High street retailers are losing up to £1bn of sales per month due to poor stock management. And that’s just in the UK. Predicting precisely how much stock your store will need, and when, is made difficult by fickle consumer behaviour and trends which change with every season.
Fluctuations in tastes and demand not only result in distribution challenges, but also put enormous pressure on internal systems. The retailer who successfully predicts, stocks and promotes the ‘must-have’ purchase for a season faces a potential IT nightmare. Although foresight combined with savvy marketing campaigns, a strong e-commerce strategy and smooth order fulfilment can mean a boon for sales, retailers could fall at the last hurdle if IT systems can’t deal with a sudden spike in transactions. IT systems must have the capacity and scalability to cope with the seasonal rush or a quickly expanding franchise.
British fashion designer Paul Smith understands the pressures associated with seasonality and a fast growing business. The brand typically launches two new collections every spring and fall into stores around the world, and opens an average of three new shops a year. Its challenge was to support this growth with its existing IT team, based in one location. Essential applications such as CRM needed to be agile enough to react changing trends, hitting customers with the right offers at the right time to drive sales, while ensuring that the customer’s shopping experience was commensurate with a high-end brand.
Microsoft helped Paul Smith move to the cloud to effectively manage peaks in sales and sudden growth spurts. By housing CRM and ERP tools in the cloud rather than on premise, the brand can pay for IT resource as it’s required. The cloud also offers the brand the flexibility and scalability to ramp up for seasonal demand, without having to resort to panic IT buying. The extra capacity also enables the brand to send out around 10 million tailored customer emails in the run up to holidays or sales, and provides the tools to quickly measure the popularity of a new collection or store in the immediate aftermath of a launch.
The company’s 500 staff around the world can also gain instant visibility into what stock is available via Windows-based mobile devices on the shop floor. They can even pull up information on alternative style options for customers that might also be available elsewhere, meaning they don’t have to leave the store disappointed if an item isn’t on the racks. This is particularly valuable during peaks when stock is moving quickly.
For gourmet Russian supermarket Azbuka Vkusa – literally, the ‘ABC of taste’ – the demands on its supply chain are even more stringent. One of the country’s largest retailers, the company delivers 18,000 fresh products to stores throughout Russia every day. As a growing business, the firm needs to operate as efficiently as possible. Time wasted on managing IT processes ultimately equates to thousands of lost opportunities to re-stock and sell fresh produce the next day.
Each night, the retailer has to process more than half a million transactions from different locations and translate these into replacement stock. Traditionally, overnight batch processing involves a locking management system to protect sales data being inputted, one transaction at a time. This considerably slows down the process. The company needed to become more efficient and, ultimately, move more stock faster, particularly during holidays. Using a customised, cloud-based Microsoft Dynamics solution, the company was able to adjust its ERP settings to allow transactions to be processed in parallel, creating more flexibility to meet increased demand and ensure shelves are stocked countrywide.
Let’s face it, retailers have a tough job. Not only are they constantly fending off competition from other contenders on the high street, and an increasing number of businesses online, but they have to continuously adapt to please fickle consumers and their ever-changing tastes. For companies looking to grow, the challenges are even greater. Harnessing the right, modern technology is a successful retailer’s secret weapon. At Microsoft, we’re focused on helping retailers to do more, and respond to changes faster, with fewer resources. In particular, cloud-based services result in far greater Return on Investment, enabling companies to turn IT resource on and off like a tap. Not only do they only ever pay for what they need, but they can scale up almost instantly for a launch or major promotion, providing reliable resource in an unpredictable world.
