Back-End Standards Support Front-End Omnichannel Success
By Melanie Nuce, VP. Apparel/General Merchandise, GS1 US
On a Saturday late in December, days away from Christmas, Saturday Night Live’s resident Weekend Update host offered an insightful quip about the state of retail. Toys “R” Us announced this week that its stores will remain open for 87 straight hours leading up to Christmas. Not to be outdone, the Internet announced that it will be open all the time, always and forever,” he read, followed by roars of laughter from the live audience.
Reflective of what is being dubbed as the “post omnichannel” retail industry, the joke strikes a chord particularly with those retail supply chain executives and managers looking for ways to make serious strides in the channel-less, increasingly customer-centric marketplace in 2014. The new reality is shopping is truly no longer confined by space and time.
Omnichannel success depends on the alignment of back-end operations and consumer-facing services. GS1 standards provide the structure to achieve this alignment. Analysts from Retail Systems Research say we are at a critical “reset” moment. The brands and retailers who reorient their supply chain operations based upon a foundation of scalable, repeatable processes and consistent data will outlive the traditionalists, who prefer proprietary and outdated data solutions. Retail supply chain operations that embrace, not ignore, customer centricity should pay attention to four key strategies:
1. Inventory visibility: Supply chain visibility and inventory accuracy are the foundational requirements for effective omnichannel operations. What a retailer’s system says is in stock, needs to actually be in stock. Item Level RFID tagging is a critical enabler for this strategic lever, creating efficiencies internally to help ultimately give the consumer what she wants when she wants it. Retailers that have already deployed pilot programs have found RFID technology is significantly faster than counting individual item bar codes, enabling frequent inventory counts and accuracy that has risen from an average of 63% to 95%, according to University of Arkansas RFID Research Center studies.
2. Web-ready products: Significant investments of time and money are being spent on gathering product attributes and images to list items on e-commerce sites. Optimizing “speed-to-web” in today’s digital environment is ripe with opportunity for improvement. Not all key attributes and images are standardized, and while some of the data is supplied by vendors, much of it is still being gathered by the retailer. GS1 Standards provide the foundation for identifying, capturing and sharing product data, and there is a tremendous opportunity for industry to continue to collaborate together to define additional product attributes and common data-sharing models.
3. Attributed customer: Perhaps the piece of the omnichannel puzzle that represents the greatest opportunity to create a competitive advantage is the ability to understand the customer in ways that were not possible prior to the emergence of the online world. According to a 2013 report from Retail Systems Research, creating a consistent customer experience remains the most valued capability for retailers, but 54% of retailers say their biggest inhibitor is that they do not have a single view of the customer across channels. Listening to what the consumer shares through social data, product reviews and purchase history can provide valuable insight for continually enhancing future strategies.
4. Fulfillment strategy: A 2013 Accenture report found 81% of survey respondents said it is important for a retailer to enable them to pick up or arrange for delivery of their purchase regardless of how they paid for the item. Consider all the purchasing options a consumer has and the immediacy of how product can get to her home. A variety of fulfillment options — in-store, web-store, direct-to-consumer — need to be examined and deployed based on business goals and supply chain capabilities. Identifying the right mix for an effective fulfillment strategy will involve the examination of essential processes and infrastructure, including systems, logistics, staff training, order preparation and product presentation that can help make the sale happen.
Throughout these four strategies, brand owners and retailers place an emphasis the GS1 system of standards, which make it possible for companies to speak the same language when identifying, capturing, and sharing information about products, business locations and more – across all channels and throughout all of the stops a product makes from source to consumer.
Supply chain standards have saved trading partners billions of dollars through improvements in data management, business communications, and analytics, allowing for widespread and repeatable efficiencies. Proprietary product identifiers that were used in the past for internal business purposes are, by definition, usually non-unique and incompatible with other systems, creating unnecessary costs and complications for business processes between trading partners.
Ultimately, assuring customers a unified and coordinated experience will be a retailer’s strongest asset in how they adapt to the “always on, always open” marketplace.
Lindt expands U.S. manufacturing
Premium chocolatier Lindt & Sprungli is adding more than 100,000 sq. ft. of manufacturing capacity at its U.S. headquarters in Statham, N.H. The facility in New Hampshire is one of eight production sites worldwide and the only location in North America. When the expansion is complete the facility will encompass more than 1 million sq. ft. to accommodate production, storage and distribution for products such as the recently introduced Lindt HELLO collection, LINDOR single serve bars and EXCELLENCE individually wrapped dark chocolate diamonds. "Lindt continues to dominate the premium chocolate segment in the U.S. and the expansion of the manufacturing facility will help Lindt stay at the forefront of the industry and accommodate the growing demands from the market and consumers," said Thomas Linemayr, president and CEO of Lindt USA. "Our investment in the company’s growth further showcases the brand’s ongoing commitment to creating the highest quality chocolate and providing chocolate beyond compare to our consumers." The most recent expansion follows the a four-year growth period that began in 2006 that saw Lindt add 350,000 sq. ft. of production, packaging and distribution facility space, and a new state-of-the-art cocoa liquor plant to the U.S. facility. The addition of the cocoa liquor plant provided Lindt USA with the capability to clean, roast and grind cocoa beans needed to produce cocoa liquor used in the production of chocolate.
Destination XL swings to Q4 loss; plans 40 new stores
Canton, Mass. – Destination XL Group Inc. reported a net loss of $55.1 million for its fourth quarter, compared to net income of $4.2 million in the year-ago period. The chain cited a sluggish retail environment, a shorter holiday selling season and adverse weather conditions as contributing to the disappointing results.
Fourth quarter net sales declined almost 6% to $108.5 million, from $114.9 million. However, same-store sales rose 13.6%. In fiscal 2014, DXL plans to open approximately 40 DXL stores and to close approximately the same number of Casual Male XL stores. Some of the new DXL stores will be smaller-sized locations in smaller markets.
“Since accelerating the opening of DXL stores and closing our Casual Male stores nearly a year and a half ago, we have made significant progress in our transformation,” said David Levin, president and CEO of Destination XL. “During the past year, we opened half of the 102 DXL stores that are currently in operation. From that activity, we’ve been able to analyze a significant amount of empirical data with respect to the effectiveness of our store openings and closings. We have better insights into the optimal location and size of DXL stores and the importance of opening new stores prior to the Q4 holiday season.”
During the full fiscal year 2013, net loss was $59.8 million, compared with net income of $6.1 million for fiscal 2012. For fiscal 2013, total sales were $388 million, down 4% from $399.6 million for fiscal 2012. Same-store sales declined 3%
Looking ahead, Destination XL forecasts a comparable sales increase of approximately 5.6% and total sales in the range of $405 million to $410 million.