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Retailers Mix and Match Systems

One size doesn't fit all when it comes to integrating systems and processes behind the scenes at multichannel retailers.

BOSTON — One size doesn’t fit all when it comes to integrating systems and processes behind the scenes at multichannel retailers.

At Selexyz, a 170 million euro, or $226 million at current exchange, bookstore chain based in the Netherlands, a new inventory system for its Web and brick-and-mortar stores dramatically improved inventory accuracy and helped the chain realize a 5 percent increase in sales last year.

Meanwhile, Anthropologie is finding smart work-arounds to handle the current disconnect between the systems and processes for its catalogue, Web and store operations.

The two retailers spoke at the ERI eXchange retail conference here last week.

“If you as a retailer aren’t able to integrate, I think you will face serious problems in five to eight years,” said Jan Vink, IT director at Selexyz.

The 40-store retailer started transforming its brick-and-mortar stores into “smart stores” in April 2005. At the same time, the company changed the names of all its stores to Selexyz and migrated 13 Web sites to one under the new brand. It also outsourced physical distribution to a third party.

The smart stores are designed to compete on service rather than price, said Vink. Having Web stores as well as brick-and-mortar stores will be key going forward, he said, because physical stores create emotion and the Internet delivers transactions.

The company’s stores are designed to be attractive and less densely stocked than a typical Barnes & Noble or Borders. At least one of them is housed in a magnificent former cathedral with a soaring, vaulted ceiling and stained-glass windows.

“Our bookstores in Holland are more spacious than Barnes & Nobles or Borders,” Vink said. “When you go into Borders or Barnes & Noble, they are like libraries. When the guys from Borders and Barnes & Noble go into our stores, they are amazed that we are still doing 2,500 euros [or $3,325] per square meter per year.”

The retailer has converted two stores so far, installing kiosks for customers to look up books, tagging books with radio frequency identification instead of barcodes and putting in play areas for children. The addition of the children’s facilities raised the average time adults spend in a store to 33 to 36 minutes from 25 to 30 minutes, he said.

This story first appeared in the June 13, 2007 issue of WWD.  Subscribe Today.

The bookseller now uses RFID scanners to take weekly inventory in only four hours. Previously, taking inventory was very time consuming and was attempted only a few times a year. The RFID tags have improved inventory accuracy to 97.5 percent from less than 65 percent.

The company’s distributor, Centraal Boekhuis, attaches the RFID tags, and they have sped up the process of checking books into the stores.

Shrinkage is now tracked on the item level. Special orders, which make up a large part of Selexyz’s business, are identified when they arrive in the store and are set aside where a customer can find them, rather than being put on the shelf.

Vink attributed the uptick in sales to people being able to find books more easily and without having to ask a sales associate.

In the next few months, customers will be able to see which physical stores have which books on the shelves. They will be able to order a book online and pick it up in the store or arrange for delivery. In the future, they also will have their own “digital bookcase” online, which will automatically update when they purchase something.

This year, the company plans to convert three or four more stores to “smart stores.”

At Anthropologie, a brand owned by $1.2 billion Urban Outfitters Inc. of Philadelphia, separate systems helped the direct business and its stores grow quickly, said Michael Robinson, managing director of Anthropologie Direct. But now the company wants to move to one platform and has come up with work-arounds to make it easier for customers and employees to translate between the two.

The catalogues and Web store run on Ecometry software, whereas the physical stores run on Island Pacific. Unfortunately, the stockkeeping units, taxonomy, assortments and promotions are different for each business.

For example, the direct business uses a 16-digit sku and the retail business uses 19 digits. If a customer sees the Passementerie Dress online and asks for it in the store, the sales associates won’t know what she’s talking about because in her world, it’s the “sleeveless V-neck crepe dress.”

Anthropologie does allow in-store returns. However, the sales associate must contact the call center or look up the item in a binder to find the correct information to process the return.

“We’re passing the workload on to the sales associate and the call center,” Robinson said. Either the company will have to stop using Ecometry or build software that can translate between the two systems. “It’s a huge challenge,” he said. “Either one is going to be extremely expensive and disruptive.”

In the meantime, Anthropologie is developing processes to make prices consistent, already has adjusted its assortments to be more similar (although the online store continues to carry shoes) and is working on identical nomenclature. A reorganization has consolidated buying, marketing and visuals so that they handle both businesses together rather than separately. Full integration may take five years or longer, said Robinson, but the company hopes to move to a single sku type in the next year.

“There are so many things riding on it,” he said.