Retail Therapy

The region’s retailers are fast adopting comprehensive and integrated IT infrastructures as they chase international competitors, information efficiency, fast transcations, and most importantly of all — customer loyalty.

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By  Zoe Moleshead Published  July 24, 2001

Spinneys, Dubai|~||~||~|The regional retail market can still be considered to be in its infancy, but the increasing number of international companies moving into the region over the last five to six years, has forced local retail companies to re-evaluate not only their customer policies and relationships, but also to the recognise the importance of comprehensive IT systems. Such systems can provide fast, efficient information to enable business processes. With the regional governments also keen to drive e-commerce, the regional retail market has been forced to get up to speed in double time.

“The market here has only just begun to change, before the big players came in there was no need. It was a simple market,” reveals Richard Thorne, general manager, Spinneys, Dubai. “In some respects the industry is behind, but its behind because there was no motivation or necessity to change. The predator has come in, and you need the predator to bring change.”

Spinneys, Dubai, has been quick to recognise the need for change internally not only to keep pace with its international competitors, but to drive greater efficiency and expansion plans.

Spinneys’ diverse business interests including retail, distribution, logistics, export and ship channelling, posed the company some complex issues when it decided to revamp its entire IT infrastructure from the point of sales (POS) system right through to the back end.

The company not only had to contend with juggling and integrating the interests of all its business units, but it also had to find a comprehensive solution that would drive the company forward. And specifically with its retail business in mind — improve its customer relationship policy.

“I think the key that we had from a company perspective is over the last 10 years there have been a series of IT solutions, none have been specific, and therefore we have ended up with three different operating systems,” says Thorne.

However, finding a solution that would suit everyone’s interests has proved a time-consuming process. The company has invested 18 months selecting a system. The search has taken staff to Indonesia and as far a field as Canada to find the most suitable solution.

“We narrowed it down to SAP in the end,” adds Thorne. “But even SAP is probably not the 100% solution that we want.”

The choice of SAP was just one critical decision the company has made, and formed the basis for some of its decisions with regard to back end and POS systems, with integration proving the key factor in determining the systems of choice.

“We picked a lot of partners who were working with SAP, KPMG is one of its global consultants, NCR [the POS system] is one of its global partners, and Compaq is another partner,” explains V. Chandrasekar, manager, information systems department, Spinneys, Dubai.

Spinneys has also opted to move form its existing HP-UX platform to Compaq and Windows NT. With the project nearing the end of the planning stages Spinneys is hoping to have the system live by the end of the year. The implementation will involve eight servers running applications, and Internet services, as well as storage area network (SAN.)

||**||Dubai Duty Free|~||~||~|Spinneys is not alone in its decision to upgrade its IT infrastructure to improve its data handling, customer service, and provide infrastructure flexibility and scalability for future growth. Dubai Duty Free (DDF) is due to complete its $1 million upgrade to its systems with the implementation of 13 Oracle 11i modules at the beginning September.

Like Spinneys, DDF has been driven by the increasing need for efficient data handling, and also its expanding business requirements.

“For our first full year in 1984 we had sales of $20 million, and about 100 staff, last year we had sales of $220 million and we have 900 staff, soon to be 1000,” reveals Colm McLoughlin, managing director of Dubai Duty Free. “The airport in 1984 had about 3 million people, this year it will be 14 million.”

DDF has witnessed considerable growth during its time, in the last year alone with the opening of the new airport the duty free operations grew by four times. With plans underway for a third terminal and a second concourse, the company recognised the need to upgrade its systems.

“We knew in our minds that the functionality of the existing application platform we had was limited, and it did not make sense to us to start a whole process of custom developing application to meet whatever demands were being placed on us,” says Ramesh Cidambi, senior manager, systems & information technology, Dubai Duty Free.

Both DDF and Spinneys opted to go with their respective best-of-breed choices, ensuring that both an upgrade path and support were maintained for their future expansions.

DDF also bought in the help of nine or 10 consultants from Satyam Computer Services to implement the applications and train the staff.

