings. A few have even shut their doors for good. While Pier 1 Imports and Pottery Barn both have extensive store bases, they have not escaped problems inherent to the category wide downturn.
Pier 1 has experienced steady declines for several years. Sales fell 8.3 percent in 2007 to $1.6 billion. While the company has tried to diversify its furniture and decorative home accessory product mix, customers still think of the retailer as a destination for wicker and Asian-themed items.
In 2007, Pier 1 sold off its credit card operations . It launced an e-commerce platform that allows customers to utilize discount and coupon codes and redeem gift cards.
According to Pier 1's 10K, the retailer plans to improve supply chain efficiency by simplifying the process, improve visibility and inventory turns and reduce costs. Pier 1 also wants to develop a more effective planning and allocations team and make its marketing more cost effective. Pier 1 operates 100 store locations in 49 states.
Pottery Barn, the largest division of $3.8 billion Williams-Sonoma, has also been under the weather.
In a financial statement, the company calls for a "revitalization" of the Pottery Barn brand and points to "operational issues" that may be infringing on the effectiveness of merchandising and marketing operations and overall execution. Company wide, Williams-Sonoma hopes to cut costs by reducing catalog circulation and managing inventory more aggressively. It also plans to continue investing in new stores.
An August 2007 purchase of a Teradata data warehouse could help. Across all brands, Williams- Sonoma is using an eight-node Teradata 5450 platform for operations and a two-node Teradata 5450 platform for testing, development and disaster recovery. The data warehouse provides the company with a single data source and a business intelligence platform.
A retailer's market position is determined by many things. For starters, consumer trends and needs continually change. Beyond that, retailers must contend with the many factors that impact everything from pricing and operations to overseas sourcing and replenishment. Some aspects of business are beyond their control. But having the best, most up-do-date information is often not. More and more, retailers are turning to cutting edge technologies as a means of monitoring and controlling all areas of business and driving down the incremental costs and unpredictable factors that affect their bottom lines.
In the following pages, RIS News takes a close look at the technologies employed by 14 competing retailers in seven segments. Information comes from the Sophia database from IHL Consulting Group, our own data base, publicly available sources, editorial research and retail companies. Information is as up-to-date as possible. While we cover a number of key technology categories, data is not intended to be inclusive of every vendor and every technology category. For more information about Sophia, go to ihlservices.com
LUXURIOUS LIVINGNordstrom and Neiman Marcus appeal to consumers who appreciate the finer things in life.
Nordstrom, which operates 103 full line stores and several offshoots, plans to have 140 to 150 full line stores by 2015. Via a back-end system from Oracle, the $8.8 billion retailer has aligned e-commerce with its full line stores and catalogs to provide a "seamless" shopper experience. During 2007, online sales increased 16.7 percent to $633 million.
Neiman Marcus operates 39 Neiman's stores plus two Last Call clearance centers, Horchow's and Bergdorf Goodman. In fiscal 2008, e-commerce accounted for 75 percent of $14.4 billion Neiman's direct marketing revenue. Online sales totaled $304.7 million for the first half of 2008, an increase of 19 percent over the same fiscal 2007 period. Neiman's Web site is powered by ATG's personalization platform.
VALUE-DRIVEN SHOPPINGIn some retail circles, Family Dollar and Dollar General fly a bit under the radar. Both target lower middle and lower income shoppers.
Family Dollar operates 6,430 stores in 44 states. Four thousand locations were added over the past 10 years. Most products retail for less than $10. A few years ago, the $6.8 billion retailer began serving urban areas more aggressively. It invested in human resources technology to help better screen job applicants.
Dollar General operates 8,309 locations. Thirty percent of the $9.2 billion company's merchandise is priced at $1 or less. Stores, with the exception of 56 larger format Dollar General Markets, average 6,900 square feet. In 2007, Dollar General was acquired by private investment firm Kohlberg Kravis Roberts & Co.
