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Multichannel Experience

BY Connie Gentry

A larger-than-life shopping experience is what outdoor-lifestyle retailer Cabela’s seeks to provide across every consumer channel. Translating the unique experience and ambience of its physical stores, which have an average footprint of 170,000 sq. ft. and include in-store attractions such as aquariums and dioramas, across multiple channels was no small feat. However, the true measure of successful multichannel retailing is the ability to deliver the desired product to the end consumer—in-store, online and through the call center.

In addition to 26 stores located across 19 states (with seven new locations on tap this year), Cabela’s publishes 120 catalogs annually, each with a circulation of 130 million households. The company also maintains a dynamic e-commerce business at cabelas.com.

“A multichannel supply chain solution is about business processes, executed by people, supported by technology,” explained James Landsman, senior applications channel manager, Cabela’s, Sidney, Neb.

Speaking at the National Retail Federation’s (NRF) annual conference, in New York City, Landsman described how his company has successfully developed and implemented a set of business processes and support technologies to achieve optimum supply chain execution for each sales channel.

To effectively address the unique differences, as well as similarities in each sales channel, Cabela’s had to change long-established business processes and prioritize what would be implemented first. Additionally, it had to re-think distribution processes, understanding the different requirements for deliveries to stores vs. direct-to-consumer fulfillment. Across every sales channel, Cabela’s commitment to customer service is unwavering. Landsman noted, “If product is not at the distribution center [DC], we’ll ship overnight from another location to where it needs to be.”

Supporting this commitment is complicated by the challenges of a complex global supply chain, with vendors in multiple countries and product in-transit around the world.

Landsman estimated Cabela’s has more than 4,000 active vendors, some providing fewer than 10 SKUs to the retailer. However, at any given time there are some 250,000 active SKUs at Cabela’s and as many as 400,000 SKUs over the course of a 12-month period.

Although the big-box footprint is conducive to housing large inventories, Landsman said, “Even our largest stores can only carry 50% to 60% of the assortment at any one time.”

In fact, one incentive for becoming multichannel was that it enabled Cabela’s to extend its product offering. As a rule, multiple sales channels also encourage customer loyalty and promote higher average transactions.

Managing change: During the NRF session, Landsman advised retailers of many challenges posed by a multichannel global supply chain, including the integration and replication of data and maintaining executive-level commitment to the ongoing change-management process.

“It is also important to have a refresh strategy because new and improved technologies are continuously introduced,” he stated. “Another issue is sustaining the process changes that are implemented because people will naturally revert to the old way of doing things and to habits that are comfortable.”

Among the strategies that Cabela’s found useful were establishing dedicated teams within its organization to oversee process changes, fostering strong vendor partnerships and enlisting the aid of third-party management consultants to assist in guiding internal teams as well as technology vendors.

The most critical key to success, advised Landsman, was to define the desired business processes and decide how they should operate within the organization before investing in technology to support the processes.

He also spoke in detail about what retailers should do to maintain the positive momentum of newly implemented processes. For instance, initial training should be supplemented with reinforcement training to keep associates “up to speed” and to sustain the systems and processes for the long term. It is also important to establish metrics that will benchmark the success of new processes. Finally, Landsman suggested retailers should not expect to get everything right “the first time” and should be prepared to make continuous improvements to business processes.

The technology Cabela’s implemented to support its new processes includes a merchandise-management system from JDA, Scottsdale, Ariz., and an order-management suite from Sterling Commerce, Columbus, Ohio. Landsman said this provides visibility to order status and product in transit, and has enabled Cabela’s to optimize its fulfillment strategy.

Cabela’s warehouse-management system, as well as its advanced planning and replenishment application, are from Manhattan Associates, Atlanta, and are being deployed in three phases over a 24-month period.

For replenishment orders, he said, “We’re able to take a near real-time feed from the POS system and batch to the DC every half hour during the peak holiday season.”

The retailer’s three DCs, which typically process more than 100,000 orders a day, have to strike a balance between store and direct-to-consumer fulfillment. Inventory is processed through a combination of “each picking,” break-case selection and cross docking.

Although some of the technology implementations are still in process, Landsman reported that Cabela’s has already achieved more accurate forecasts with lower inventories held in stores and increased inventory turns.

Cabela’s, recently named one of the nation’s 20 most competitive retailers by Capgemini and W Ratings Corp., plans to open seven stores this year. The retailer’s total revenue for the first three quarters of 2007 was $1.46 billion, a 13.8% increase over the same period last year. Its year-end revenue for 2006 topped $2 billion.

For more NRF coverage, visit www. chainstoreage.com and click on the NRF Show wrap-up button. 

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Lampert, the Eli Manning of retail?

BY CSA STAFF

HOFFMAN ESTATES, Ill. The New York Giants triumph over the highly favored New England Patriots in the Super Bowl earlier this month, has become an example of coming from the bottom to win it all. Sears Holdings chairman Edward Lampert is one of the latest to use the Giants win, even going as far to compare himself, and the leaders of his company, to quarterback Eli Manning.

The Giants analogy, and Eli Manning comparison, is applied mainly to the company’s Kmart division. In a letter to investors, posted on the Sears Holdings investor relations Web site, Lampert said during Kmart’s bankruptcy in 2002, the unit was “like an undrafted free agent who nobody thought had a chance to play in the big leagues.” Lampert went on to say, “Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

Sears Holdings reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

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Circuit City investor seeks to replace board

BY CSA STAFF

RICHMOND, Va. Circuit City Stores today acknowledged that it has received two proposals from shareholder Wattles Capital Management regarding its board of directors. Wattles holds approximately 6.5% of the outstanding shares of the company’s common stock.

Circuit City reported that Wattles proposed the idea of replacing the company’s Circuit City 12-member board of directors with its own nominees. Circuit City said its board of directors will review carefully the shareholder’s proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company’s shares.

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