DavidsTea Sweetens Operations
DavidsTea is on an upward trajectory as it introduces new business channels and expands operations. Its well-designed, inviting stores, which sell 150 varieties of tea and related accessories, are bringing specialty tea to the mainstream and winning over converts in the process.
Since opening its first location in 2008, the fast-growing Montreal-based tea company has expanded across Canada, and is on track for 70 locations by yearend. It is also looking beyond its own borders, having recently opened its first two U.S. stores (both in Manhattan). The company, which already has a flourishing e-commerce business, is also establishing a wholesale/corporate operation.
It all adds up to a busy agenda for DavidsTea. And it’s one in which a new enterprise resource planning system, Microsoft Dynamics AX for Retail, is playing a crucial role.
“We were outgrowing the functionality of the [previous ERP] system, which was limited to supporting our retail and point-of-sale operations,” said Howard Tafler, CFO, DavidsTea. “We needed a full back-end and accounting package that could support our current business and future plans.”
DavidsTea began searching for a new platform two years ago. To support the company’s diverse operations, the ideal ERP platform had to be affordable, scalable and robust enough to support new business functionality, and open so that integration with third-party software partners would be seamless. It found what it was looking for in Microsoft Dynamics AX, an end-to-end retail solution that standardizes operations across locations.
The infrastructure, which is supported by a centralized database, manages the enterprise’s retail operations, POS, financials and accounting. To streamline the implementation, DavidsTea is working with Cole Systems, a New York City-based Microsoft partner that is helping the retailer to configure and customize the Dynamics AX system and integrate all enterprise software.
The chain began installing the platform in the second quarter of 2011, and by June it was supporting financials and accounting. By mid-October, the system was supporting supply-chain operations and back-office functionality. At that point, DavidsTea also began rolling stores onto the Dynamics AX platform.
“Currently, half of our stores are supported by the platform, and we expect the entire chain to be live on the platform by the end of November,” Tafler reported.
The open configuration also fosters tight integration with other software. During the implementation, for example, DavidsTea integrated JustEnough, a Newport Beach, Calif.-based provider of a best-of-breed merchandise planning and demand management system, with AX, a move that allows the retailer to plan its purchasing and allocation to stores based upon data that resides in AX’s database.
Similarly, the chain is implementing a workforce management system from Alpharetta, Ga.-based Dayforce, and a fully integrated e-commerce platform from Keyora, Oakville, Ontario, which uses AX data to determine enterprise orders and fulfillment.
DavidsTea is looking forward to leveraging the power of the infrastructure as the new year approaches, initially taking advantage of the base functionality needed to operate its business. As additional software is augmented, the retailer looks forward to using the platform to support evolving business processes. The result is an end-to-end ERP solution that not only creates a unified system for DavidsTea today, but also provides the foundation of growth for tomorrow.
“Our plan is to continue growing over the next few years,” Tafler said. “During this growth, we will need a multifunctional, open ERP system. The Dynamics AX system is flexible enough to handle all of our endeavors.”
Focus on: Social Media
Retailers have pulled out the stops this holiday season, especially when it comes to experimenting with cutting-edge digital technologies. But innovation shouldn’t be reserved for the holidays — it is something that should be infused into the shopping experience all year long.
“Consumers are cash-strapped this holiday season, and merchants are doing everything possible to get a share of what they’re willing to spend,” said Kevin Sterneckert, VP research for the consumer value chain at Gartner Research. “To stand out, many retailers are turning to highly innovative strategies to communicate with shoppers in new ways. These are tactics that can be easily executed any time of the year.”
For example, merchants are looking beyond just standard email marketing and newspaper ads to get the news out about their products. Sears and Kmart have introduced “virtual shopping walls” in high-traffic areas such as airports and movie theaters that provide two-dimensional quick response, or “QR,” codes for its top toy items.
When an image of a QR code is captured by a quick-response scanner or mobile phone camera, the user’s device is directed to a website with related digital information about the products to help them shop on the go.
“Shoppers are so time-pressed during the holiday season, and we’re always looking for ways to make it more convenient for them,” said Brian Hanover, spokesman, Sears Holdings. “We wanted to bring the store to them this year, and based on how successful the run goes, this is something we may do more of next year beyond just the holiday season.”
According to Gartner’s Sterneckert, it is easy to develop innovative promotions with QR codes. A QR code takes only a few minutes to build, and merchants have the flexibility to change the content it’s linked up to when new promotions come up.
