News

Legacy Modernization

BY Deena M. Amato-McCoy

With the increasing popularity of mobile devices and social networks, managing the omni-channel experience will be a key priority for retailers this holiday season. Leading experts say that retailers need to update their legacy technology systems to handle the large amounts of data being generated by these channels.

Breaking down the silos between e-commerce and store-level platforms to get a single view of the customer and enterprise-wide inventory levels requires retailers to integrate existing platforms. With newer channels such as mobility and social media playing bigger roles in cross-channel operations, existing mainframe operating platforms are getting stretched further than ever. New cloud computing technology is helping make the transition easier, while limiting the impact on existing business operations.

“The mainframe was king for retailers because it was very robust and was created with strong business logic,” said Keith Champeau, national director of business development, Fujitsu, Sunnyvale, Calif. “However, that business logic was built more than 20 years ago, and big data stemming from social and mobile channels is taking a toll on those mainframes.”

These new channels are also impacting operations, including website and network support and functionality, as well as the ability to scale site capacity and deliver real-time online marketing campaigns. Rather than embark on a costly and time-consuming rewriting of code or “ripping-and-replacing” existing platforms, some companies are exploring the gradual migration of legacy business processes to open platforms.

Cloud computing is helping retailers in this endeavor. Since retailers can provision the power and applications they need, the cloud’s elasticity gives retailers more agility in their go-to-market strategies, and the open platform costs less to maintain and operate than mainframe options.

“The cloud is really changing everything,” explained Brad Wilhelmy, industry marketing development manager, Microsoft, Redmond, Wash.

“Last year was a year of discovery, but now companies are getting their heads around the cloud. The cloud doesn’t eliminate integration challenges, but instead creates new opportunities to integrate systems that have traditionally stood alone.”

Having the proper platform in place is a good first step, but more work needs to be done to prepare for the holiday season. Retailers need to ensure all back-end systems integrated on the modernized platform can support end-to-end multichannel transactions. Among the priorities:

• Supply chain performance: Retailers must ensure orders be fulfilled from an IT perspective as well as from a distribution point of view. And all details can be monitored through the new platform.

“The cloud enables retailers to do performance testing as well as load testing to ensure that once orders hit the back end, that they can be fulfilled,” said Eric Payeur, director of Fujitsu’s application modernization practice.

• Centralization of customer data: Having a single view of customer data in a centralized database is a must for all multichannel operations. The same holds true for inventory data.

“Those who struggle with who their customer is, or what their inventory looks like across all channels, will only have challenges going forward,” Wilhelmy said.

• Differentiated assortments: Differentiating inventory and assortments based on consumer demand can make a difference for retailers as they engage shoppers when they are ready to buy this holiday season.

“Retailers need to be ready for consumers when the customers are ready to buy,” Wilhelmy advised. “The business insight that retailers can get from open platforms helps them better predict what products customers will demand so stores can adjust inventories accordingly.”

When it comes to completing cross-channel functionality integration, retailers should keep one eye on modernization and the other on the fast-moving calendar.

“These health checks are a must, but they must be completed now,” Payeur said.

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INVENTORY

Around the World

BY Deena M. Amato-McCoy

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.

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News

Focus on: ADA Compliance

BY CSA STAFF

Seasonal, temporary and pop-up retailers have an added challenge this year. As of March, any retail space constructed or altered must meet the Department of Justice’s latest ADA requirements and the 2010 Standards for Accessible Design.

That applies to all new retail construction and any alterations to retail spaces; and if an existing facility is used, then retailers must conduct “readily achievable barrier removal.”

Eve Hill, senior counselor to the assistant attorney general for the civil rights division of the Department of Justice and a subject-matter expert on ADA, explained, “The readily achievable barrier removal obligation may be determined partially in light of the temporary nature of the space and whether the retailer already owns the space or is just renting it for a short period of time. Either way, both the retail tenant and the landlord have obligations regarding physical access to an existing space.”

When a retailer moves into a space, they should consider what the barriers are and which ones are “readily achievable” to remove. According to Hill, determining what can be readily removed is based in part on the resources available to the retailer.

“A large regional or national retail company has more resources to dedicate to making the space accessible than a mom-and-pop retailer might have, so that is taken into consideration when deciding what is readily achievable,” she noted.

For the purposes of the ADA compliance, both tenants and landlords are equally responsible to the person with a disability. For instance, if a person with a disability tries to gain access and is unable to do so, they are allowed to sue the landlord, the tenant or both.

When a retailer is opening a seasonal or temporary store in an existing space that was already in compliance with the ADA’s 1990 standards, the retailer doesn’t have to modify the space to the 2012 standards unless they are physically altering the space. Simply adding merchandise or painting the walls does not alter the space, but additions, such as built-in cabinets, movable racks or even temporary point-of-sale lanes, are required to comply with new standards.

Additionally, a pop-up store that may be open for a very short time is still expected to comply with ADA requirements. However, in most cases, the landlord is responsible for making the necessary accessibility modifications and the tenant should make sure the leasing contract spells out who is responsible.

From September through December, retailers are opening more seasonal stores and also dealing with higher traffic and increased inventories. All of these factors contribute to a higher risk for barriers or obstructions to ADA compliance.

“Anecdotally, I hear more complaints about issues such as extra merchandise in aisles so that the aisle becomes inaccessible,” Hill said. “We also hear complaints that people who need assistance have more trouble getting help because the store associates are otherwise occupied and not prepared to help them. And retailers are fitting a lot more merchandise into the same space, so often products are on high shelves and unreachable.”

Making sure store associates are adequately prepared to assist shoppers is one of the more subtle expectations of ADA compliance. As the number of senior citizens and elderly shoppers continues to grow, assisting people with cognitive challenges becomes a larger component of ADA compliance.

“As people get older, they typically need more clarity about where to go and how to conduct business,” Hill added. Store associates should be prepared to volunteer help or assistance without seeming patronizing. You can’t grab a person with a disability and move them to another area in the store but you can offer assistance, which is generally appreciated.”

Her suggestion for retailers opening seasonal or temporary spaces is to start by evaluating the space for barriers and envisioning how they would get through the store if they had a disability. “Think about a variety of disabilities — not only people with wheelchairs and walkers but also those whose vision is impaired, or who can’t hear as well.”

Although the Department of Justice doesn’t recommend specific training for how to comply with ADA requirements and serve the public, the Department of Education has an ADA network with 10 regional centers that provide training and information to local areas. Retailers and store managers are encouraged to use these regional ADA centers as a training resource.

“Another way to gain insight into the needs of people with disabilities is to actually employ people with disabilities in your stores,” Hill advised. “The only problem with hiring someone with a disability on a temporary basis is that you are going to want to bring them on permanently.”

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