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+44 (0)115 904 2777
Alan Morris
  • 10 Nov

The critical measures of retail

By Alan Morris, Managing Director of Retail Assist According to research published recently by Steria and Verdict Consulting, the barometer of success or failure for almost every retail business can be evidenced by five critical measures: footfall, spend per customer, market share, margin; and operations. Now more than ever, retailers need to ensure that their activities and strategies link directly to one or more of these measures. Failure to link to them and to monitor them on an ongoing basis can lead to declining sales, weak profits and eroded market share. But why are these five measures so important? More significantly, what can retailers do to improve them, and do software solutions such as supply chain ERP have a role to play? Footfall: The retailer’s lifeblood Without customers, there is no business. But with more shopping destinations than ever before, winning footfall is getting harder. In 1999, 24% of clothing consumers visited just one store; today that figure is down to 15%. Fewer shoppers are hitting the high street and they are shunning the stores they once visited in favour of those that better meet their present needs. But, on the flip side, this promiscuity offers retailers the opportunity to attract new customers. Given the different routes to market: the high street, internet, catalogue and concessions, the battle to win customers means that retailers now need complete visibility of spend and activity, presented as consolidated intelligence, across each and every channel that customers use, regardless of location, retail format and time of day. As recently reported in The Times, UK fashion sales are currently worth £45 billion annually. Of this massive figure, 5% – 6% is currently derived from online sales, a share which is expected to grow to 10% – 15% within the next three years. There can be no doubt that e-commerce has come of age. The unquestioned multi-channel dimension of retail has created a new imperative for supply chain solutions. They can no longer position themselves as primarily supporting high street trading, with additional channels as ‘add-ons’. In terms of optimising footfall, supply chain solutions contribute significantly by streamlining warehouse and stock management. They automate numerous manual processes, resulting in improved stock availability in store. In particular, customer-facing processes such as effective ordering and communication that includes SMS messaging increase satisfaction and loyalty. Spend: Where browsers become buyers Fundamental to success is the ability to convert browsers into buyers and to encourage them to spend as much as possible in one transaction, thereby maximising the average transaction value. The key to improvement is to understand what customers want and to put compelling offers in front of them. Minor tweaks to the retail proposition can have a major impact. Companies that have automated their supply chain enjoy access to tools including business intelligence and performance management that generate accurate and consistent information across the business. Real-time stock views and integrated WSSI give insights that can support precise, timely and profitable decision-making. Where system-led stock management is in place,…
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Nigel Illingworth
  • 20 Jun

Getting the best from BI and CPM technology

It’s not uncommon for retailers to invest in Business Intelligence (BI) and Corporate Performance Management (CPM) software, only to be bitterly disappointed. These tools are purchased in the belief that they can be used by end-users, independently, to gain timely and efficient access to data. The reality is that they are often no more than raw components that bring with them an IT overhead of programming, integration and support. Here, Nigel Illingworth, Retail Assist’s Product Director for the Merret supply chain solution and Dominic Policella, Managing Director of BOARD, challenge the current BI paradigm, advocate the “retail-ready” approach, and suggest ways of getting the best from BI and CPM technology. Look for integration Many BI systems are sold as toolsets, comprising disparate modules such as budgeting, reporting and dashboard, on the promise that the created model will be just right for the business requirements. In reality, these modules – often the result of company and product acquisitions – can come with huge integration issues, long project timescales, high costs and little flexibility to support change. So, retailers should look to have everything in one integrated environment. Ease of use is critical “Most BI platforms are difficult to use, technical and inflexible,” says Nigel Illingworth. “As a result, they are often kept in the hands of a small number of power users and technicians rather than the wider business community who should be their consumers and beneficiaries.” A BI tool needs to be intuitive to use, and to provide fast and accurate answers to organisations that are starved of information. This is where programming-free environments come into their own, offering rapid familiarity to end-users and enabling them to operate independently. If the solution is modular, it may take some time to model data and craft reports. The best approach is to buy a system that comes with existing reports “out of the box”, tailored to the retail industry. Even if not precisely what you require, this will facilitate much faster report creation and deliver faster business benefit. Retail-ready intelligence Nigel Illingworth observes: “BI tools are very valuable to a fast-moving industry sector such as retail, where it’s necessary to look constantly at how the business is performing, monitor the effects of sales campaigns, benchmark market penetration and measure store and product profitability. A generic tool is simply not up to the job, so retailers should look for BI systems that come with the appropriate retail ‘wrapper’ that both delivers standard, retail-ready reports and offers easy customisation.” Focus on KPIs and exceptions It’s important to differentiate data that you need for information purposes only from data that can be used to make a difference and instigate change. Use of BI should be driven by key performance indicators (KPIs), with emphasis put on highlighting exceptions. KPI thresholds should be easy to define and display, with graphical representations such as gauges, traffic lights, colour coding and maps. At the same time as revealing the big picture, BI tools need to drill down to pockets…
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Nigel Illingworth
  • 16 Apr

