CHICAGO — Chico’s FAS is shifting its Soma intimate apparel brand to new enterprise resource planning software, the first step in a chainwide technology upgrade that will cost $10 million in its first year.
An ERP system is a massive software package that integrates and streamlines various business functions such as manufacturing, merchandising, supply chain management, human resources and financials. Chico’s Soma brand will go live with software from technology firm SAP this year; White House|Black Market and Chico’s will follow by yearend 2008, said Gary King, executive vice president and chief information officer of the $1.4 billion Fort Myers, Fla., chain.
Details of the project, which began in March, were revealed Tuesday in Orlando, Fla., during SAP’s user conference. Chico’s said it would spend $10 million on ERP software and services this year, but declined to estimate the total capital outlay for the system.
King told WWD the upgrade is necessary now to support Chico’s overall growth strategy and replenishment demands of the Soma and direct-to-consumer businesses.
“If we don’t have a scalable platform in place a couple years out, then we run the risk of being a barrier to growth,” he said.
Chico’s expects to open 25 to 30 Soma by Chico’s lingerie stores this year, plus five to 10 Soma boutiques, which offer an edited assortment and would be located either within or attached to Chico’s stores, according to Michael Smith, vice president of investor and community relations. Companywide, Chico’s plans to add 135 to 155 stores this year.
The new ERP means Chico’s will ditch the software it currently uses for product development, merchandising, financials and numerous databases. However, Chico’s will protect its investment in other major systems such as warehouse management from Manhattan Associates and point-of-sale systems from CRS (now part of Epicor Software), thanks to SAP NetWeaver, software that consolidates and integrates those existing stand-alone applications with the new ERP system.
Due to their inherent scope and complexity, ERP systems can be notoriously difficult to implement without risking disruption to the business. King, who’s been involved in ERP projects at another retail company — one SAP implementation and another project using software from archrival Oracle — said it’s critical to resist temptation to modify the software, which further complicates an already complex undertaking. “You have to take the package as is, ‘plain vanilla,’ without customization,” he said.
The Soma brand will serve as an “incubator” to test the ERP software before it is expanded to the White House|Black Market, Chico’s and Fitiques brands, King said. The ERP project does not involve Lucy Activewear, the privately held brand in which Chico’s holds a minority interest.
Upon completion of the project in 2008, Chico’s expects to gain greater transparency in all aspects of operations. Though the company will be larger at that point, it hopes to be more nimble.
“It has a lot to do with integration and a single source of data, as opposed to multiple sources of data,” which is the case with stand-alone systems that draw on their own databases, King said. “We think we’ll get a common view of the data across all activities. All of that is a springboard for making better, faster business decisions.”
In other news at the company, Toni L. Robinson has been named senior vice president of planning and allocation for the Chico’s brand, a new post.
Most recently, Robinson was vice president, merchandising planning and allocation for Bath & Body Works at Limited Brands. Earlier, she spent eight years with Accenture, the technology consulting firm. She began her career in merchandising at May Co. department stores.
At Chico’s, she will be responsible for all merchandise planning and allocation for the Chico’s brand, including providing the direction of improvements in process, planning and systems. She reports to Patricia Murphy Kerstein, executive vice president-chief merchandising officer.