Industry News for the week of September 26, 2006

9/26/2006

HOTLINE

Motorola to Acquire Symbol Technologies
Motorola and Symbol Technologies have signed a definitive merger agreement, under which Motorola has agreed to acquire all of the outstanding shares of Symbol for $15 per share in cash. The transaction has a total equity value of approximately $3.9 billion on a fully-diluted basis. As of June 30, 2006, Symbol had approximately $200 million of net cash. Upon completion of the transaction, Symbol will become a wholly owned subsidiary of Motorola. The acquisition is subject to customary regulatory approval and the approval of Symbol's stockholders, and is expected to be completed in late 2006 or early 2007.

In acquiring Symbol, which has the tag line "The Enterprise Mobility Company," Motorola is buying a business that includes wireless technologies, mobile computing, Radio Frequency Identification (RFID), and scanner technology commonly found in retail checkout counters. Symbol brings to Motorola more than 900 patents and thousands of enterprise customers.

Industry analysts weigh in on the acquisition:

Rob Garf, AMR Research: This one will shake up the market a bit. Having Symbol team up with Motorola gives the combined company the ability to tap into the cell phone market, and almost every U.S. consumer has a cell phone. Until now, the role of personal shopping assistant has been somewhat slow to take hold. On day one, this new company will have at its disposal a critical mass of users of this type of technology. Look at some of the retailers who have invested in handhelds Â€” they have had to take on the capital costs, but now can rely on the consumer for the capital costs.

Greg Buzek, IHL Consulting: This acquisition finally brings credibility to the discussion of mobile commerce. Symbol has owned many patents in the area of scan engines and particularly small ones. They have had a history of vigorously defending and litigating those patents in the past to the point that many vendors have been unwilling to work with them. When it comes to mobile commerce, no single vendor has had all the pieces and Symbol had the missing scanner piece. With Motorola purchasing Symbol, mobile commerce and just mobility in all facets will take a strong step forward.

Bud Wagner, CSC Consulting Group: All in all, this acquisition promises to push RFID to the next level as retail and consumer product companies find creative ways to leverage the technology. This could become a powerful tool in optimizing an item's sell-through by having the right product in the right place at the right time.

Eric Austvold, AMR Research: This acquisition will inevitably trigger further consolidation as the likes of Nokia, Ericsson, and others look to snap up someone like Intermec, a Symbol competitor. Standing alone in this market just became unattractive. Motorola benefits from the timing. By acquiring an early RFID pioneer like Symbol, Motorola gets the benefit of Symbol's experience without the pain of initial investment. It also creates an opportunity to grow business from new enterprise customers by aligning with carrier partners like Cingular, AT&T, Verizon, or Sprint to provide new possibilities for mobile computing.

TECH TACTICS

Carrefour Promotes Customer Loyalty in France
Groupe Carrefour implements Retalix Loyalty and Promotions in 217 hypermarket stores in France, serving more than eight million loyalty club members through 13,000 point-of-sale terminals. Retalix Loyalty and Promotions provides integration between promotion and loyalty functionality throughout all stages of the marketing process, from headquarters to store Â€” starting with central setup and deployment of marketing campaigns to the execution of promotions and personalized programs at the point of sale.

Casual Male Aims to Manage Product Lifecycle and Global Sourcing
Casual Male selects New Generation Computing (NGC) to manage its Product Lifecycle and Global Sourcing needs. NGC's e-SPS is a Web-based integrated PLM and Global Sourcing solution. Casual Male is installing e-SPS at its Canton, Massachusetts, headquarters to help streamline design, product development, sourcing, production and inbound logistics. NGC's e-SPS solution will enable Casual Male's global sourcing team to improve efficiencies and to gain real-time visibility from initial product concept to receipt in its distribution centers and retail outlets via the Internet.

USMC Upgrades Merchandising System
The U.S. Marine Corps (USMC) upgrades to the latest version of Jesta's Vision Merchandising solution at 14 Commands in 180 locations throughout the United States. The new version from Jesta offers full EDI capability and a platform that will facilitate further enhancements to its existing systems. Other key components include: Style Cost Management and Vendor Rebates and Purchase Order Management. Vision Merchandising is Web-enabled system and built on Oracle Application Server 10g.

NEW TECHNOLOGIES

NCR Launches POS Workstation for Small and Mid-Sized Retailers
NCR introduces its RealPOS family Point-of-Sale workstations, which are designed
to deliver a new level of investment value through a combination
of performance, reliability and functionality. Driven by Intel technology, the NCR RealPOS 21 supports the latest POS applications while accommodating retailers' future needs. It features a 15-inch resistive touch screen and peripheral options such as a variety of printers, including NCR's latest two-sided multifunction printer, a complete family of bar-code scanners, customer displays, payment terminals and biometric devices.