LADIES OF FASHIONColdwater Creek and Chico's are two of the most successful cross-channel apparel retailers around. Historically, both have operated strong catalogs as well as brick and mortar stores. In recent years, the companies' e-commerce operations have blossomed.
While the retailers' fashion palettes are different, both target upper middle income professional women aged 35 to 60. While not super trendy, merchandise is fashion-forward and unstructured in fit. Chico's is known for its bold prints; Coldwater Creek specializes in more subdued fashions.
Coldwater Creek has almost 300 stores. This year, the $1.8 billion company plans to add 50 locations. Coldwater Creek also hopes to "right size" inventories in order to decrease markdowns.
Chico's FAS Inc. runs 789 women's specialty stores in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico under the Chico's, White House|Black Market, Soma by Chico's and Fitigues names. Two years ago, the $1.6 billion company began implementing SAP for Retail as its end-to-end solution to increase speed and coordination across its multi-branded enterprise. The solution provides integrated applications for merchandising, finance, procurement, supply chain management and product lifecycle management.
SAP's NetWeaver is the strategic foundation of the system. It has allowed the company to consolidate disparate legacy systems. SAP for Retail provides Chico's with comprehensive, real-time performance metrics and planning capabilities. Chico's also relaunched the Web storefronts for each brand with ATG's e-commerce suite. The product provides personalized shopping experiences and lets Chico's stage sophisticated merchandising campaigns.
YOUNG, HIP & TRENDYGetting the picky teen and 20-something shopper to like a store or brand is no easy task. Attracting younger siblings and subsequent generations is even harder. One "yuck" and a retailer is eternally banished from the youth click. Urban Outfitters and Abercrombie & Fitch have overcome many of these challenges. By backing constant newness and innovation with cutting edge technologies, they offer a new "flash in the pan" to each generation of kids with disposable income.
In 2007, $4 billion Abercrombie & Fitch began replacing aging technology systems with an Oracle platform. Rollout of the new ERP system is being completed in three phases. The final part is slated for completion in 2009. The retailer, which operates 1,000 stores, also launched a Netzza data warehouse.
Other new applications include an identity and access management application from Novell, a biometrics tool for staff and a back-of-store wireless network. The latter allows store associates to use hand-held scanners to monitor and replenish stock levels. Scanners are synchronized with POS systems. Stores stock up to 20,000 SKUs.
Urban Outfitters runs 108 stores under the Urban Outfitters brand. It also operates 100 Anthropologie locations and 14 Free People stores. In 2006, it implemented Manhattan Associates' Supply Chain solutions. The product has helped increase productivity, visibility and product flow in the supply chain and has improved collaboration with trading partners. Turn time has gone from three days to less than 24 hours.
Urban Outfitters has also been aggressive online. During the fourth quarter of fiscal 2008, Web and catalog sales increased 39 percent to $72.9 million. ATG's personalization platform facilitates product searches and checkouts.
BUBBA'S FIRST STOPWhen it comes to beer, fountain soda and pay-at-the-pump, Circle K and 7-Eleven are among the most aggressive and recognizable of North American gas and convenience store chains.
At 7-Eleven, developing products from scratch is a way of life. The retailer, whose annual sales are more than $40 billion, created the Big Gulp, America's first giant (and very high margin) fountain drink. Years later, many C-stores are still trying to emulate a success story that, essentially, transformed a paper cup into a highly recognizable household name.
7-Eleven was ahead of its time in technology, too. In the early 1990s, it developed a proprietary retail information system. By 1999, the system was in use at all stores, handling everything from POS functions and credit card authorizations to reporting and payroll. It also tracks the fastest and slowest moving items. Recently, 7-Eleven began installing cash terminals from Wincor Nixdorf.
In the U.S., 7-Eleven operates and franchises 7,100 convenience stores under the 7-Eleven name and other brands (1,200 of is locations are in California). Stores range from 2,400 to 3,000 square feet and carry about 2,400 items. Worldwide, stores total 30,000 and are located in 18 countries.