How can IT help fashion retail meet its challenges

Whilst retail in general is bearing the brunt of the downturn, fashion is feeling more pain than most. How can IT help fashion retail? Here, Retail Assist’s Product Director, Nigel Illingworth, describes ways in which fashion retailers are using technology to turn themselves into smarter businesses Whilst the world of fashion retailing is not alone in needing to adapt to a tough trading climate, it suffers more than most from external conditions. These include the demands of multiple season stockholding, complex supply chains, competition from cheaper markets, and fickle customers with less disposable income for discretionary purchases. We’ve seen these elements influence the way in which fashion retailers behave towards their IT suppliers and use IT. In the past, inhouse teams would be expected to evolve a 5-year or even 10-year IT plan, which brought together commercial vision and IT investment. Today, it’s short-term tactics and results that count, as retailers focus on 6-24 month developments that can make tangible improvements. When it comes to supplier relationships:Under-performing systems are no longer tolerated and retailers look to squeeze greater efficiencies from an existing core system Gone are the days when a systems change meant a long process, starting with an ITT. Today, pressured retailers want rapid results: a better system or a better deal from their suppliers Suppliers are expected to come up with flexible working and licensing models Large-scale capital outlays have disappeared, as leasing, rental and SaaS options become the norm Timescales have been squeezed. Lengthy implementations with long workshop programmes don’t get signed off Packaged solutions have ousted bespoke developments. The former approach puts the main elements in place, with minor customisation cost-efficient and often be done by usersIn terms of how IT is used today, the focus is on “quick win”, justifiable changes that are easy to see, save money, and enhance processes, customer service and stock management. Increasingly, retailers use software solutions as the agent for improvement. The customer experience:Whilst many brands boast about store ordering, their processes are often cumbersome. The best amongst them use their supply chain software to create a swift and slick process, whereby items can be sent for home delivery or store pickup Linkage and loyalty come from connecting with customers in new ways, such as via mobile phones, SMS texting and e-magazines. All can build brand loyalty and demonstrate customer care IT solutions are helping fashion retailers to learn a lesson from their supermarket peers and improve flexible pricing and promotion.Stock availability:Inter-branch transfers done manually are labour-intensive and prone to inaccuracy. Today’s IT systems look for overstocked or wrongly-stocked stores and suggest moves. This rebalancing of in-store stock means sales opportunities aren’t lost It’s especially important in fashion to phase stock deliveries. Having stock arriving ad hoc has cost and space implications and negatively affects cash flow. Better inwards tracking and control makes a real difference. Whilst this is often done manually on paper or spreadsheets, savvy businesses use their supply chain solution to give…
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Alan Morris
  • 20 Feb

How to reduce IT costs now

In a shrinking market, IT must reduce its price tag to stay relevant Alan Morris, Retail Assist’s Managing Director, says retailers need to look again at IT cost models. As turnover falls, new cost management principles are required to reduce IT spend and contribute to a leaner business. IT spend in retail is normally between 0.9 and 1.9 percent of turnover per annum, so taking 1.6 percent as an average would mean £1.6 million for a £100 million turnover business. The problem comes when sales drop and turnover falls. In a pre-credit crunch world, many retailers would have considered themselves well placed against a benchmark of ‘only’ 1.6 percent but now find their own costs reach or even significantly exceed that 1.6 percent figure. Given this scenario, wouldn’t it be ideal if your IT costs operated like a ‘tracker mortgage’ – the flexibility to have IT spend rise and fall relative to turnover, as business needs and the trading environment dictate? With that as an ideal, the first step is to take a good look at what you’re doing and where you’re spending, using the current downturn as an opportunity to change the way you run IT and so take costs out of the business. Explore costs – look at new models Today’s recessionary environment will be forcing retailers to question how they do things in relation to their IT and its cost, to carefully examine systems and processes. IT can no longer be seen in simple terms of how much value it adds to a business, important though that is, but also in terms of how much it’s actually costing you relative to your company size and level of business you’re actually doing, and considering which of your IT costs are truly fixed and areas where there may be some room for manoeuvre. Indeed, perhaps the best way to add value to a retail business right now is being able to maintain the status quo while controlling or even reducing key costs. This brings us to an old point but one still worth making: technology may be essential to running your business but it is not, in fact, your business. In view of that, here are five suggestions for a plan of action to help get things moving:Find out what you are actually spending your money on. Consider what’s changed since those spending decisions were made (falling turnover). See which IT costs are truly fixed, sunk costs or variable (experience suggests IT is best seen as a ‘semi-variable cost’ with diverse elements ranging from hardware that depreciates year-on-year to internal help desks). Think about the business needs or operational requirements driving those costs, and if they have changed. Explore opportunities for change, and include your overall business strategy and objectives in your plans.Let’s use a help desk as an example: actually a variable cost. A reduced retail estate following store closures or, say, or a reduction to six days in trading suddenly means your requirement for a…
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