CORAL GABLES, Fla. — Maybe information technology really has come of age. Signs of the retailing industry becoming more comfortable with the reality that information technology is a driving factor in bottom-line performance emerged to a...
CORAL GABLES, Fla. — Maybe information technology really has come of age. Signs of the retailing industry becoming more comfortable with the reality that information technology is a driving factor in bottom-line performance emerged to a surprising degree at the A.G. Edwards investment conference held here late last month.
Typically press-shy retailers stepped up to the stage and unveiled an array of paybacks from technology investments and even dared to reveal some of what they expect to implement in the future. They also peppered talks with cautionary advice about making sure the mix of technology and company culture is right.
Executives from Nordstrom, J.C. Penney, Hot Topic, Guess, Wal-Mart Stores, BJ’s Wholesale Club, and Build-A-Bear Workshop, among others, took part in the event, titled “Retailing 2005 — The Technological Imperative.”
J.C. Penney’s Centralized Turnaround
Jeffrey J. Allison, J.C. Penney’s executive vice president and director of planning and allocation, offered his company as a case in point for the importance of a clear, strategic technology vision. In five years, Penney’s went from a decentralized buying environment with over 1,000 vendors, 250,000 items and slow merchandise flow to one that is now fully centralized.
“This journey started with the issue of survival,” Allison said, alluding to the company’s financial woes in the late Nineties. “Survival was a great motivator. There was wide recognition that the company needed to change.”
At the time, markdowns and buying decisions were made at the individual store level. “We had to take every significant buying process and build an application that would support a centralized model,” Allison said.
With the development of a centralized buying function, the number of items went down to fewer than 100,000. “Our merchandising plan feeds the store plan. Merchandise planning, store planning and assortment planning are integrated from beginning to end.”
The new system provides monthly store presentation plans and in-season forecasts for 1,000 stores managed by 25 store planners. “We have gotten improvement in in-stocks and sales, markdowns and expense structure,” Allison said.
With better controls, J.C. Penney is looking to grow turns by 5 percent to 10 percent and improve speed-to-market of private label. Where the process of getting an item from the design stage to the sales floor once took 18-to-24 months, changes in supply chain systems and product development could speed the process up to 45-60 days from concept to door. And new system targeting improvement in point-of-sale is “the big exciting new effort we’re kicking off this year,” Allison said.
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