DDF is deploying 13 modules from Oracle’s 11i Applications, including Oracle Financials, Oracle’s Human Resource Management system, Procurement, iProcurements, Sales Analyser, Financial Analyser and Discovery querying and reporting tools.

As DDF and Spinneys both contend the main business benefits of IT infrastructures are the precise, efficient handling of both customer and inventory information, at increased speed, primarily at the point of sale. Both information and quick transactions are vital for gaining and enhancing customer satisfaction, which is after all what drives the retail industry.

With DDF rolling out 66,000 different lines of merchandise, keeping track of stock location and levels is vital.

“We move 24 million units of merchandise every year from our store to the duty free. This all has to be x-rayed, priced, documented, checked, transported, loaded, unloaded, put on the shelf and sold,” adds McLoughlin. “So the more that we can do with the help of technology the better it is for us.”

Tight control of inventory also enables Spinneys to identify any potential problems.

“We have about 40,000 items in the store. We need to see individual items, individual areas within the store, and see what’s moving and what’s not,” comments Thorne.

Spinneys’ upgraded IT infrastructure will also enable it to track any potential glitches in stock levels, particularly with regard to stock losses.

Currently, “if we’ve got a stock loss, we’re financially secure. But where was it from? What part of the store? because you have to try to identify where your problems areas are, is it your back door, your delivery guy, your staff?” says Thorne. “If you’ve got a system that identifies volume you can very quickly isolate it.”

||**||MMI|~||~||~|MMI Technology Solutions teamed up with retail solutions provider SMS to fill what it saw as a gap in the regional market for retail solutions, and has signed Spinneys, Abu Dhabi as its first major customer in the region,

“There is no software solution provider just catering to the requirements of the retail market,” explains Premchand Kurup, manager of MMI Technology Solutions on the company’s decision to move into the retail solutions market. “The first thing was very clear, there is an opportunity to give customers a better break, the second, we believe this is a growth opportunity, because retail is growing.”

MMI stresses the ability of its solution to integrate with ERP systems, but it is primarily integrating with its ERP offering from Sage.

MMI was also quick to recognise the benefits of information and data handling in enabling retailers to advertise, upsell and cross sell to customers with POS systems.

“[If ] I’m installing another display which is facing the customer, and you can advertise on the second display. So you can sell this space, maybe you have competing brands, so when Pepsi is scanned, Coke comes up on the display,” adds Kurup.

The wealth of opportunities for improving sales and customer experience are there for the taking, and POS is a key place to impress the customer with a speedy, efficient service and knowledge of their likes and dislikes.

Customer relationship management (CRM) has been buzzing around for ages, but the region’s retail industry is just beginning to recognise the potential of CRM strategies.

“I think the retailers in the Middle East need to look at customer service,.I think this is one area that is only slightly behind in terms of the rest of the world,” comments Sunil Chadha, area manager, Symbol, Middle East.

Symbol, which specialises in hardware devices including barcode scanners, mobile computing and wireless local area networks (LANs) for the retail experience is quick to stress the enhanced customer experience, and the benefits that can be gained from using such PDAs, and personal shopping devices.

“We are starting to do assisted shopping with one or two customers in Saudi Arabia. For example, shop assistants with PDA-type devices have information available in real time,” says Chadha.

“So as a customer walks in and likes a shirt, but wants to know what colour or size it is available in, the shop assistant can instantly help you with that information.”

POS and transaction service are also important to the retailers. Leaving a lasting and positive impression on a customer is key to ensuring they return to your store. Twenty minutes waiting in a queue that doesn’t seem to be moving is hardly likely to endear the retail outlet to the customer.

Many factors come into play in ensuring a good POS execution. “Barcode scanning is key to the performance of the checkout, first time read, and accuracy are essential to the retailer,” adds Chadha.

||**||Customer relationship management|~||~||~|Spinneys are looking to impress with their CRM strategy and the personal touch from their staff. “Talking to the consumers, and getting the staff talking to them is important, to the point that when the customer comes in, you know who they are, what they buy, and can say ‘why haven’t you bought this today, you bought it yesterday?’” explains Thorne.