Fujitsu Reveals New iPAD Model
Fujitsu Transaction Solutions announces an upgraded model of its Fujitsu 100-20 iPAD computer, a powerful, retail-hardened mobile device that integrates multiple applications into a single, compact solution, making it ideal for Pervasive Retailing environments. The new will support multiple customer-facing applications such as guided-selling, inventory look-up and price verification, line-busting, and even sidewalk sales. By combining numerous functions in one device Â€” such as voice-over IP capabilities Â€” the iPAD also reduces operating costs by eliminating the need for portable phones and pagers.

SUPPLIER SCENE

HighJump Software to Acquire Global Beverage Group
HighJump Software, 3M company, plans to acquire Global Beverage Group, a provider of software for the direct-store-delivery of consumer packaged goods. Terms of the transaction are undisclosed. Global Beverage Group has more than 500 customers across many industries, including soft drinks, beer, baked goods, wine and spirits and snack foods. Customers include PepsiAmericas, Coca-Cola enterprises, Snapple Distributing, and Sara Lee Baking.

This acquisition is consistent with HighJump Software's source-to-consumption offering by adding focus on the point of consumption area of the supply chain.

Walls Signs on with TradeCard
Walls Industries implements TradeCard supply chain system to streamline its sourcing operations and improves vendor relations. The TradeCard system will: automate transactions from procurement to payment; extend visibility along the supply-chain; cut down on costly manual, paper-based processes; improve relations with vendors through enhanced data sharing, compliance, and cooperation; and benefit from unique financial services, such as TradeCard's Early Payment Program, to improve margins.

ALLIANCES

CommercialWare and Mercent Create Integrated Marketing Platform
CommercialWare and Mercent introduce a joint technology offering that helps merchants generate, capture, and manage consumer demand through online marketing channels. The combined solution promotes merchandise managed within CommercialWare cross-channel retail applications to more than 150 million online shoppers through Mercent Retail, a hosted software service. The integrated offering provides a single point of integration into 30 leading online channels including transactional marketplaces such as Amazon.com, shopping portals including AOL inStore, Google Base, MSN Shopping and Shopping.com, as well as affiliate marketing programs such as Performics.

Harte-Hanks Purchases AberdeenGroup
Harte-Hanks' board of directors approves the acquisition of AberdeenGroup, pending shareholder approval and customary conditions set fourth by the companies. The purchase is expected to close by the end of September. AberdeenGroup gathers market research on 17 different business areas, including retail and financial services, sales and marketing, human resources, service, and supply-chain management and procurement. Harte-Hanks' database tracks the technology infrastructure, business profiles and technology purchase plans at 680,000 locations in North America, South America and Europe. Plans are set to retain all of AberdeenGroup's employees; the company's offices and analysts also will remain in the Boston area.

MANAGEMENT ON THE MOVE

Thomas Nealon to Take Over as EVP and CIO of JCPenney
Thomas Nealon assumes the positions of executive vice president andchief information officer of JCPenney, where he will oversee the company's information technology, including the design and ongoing development of systems and infrastructure to support strategic business objectives. He will lead the development of systems for jcp.com, the billion-dollar e-commerce site that serves as the hub of the company's cross-channel retailing strategy linking stores, catalog and the Internet. Nealon brings more than 20 years of experience in designing and implementing technologies for leading corporations. He comes to JCPenney from EDS, where he served on assignment as the senior VP and CIO at Southwest Airlines.

Circuit City Names Peter Weedfald as Senior VP and CMO
Peter Weedfald is named senior vice president and chief marketing officer for Circuit City. He joined the company earlier this year as senior VP and GMM for entertainment/content. Prior to that, he was senior VP of sales and marketing for U.S. consumer electronics and North American corporate marketing for Samsung Electronics America.

EXECUTIVE INTELLIGENCE

Appreciating the Bigger Picture
by John L. Stelzer

The Retail industry has long been known as an avid user of technology to drive efficiency and improve competitive advantage. And, there's no indication that it will step out of character any time soon.

But, where will it go next? Sure, we see the increasing adoption of item synchronization throughout the industry with pricing, promotion, and party (i.e., organizational information) synchronization waiting in the wings. We read about widespread increases in collaboration. And, we hear about pilots with such initiatives as SBT (scan-based trading) and RFID (radio frequency identification). But, these are simply steps in a longer journeyÂ€¦one that points the way to more significant levels of competitive advantage for those willing/able to make the trip.

So, then, when we step back from the trees long enough to survey the forest and appreciate current initiatives within a more holistic scope, where do we see all of this going?

Start with the End in Mind
It's usually easier to understand the legs of a journey if you have a picture of where you're ultimately going. [Most companies don't subscribe to the Yogi Berra's "We may be lost, but we're making good time." strategy.] With that in mind, let's look at the optimal state and see what it tells us about where our journey will most likely take us.

