NEW YORK — The kind of bickering that has kept Europeans from ratifying a common currency is also preventing them from agreeing on computer-to-computer communication standards — standards that could make Quick Response a reality in Europe.
“I have found only two Electronic-Data-Interchange connections in Southern Europe, and those are only tests,” Frank Engles told a gathering of the American Apparel Manufacturers Association at the Waldorf-Astoria hotel here recently.
Engles, director of international affairs at Colton Bernard, was just back from a month-long tour of apparel retailers in Spain, Italy, France and Portugal. His findings will be made available to AAMA members this month in an association report titled “Global Marketing Part 2: Southern Europe.” The association published a similar report on Northern Europe last year.
“Italian retailers say they know the technology is valuable, but they can’t agree on a standard,” he added. “It’s a major stumbling block.”
The situation is little different among Northern European retailers. Though many collect store-specific POS data at their corporate headquarters, few convey that data to suppliers to expedite replenishment.
“In Northern Europe, there is more potential to develop EDI because retailers there collect POS information for internal use,” Engles explained. “But they are not currently using EDI to communicate that information to suppliers.”
Juan Munoz, principal marketing and merchandising officer for Wrangler Europe, agreed, but added that the situation could change soon. “There are very few electronic-replenishment programs in Europe,” Munoz told the same audience. “But that will go in the next five years.”
Munoz said suppliers who enter into EDI-based, inventory-replenishment programs with retailers soon will have an advantage. “The people who develop electronic programs will get a lot of sell-through and be well positioned,” he said.
Engles said Munoz’ timetable for EDI implementation could prove correct. “The Europeans don’t have a choice,” he said. “Standards, whether real or de facto, will likely be in place within five years. Big retailers are already linking their distribution centers up to their stores to monitor what’s happening at the store level.”
Engles and Munoz also agreed that a supplier committment to EDI could help it cement relationships with retailers. “Vendors should make EDI part of their service offering,” Engles said.
Engles said Northern Europe will likely adopt EDI earlier than Southern Europe. The structure of the retail community is the major reason. In the north, independents make up about 40 percent of retailers; the figure in the south is a whopping 70 percent.
“Independents are always the last to get on board with EDI,” he said. “We saw the same thing in the United States. EDI does not come cheap. Retailers have to feel confident that EDI is going to increase inventory turns. They have to figure the payback and then set money for the systems aside.”
The large number of independents in Southern Europe also makes the expansion of EDI difficult for suppliers. Without standards in place, suppliers would have to agree on a proprietary communication protocol with each independent retailer they supply.
But competition is beginning to skew the equation in favor of chains in the south, and that could make EDI viable there. “Italy lost seven percent of its independent retailers in 1993,” Engles said. “And 10 percent of those were in Milan alone.”
For all the controversy about the lack of EDI in Europe, Engles said retailers there are suprisingly efficient operators.
“I’ve seen Southern European retailers that turn their inventories on a dime,” he said. “They’ve gone after consumers quickly without technology to back them up.”
Engles said North American EDI protocols, like the Uniform Communications Standard, could be applied in Europe.
“The Europeans have to voice their input to a central group and start putting together a common language,” he said.
He said hypermarkets and large retailers, like Britain’s Marks & Spencer PLC, might lead the charge. Those retailers carry both apparel and groceries, and the incentive to use EDI in the fast-turning grocery industry is stronger than in soft goods, according to Engles.