Circle K has set its sights set on owning 10 percent of the U.S. convenience store market. But this goal was not always in sight. It was acquired and sold several times during the late 1980s and early 1990s. It also filed for Chapter 11 bankruptcy protection. In 2003, it was purchased by $12 billion Montreal-based Alimentation Couche-Tard and has spent three years beefing up its store base and technology arsenal.
Circle K has updated stores' POS systems, implemented labor scheduling and productivity technology and launched a gift card program. A data warehouse conversion system allows the company to conduct market basket analysis in all stores. It also joined forces with DemandTec to implement the supplier's Price and Promotion software. In the U.S., there are more than 2,100 Circle K's. Alimentation Couche-Tard also operates stores in Canada.
GEAR & MOTOR HEADSThe automotive after market is one of the most SKU and service intensive retail businesses around. In addition to carrying the right products and accessories for do-it-yourselfers and professionals in stores and via Web sites, retailers must offer top quality, efficiently scheduled repair and maintenance services.
AutoZone is the only national player in the game. It is rapidly putting many regional competitors to shame. It recorded 2007 sales of $6.2 billion and operating margins of 17.1 percent. Last year, it opened its 4,000th store. Much growth, says the company, came from the commercial side of its business. It has made ongoing investments in this area.
On the technology side, it implemented Z-net assortment planning software in all U.S. and Mexican stores in 2007. The electronic parts catalog offers enhanced diagrams and schematics to help shoppers with repairs. The retailer also installed new assortment planning software.
Pep Boys operates 592 stores in 36 states and Puerto Rico. Over the last 18 months, it began using SPSS Inc.'s predictive analytics software to create forecast models for determining future sales probability by part number and by store. The product can also help the retailer micro market by location.
But $2.1 billion Pep Boys faces challenges. Following a period of declining sales and earnings, the company launched a "hub and spoke" plan that involves opening smaller neighborhood service shops. Stores, which are alternatives to the company's larger, 18,200 square foot supercenter format, can serve smaller markets. They leverage existing inventories, distribution networks, operations infrastructure and advertising. The company began a store leaseback program to raise capital for the initiative.
SOFAS & SCENTSIt is a tough time to be in the furniture business. Across the board, many major furniture retailers are reporting disappointing sales and earnings. A few have even shut their doors for good. While Pier 1 Imports and Pottery Barn both have extensive store bases, they have not escaped problems inherent to the category wide downturn.
Pier 1 has experienced steady declines for several years. Sales fell 8.3 percent in 2007 to $1.6 billion. While the company has tried to diversify its furniture and decorative home accessory product mix, customers still think of the retailer as a destination for wicker and Asian-themed items.
In 2007, Pier 1 sold off its credit card operations . It launced an e-commerce platform that allows customers to utilize discount and coupon codes and redeem gift cards.
According to Pier 1's 10K, the retailer plans to improve supply chain efficiency by simplifying the process, improve visibility and inventory turns and reduce costs. Pier 1 also wants to develop a more effective planning and allocations team and make its marketing more cost effective. Pier 1 operates 100 store locations in 49 states.
Pottery Barn, the largest division of $3.8 billion Williams-Sonoma, has also been under the weather.
In a financial statement, the company calls for a "revitalization" of the Pottery Barn brand and points to "operational issues" that may be infringing on the effectiveness of merchandising and marketing operations and overall execution. Company wide, Williams-Sonoma hopes to cut costs by reducing catalog circulation and managing inventory more aggressively. It also plans to continue investing in new stores.
An August 2007 purchase of a Teradata data warehouse could help. Across all brands, Williams- Sonoma is using an eight-node Teradata 5450 platform for operations and a two-node Teradata 5450 platform for testing, development and disaster recovery. The data warehouse provides the company with a single data source and a business intelligence platform.