“It’s a very fast way to reach customers, and retailers can have fun developing engaging campaigns that encourage people to learn more about products and shop on the go any time of year,” he added.
Although some retailers such as Target have built compelling apps around the holidays and gift giving in the past, retailers should take the time to make their apps worth downloading all year-round.
“The most effective apps enrich the customer experience, but many today just draw attention to deals happening in stores and online,” Sterneckert noted. “Retailers need to give shoppers a reason to keep and use the apps they download on their phones by including helpful features, such as allowing users to make a purchase, check inventory and look up store information.”
Although shoppers are extra budget-conscious around the holidays, many are interested in getting offers that benefit and meet their needs throughout the year. A mobile app called Shopkick rewards shoppers with offers just for walking into stores. Participating retailers such as Macy’s, Target and most recently, Old Navy, have a physical device in their stores that emits an audio tone not heard by the human ear and sends a message to a shopper’s phone when they walk inside a location. The app encourages shoppers to visit items that are on sale, and customers collect points for these behaviors that can be redeemed for discounts.
“One-to-one offers like this will become increasingly more popular in the next few years,” predicted Sterneckert. “Retailers can offer customers incentives for just visiting locations and reward their behavior with loyalty points that give them the notion that they’re working toward something. Adding this type of innovation to marketing will not only make a difference during the holiday season but all year through.”
Expansion-Minded Uniqlo Aims Big
From dazzling LCD/LED video displays to rotating mannequins to staircases with color-changing LED lights, Uniqlo’s Manhattan flagship is massive in scope and bold in design.
The three-level, 89,000-sq.-ft. store is the largest Uniqlo outlet in the world. It’s a big store for a company with big ambitions: Uniqlo parent Fast Retailing Co., the world’s fourth-largest apparel retailer, is targeting $50 billion in global sales by 2020.
To meet its goal, the company has embarked on an aggressive program to expand Uniqlo from its current 1,041 locations to 4,000 worldwide. Expansion in the United States figures prominently in its strategy.
“We see great potential in this market,” said Shin Odake, CEO, Uniqlo USA. “By 2020, we hope to have opened in major cities across the country.”
The Uniqlo flagship has a high-tech vibe and ultra-modern look. It has 100 fitting rooms, 50 checkouts, 300 LCD and LED screens, and four glass elevators (complete with custom video installations).
“It’s a futuristic design that shows the future of Uniqlo,” Odake said.
The store’s clean, modern aesthetic is in sync with the goods on display. With its “Made for All” mantra, Uniqlo is known for its affordable prices and emphasis on core basics. The brand is counting on its product innovation to give it a competitive edge.
“Our approach to product is a little different from other competitors,” Odake explained. “Everyone is focusing on trend. But our focus is on how to bring innovation to core basics. Another focus is product quality.”
Among the merchandise collections highlighted in the flagship are the new Uniqlo Innovation Project (IPJ) brand of high-performance, active, everyday sportswear, which includes zippered jackets that can be torn open. The retailer’s signature moisture-trapping and heat-generating Heattech line is spotlighted in a tunnel-like department set off with mirrored ceilings and an LED reader board.
The merchandise is made with an attention to detail unusual for a brand that is not upscale. A winter parka, for example, has pockets large enough to accommodate gloved hands.
Uniqlo followed its Fifth Avenue debut with a 64,000-sq.-ft. store in Manhattan’s Herald Square area. The two high-profile locations will expose the brand to a much wider range of shoppers than Uniqlo’s only other U.S. outpost, in Manhattan’s SoHo, which opened in 2006.
Odake said the company has not yet determined the exact number of U.S. stores it will open. But he noted that Uniqlo’s U.S. operations eventually will be run by Americans.
“We think that’s important for success,” Odake said. “We have to hire people who resonate with the Uniqlo concept and train them.”
Fifty of the employees for the Fifth Avenue and Herald Square stores were flown by Uniqlo to Japan for a six-month manager training program prior to opening.
“It was a challenge for them in some respects,” Odake said, “but it was good in that it gave them the opportunity to see our operations firsthand.”
The role of store manager is a critical one at Uniqlo.
“We give them a lot of authority and expect them to be very proactive,” Odake said. “To us, the store manager is like the CEO of a company. We also give a lot of authority to store associates. We want the same type of culture here.”
Customer service is a top priority at Uniqlo. Odake explained that in Japan, customers expect good service — be it a discount chain or an upscale boutique. Uniqlo hopes to upgrade shoppers’ expectations here also.
“I’m happy we can revolutionize the retail business here by offering great service and moderate price points,” Odake said.