Abercrombie & Fitch understands that the key to international branding is to deliver a consistent store experience across the globe.
By adopting an open operating platform and integrated point-of-sale infrastructure, the company is able to centrally manage all business operations, including supply chain, inventory management and POS processing, across international borders. The retailer’s international stores now garner close to $1 billion in sales.
“International stores are much more profitable than U.S.-based stores due to several reasons, including that they are much less promotional and their price-point strategy is a little different in those stores,” said Jon Rudy, the retailer’s VP merchandising systems, during a presentation at Oracle’s Retail Cross Talk 2012 conference.
A&F launched its international strategy in Canada and the U.K. in 2006 and 2007, respectively, using its existing legacy systems to support the expansion. The platform lacked visibility into financial impacts, especially those related to merchandising. For example, all planners managed financials in spreadsheets, a manual process that made it impossible to determine if they were over- or under-buying.
“[The process] took a toll on merchandise allocation because we used to plan floor space based on their orders,” said Raj Lakshmaihgari, director of merchandising systems, Abercrombie & Fitch. “If there were shipping delays, we had to change floor sets. Then we began to overbuy to stay stocked. The challenge here was that all merchandise was shipped to our Columbus, Ohio-based distribution center, and it sat there until it was needed.”
Since this practice tied up capital and also made it difficult to efficiently replenish stock overseas, it quickly became clear that these systems and processes couldn’t sustain future international growth.
In 2009, the retailer selected the Oracle Retail Merchandising system, which resides in the company’s Columbus-based corporate data center. Since adding the platform, A&F increased its inventory ordering accuracy from an average of 94% to 100% accuracy.
“This helps us in our metric control, getting a floor set properly organized and getting the merchandise into the store at the right time,” Lakshmaihgari said. “We also decreased air shipments from 25% of total shipments to 8%, which is a huge cost savings.”
To support its global POS strategy, the retailer also deployed Oracle’s Retail Point-of-Sale Software Systems (ORPOS). Prior to adding the POS platform, the company was managing terminals across 1,100 locations, each with their own servers and associated databases.
“The process was too overwhelming for the size of our IT team [which consists of one development manager, eight POS developers and a payment manager] and what we had to do,” explained Simon Kish, Abercrombie & Fitch’s director of IT. Subsequently, he explained, the chain decided to create a centralized strategy that required it to bring POS processing back into its Ohio-based data center.
Similarly, A&F implemented regional databases that manage up to 30 stores each. To integrate these databases, A&F is using open-source database replication software to synchronize multiple repositories into a centralized database in the data center. This configuration streamlines the process the chain uses to transmit pricing to each POS system nightly, Kish explained, and also distributes sales information to other business systems. The end result is that A&F has a near-real-time view of what is happening in its stores on a global level.