For DDF one of the most crucial factors is speed, with the duty free estimating that it has to deal with 2000 passengers an hour all of which are limited for time as they wait for their flight departures.

“The speed is important. Before 1999 we had a system where you would ring up a sale on a cash register, take the credit card from the person and go to a separate terminal to swipe the card. This would take 30-45 seconds,” reveals Cidambi.

But the duty free retailers took steps to slash its transaction times down to just 10-12 seconds according Cidambi.

“The National Bank of Dubai, American Express, Visa, Mastercard, the bank’s information suppliers, our information technology suppliers, we integrated all this into one device, where a sale and a credit card authorisation is run immediately,” he adds.

The other primary element driving IT deployments in the region is the emergence of e-commerce and online shopping in the region, and the increasing importance of the web as an additional channel to the customer.

“With Dubai government’s sponsorship of e-commerce, retailers will also move to transacting some amount of business on the Net,” says MMI’s Kurup. “You can’t have one inventory for net transactions, another inventory for phone transactions, and another for your bricks and mortar stores.”

The importance of the Internet is not just in ensuring an integrated inventory, but also in communicating with your customer. Spinneys’ upgraded IT infrastructure will enable it to fully develop its web site and begin to seriously build on the idea of online shopping.

Thorne says Spinneys has recognised a change in customers’ habits, and a move to the net. The retailer receives a lot of feedback and customer comment via its web site, which has allowed it to develop and respond to customer requests and demands both personally and in store.

“If your going to into CRM, it [the Web] is one of your communication ports, instant easy access, and one that’s available 24x7, so you can feed selective information to selected customers,” says Thorne.

Dubai Duty Free’s move to the Internet has been two-fold, not only is DDF sizing up the potential of online shopping, but as a founder member of it is also driving the move to online procurement.

“We are experimenting with selling things on our web site for the Millennium millionaires draw, and our Finest Surprises car draw. Up to now we have done Dhs 1 million [business online],” claims McLoughlin. “It’s the forerunner to perhaps selling 10,000 items on the Web.”

DDF’s move to the Internet is a three step process according to Cidambi, the first process in place now involving procurement from suppliers through Tejari. DDF is able to view suppliers’ catalogues online, and obviously purchase goods via Tejari.

The next stage will involve self-service for the suppliers, using the B2B portal, Tejari. Suppliers will have access to DDF’s back end systems, where they will be provided with the information they need, and purchasing orders. Consequently, minimising DDF’s involvement in the process. The final step will of course be the move to online shopping.

||**||Wireless limitations|~||~||~|Some elements of the Middle East retail industry has been quick to recognise the flexibility, scalability, integration and speed it requires from its IT systems to deliver enhanced customer service, and catch up with its international counterparts. But in addressing the needs of the new economy, there are still factors within the region that limit the mobility and flexibility of retail systems.

Bally shoes has encountered bandwidth and digital line barriers to the efficiency of its retail system from German software company, Logware. The shoe retailer implemented the POS system in the Middle East just over a year ago, and has witnessed time and money savings. But with 16 shops around the region, and plans to expand to 23 in the near future, the retailer is hoping for improvements.

“These POS machines operate on digital lines, ISDN, and they can work on telephone lines as well. But it’s more costly, and data flow is slower,” explains Ashok Chaturvedi, regional manager, Bally, Middle East. “In Saudi Arabia ISDN lines are not provided, so we are having a rough time getting the best out of these links.”

Symbol also recognising regional drawbacks for retailers is looking to get the best out of mobile networking systems, but says things are slowly changing.

“There are limitations in Saudi Arabia and the UAE in relation to wireless technology, and the use of certain frequencies. [But] we are beginning to get some results now, we will see a wider proliferation of wireless LAN technology in the near future, and once that happens we will see a lot of new retail solutions being implemented and leading to enhanced customer services,” claims Chadha.

With the regional retail industry gearing up to take on its international counterparts, strengthening their IT infrastructures, developing their CRM polcies, and with barriers to wireless computing rescinding gradually in the region, it seems the biggest winner in the regional retail market is also going to be the most important — the customer.

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