On the way to an evening reception at a recently concluded SAP industry analyst event, I had a thought provoking discussion with Michael Braine, CIO at Tapestry. We spoke about critical challenges and technology prioritization requirements facing retailers and brands in prevailing times. Entrusted to lead his company’s technology game-plan, Braine discussed Tapestry’s multi-brand global technology strategy at length which includes expanding its digital capabilities, upgrading of core enterprise technology platforms and enhancement of international supply chain- all critical areas to further Tapestry’s evolution as a multi-brand luxury fashion company. Tapestry is a multinational luxury fashion company that owns Coach New York, Kate Spade and Stuart Weitzman. The conclusion we arrived at is that the challenges facing Tapestry, other luxury fashion companies, retailers and brands may be at times are unique at a country-level but at a macro-level are quite similar.
Along with Braine, this SAP meet brought together several industry analysts who were given a sneak-peek into SAP’s 2018 industry solutions strategy. There were three pertinent and strategic questions that I arrived at and pondered over the most concerning the future of retail and consumer goods. These are:
- Has the digital enterprise trend already passed us?
- What is the next wave in retail and consumer goods after digital transformation- is it the Intelligent Enterprise as some companies and analysts are professing today?
- With stunted growth across several segments, how do consumer industry companies and other industries address growth and innovation moving forward?
My own personal take on the aforementioned questions is that innovation must receive immediate and due attention within consumer industries for achieving growth. Moreover, every phase in an industry’s technology evolution will surpass the previous one unprecedented ways so organizational fear or lack of budget should not be an excuse anymore. But, by no means have retailers and consumer good companies seized upon the opportunity presented by digital transformation to its fullest extent in the current post-dotcom, post-business intelligence and post-social commerce evolutionary cycle. And, even as digital as a construct has not gone past its expiration date just yet, sensory, artificial intelligence and edge technologies have emerged swiftly to provide some answers to the age-old business problems facing consumer industries.
In many ways, the combination of sensory, edge and AI technologies may not solve every problem but these technologies possess a lot of potential to root out some legacy problems such as out-of-stock, poor demand forecasting, marketing effectiveness, supply chain traceability, inadequate labor, among others.
I spoke about this trend at length in the last 12-24 months and recently published a unique and new innovation measurement benchmark in consumer industries. I am pleased to note that SAP has put a line in the sand in terms of making some decisive moves towards such tools and processes by evolving its platform towards a more intelligent retail and consumer goods enterprise. This has been made possible as SAP product strategy leadership and engineers realized that they have much more to offer besides the same-old enterprise business process automation, enterprise analytics and digital transformation.
The company has rolled out an intelligent enterprise platform featuring 3 key components- digital platform, intelligent technologies (i.e. IoT, AI, AR/VR, Advanced Analytics) and intelligent suite for consumer industries, banking, healthcare, public sector and other industries.
Specifically, within retail and consumer goods, it is noteworthy that the company spoke about updates to S/4 HANA, customer activity repository (CAR) and a whole host of retail headquarter and omnichannel applications in line with the “Intelligent Suite“, “Cloud” and “Analytics Cloud” that combines customer experience, supply chain & private label, digital core, people engagement, and network/spend management. The central core of the intelligent suite is formed due to intelligent technologies such as AI/ML, IoT and analytics with the underlying digital platform capabilities that also consists of data management and cloud capabilities.
This is a differentiated strategy based on the innovation needs of retailers for now but SAP must demonstrate continued commitment towards serving the UI/UX, ROI and functional benefits for all retail and consumer goods segments- fashion/apparel, food, discount and hardlines. Having said that mid-market is still a big opportunity not being addressed properly by retail and CPG solution providers beyond standard POS, CRM, BI (within retail) and store execution, consumer insights or trade management solutions (within CPG). There are a whole host of new age retailers and consumer goods companies in the mid-market that long for a truly holistic and complete suite of end-end solutions but are disappointed with the functional, UI/UX, accessibility and SaaS/cloud-related shortcomings associated packaged solutions in specific areas such as unified commerce, assortment planning, category management, forecasting, order management, fulfillment, and supply chain optimization.
Another question which is featuring in retail board room discussions is how future-proof are retailers and consumer goods companies? This is where companies like SAP can really help retailers and consumer goods companies track market pressures, challenges and business needs. Alongside, SAP’s technology and partner ecosystems should act as a mortar that glues the rough edges to finally create a smooth surface that companies can operate on without the worry of being late or never attaining trend-readiness.
The key retail and consumer goods industry issues that companies like SAP can help address is to support growth, margin pressures and need for innovation. During the course of the last decade, consumers’ quest for convenience has intensified, driven by on-the-go lifestyles and supported by advances in technology. These aspects along with income, health and wellness concerns has disrupted retail and consumer goods marketplace.
Throwing technology at every problem may not be the answer but technology companies and their ecosystems must help end-users address the three big elephants in the room: how to achieve growth, trend-alignment and innovation.
To discuss, retail and consumer industries innovation issues, trends and technologies, please contact Sahir Anand at [email protected] or @sahiranand.