Let's begin by surveying the landscape we're trying to manage. For the retailer, it's composed of three critical worlds:

Customer-facing -- The story begins, of course, with the end consumer who creates the demand that makes everything else matter. Fail here and there's no game to be played. This world includes the multiple channels through which the retailer touches the consumer (e.g., stores, Web, catalogues, call centers, media, etc.).

Internal Operations -- Of course, success only comes to those who can run their businesses efficiently and cost-effectivelyÂ€”which means the need for seamless orchestration across all functional areas of the retailer (e.g., store operations, merchandising, distribution/logistics, etc.) that drive growth and/or profitability.

Supplier-facing -- And, of course, there's the retailer's interactions with all those who produce and deliver the products that the retailer sells to its customers. Fail here and you'll be selling from an empty cart.

The reality is that each of these three worlds is critical for the retailer. But, a similarly significant reality is that they are highly interdependent, as well. And, it's precisely that interdependence that signals where the industry is headed long term.

It Isn't Pretty, but Look Anyway
You see, when components are heavily dependent on one another, they must work together seamlesslyÂ€”as a single holistic entityÂ€”or they generate negative impact. And, in the hyper competitive world that is Retail, that negative impact comes in two very unacceptable forms: (a) negative consumer experiences and (b) inefficiencies (and, therefore, higher operating costs).

So is it, that forward-thinking retailers are beginning to view their three worlds as a single holistic continuum from source to sale (i.e., from the source of the finished goods to the end sale and fulfillment to the consumer). They realize that a breakdown or delay in the process anywhere along that continuum causes one or both of the unpalatable impacts we just identified.

Unfortunately for most companies, when they stand back and view their three worlds as a single source-to-sale process, it isn't pretty. They find a myriad of troubling gaps that are directly or indirectly undermining their top and/or bottom lines. A few examples provide a glimpse into just some of the areas that we'll see these pro-active retailers focusing on in the upcoming months/years:

Without A (Multi-Channel) Clue
Consumer activity isn't visible across multiple sales channels. So, the customer can't purchase the product online and pick it up or return it in-store. The store has no knowledge of the online purchase price. So, the store associate is forced to refuse the return or blindly credit the customer the in-store price hoping that it's somehow the same as the customer paid online. In-store loyalty cards are meaningless to the Web site. And, customer convenienceÂ€”to say nothing about behavioral trackingÂ€”goes down the drain.

Inventory In Limbo
There's no coordination across processes to enable returns to reach their intended destination (e.g., return to shelf, return to stock, ship to repair center, route to third party for return authorization handling, return to supplier for credit, etc.) in a timely, automated manner. Therefore, liquidity is undermined.

The "You're On Your Own" Service Center
Store associates have no visibility into inventory availability in other stores, distribution centers, etc. They have no access to order or inbound in-transit shipment status. And, they have no automated means of triggering inventory transfers or initiating and tracking non-stock special orders. Therefore, customer inquiries go unanswered and sales are lost.

Corporate Blind Man's Bluff
Warehouses have no networked visibility into or centralized control over local operations to balance inventories, enforce policies, etc. They have little or no communication with storesÂ€¦which leaves store personnel unable to service customer needs or reliably set customer expectations.

Mistakes At Hyper-Speed
Communication with supply network partners might already include the electronic exchange of orders, order acknowledgments, advanced shipping notices, and invoices, but there's no automated reconciliation across functional areas to identify inaccuracies or inconsistencies. Therefore, habitual supplier errors continue undetected and uncorrected.

What's The Hurry?!
There's minimal leveraging of shipping information to speed processes such as receiving, cross-docking, special routing of inbound product (e.g., drop-ship to customer, route to customer service for customer pickup, restock shelf immediately, hold for display stocking on the promotion date, etc.), etc. Therefore, stock-outs or excess inventory are the norm.

Life Isn't Exciting Enough
And, there's no mechanism to identify and pre-act to exceptions across the source-to-sale continuum in time to minimize or avoid negative repercussions. Therefore, the first you hear of a problem is when the pain starts (for you and/or your customer).

In Summary:
For decades, we've collectively been moving in the right direction without fully understanding our destination. Now, after years of attempting to solve the problem from a variety of anglesÂ€”each of which helped in its own way, but still fell short of the end goalÂ€”we're coming to the realization that only through source-to-sale excellence can we finally fill the gaps that continue to plague our attempts at delivering a unified customer experience.

At the end of the day, it's anybody's guess what the next initiative will be. As Yogi Berra put it, "It's tough to make predictionsÂ€¦especially about the future." But, we can be certain that each initiative will fill another gap in the source-to-sale process. And, every initiative will move the proactive companies one more step ahead of their reactive competitors.

John Stelzer is Director of Industry Development for Sterling Commerce. Since 1984, he has been providing education and consulting on electronic commerceÂ€”to date, educating more than 27,000 professionals from over 16,000 companies. For more information on electronic commerce in the retail industry, John can be reached at 614.793.7046 or [email protected]