Retail

Manufacturing is still a major engine in today’s economy. The fundamental success factors in this industry remain constant: produce the right products—in the right quantities, at the right time, with good quality, and at a price the customer is willing to pay. However, flexibility and continuous improvements are also imperative.

ERT Group’s solutions offer integrated, adaptable business applications for small and medium-sized organizations and divisions of large enterprises. These integrated solutions help automate and improve financial, customer relationship, and supply chain management.

Overview:
The retail industry is one of the biggest employers in the world.  Retailers sell goods and products to consumers.  There are many different kinds of retailers, including department stores, specialty stores, discounters, catalogs, Internet sites, independent stores, chain restaurants and grocery stores.  Retail giant Wal-Mart Stores, Inc. is the world’s largest retailer and the world’s largest company with more than $401 billion (USD) in 2008/2009 sales.

Retail is just one of the many industries that has been greatly affected by the recently global, economic slowdown. Consumer prices have taken the biggest plunge in decades, pulled down by a sinking economy that evidence suggests is sending inflation into retreat.  Globally, retail has generally had a slowdown.  Markets such as China, India and other parts of Southeast Asia still remain as targets for global retail chains as we move into 2009/2010, as these regions are relatively under-penetrated.

Market Scope:

When the economy is in trouble, people close their wallets and delay purchases, and the retail industry suffers. Store chains, after all, cannot survive very long without robust consumer spending.  Retailers are slimming down, shutting stores, trimming inventory, slicing payroll and taking other strategic steps they hope will help them endure the pain. With fears that the coming months could be the toughest for them since the 1991 recession, retailers are fighting to gain any edge they can over their rivals and to cushion themselves from the slide in customer spending. Many of them are redeploying staff and revising promotions; some are putting a new stress on low prices. In the end, they know, some of them will be winners, others losers.

Online spending growth in October fell to its lowest rate since 2001, in a sign the sector has been hit by the slumping economy and indicating a challenging holiday season for online retailers.  Online retail spending was flat in the first quarter of 2009 compared to a year earlier at $31 billion, while total retail sales fell 5%. E-commerce grew at a 17% rate over the prior year in Q1 of 2008.

Among the most visible ways that stores are trying to ease their pain from the spending slowdown:

• Merchandise - Retailers must take care not to stock too little of the latest hot fashion or product — or showcase it too late. Many stores, Riley says, are working more closely with overseas suppliers to settle quickly on designs and shorten the development process.
• Pricing – Even retailers that try to avoid across-the-board price slashing are embracing the deep discounting trend, which Wal-Mart capitalized on so successfully last fall and holiday season.
• More consumer input – Retailers can’t afford to wait until the end of a season to determine which trends will prove most popular. Riley says stores are stepping up consumer research and using their websites to gather real-time opinions from shoppers.

Industry Issues:

Economic Dependence – Consumer spending within the retail industry is a direct reflection of the nation’s economic well-being. In bearish economic times, consumers are less likely to spend their discretionary income on unnecessary consumer goods, and as a result the retail industry suffers. The current pressures of soaring oil prices, sluggish home sales and consumer credit crunch are all economic factors that play into consumer retail spending. In order to counteract these economic factors, retailers are turning to promotions and deep discounts.

Rising Costs – Costs are increasing among many commodity areas, causing direct downward pressure on retail margins. The soaring price of oil has affected transportation logistics within the industry, and the increasing cost of edible commodities has forced consumers to pay higher retail grocery rates. Retailers are struggling with managing cost effectiveness and providing consumers with associated value.

Customer Shopping Experience – A positive consumer shopping experience is the forefront of retail success. Busy lifestyles have driven consumers to look for retail experiences that are quick and convenient. In this effort, many retailers have turned to self-service checkouts and kiosks to reduce the amount of time customers must wait for service. It has been seen that a negative consumer experience can result in low revenue growth, low customer satisfaction, high customer turnover and potential missed opportunities.

Loss Prevention – The costs of shrink are steadily climbing for retailers. An alarming fact is that organized theft represents a growing percentage of the losses. Companies must now look to reducing store fraud and controlling loss by enhancing the shopping experience through improved traffic flow and customer check-out, driving employee productivity and supporting all facets of store operations with open and reliable store infrastructure.

Effective Asset Utilization – Retailers are consistently charged with making the most from their assets that are tied up in property, equipment and infrastructure. Poor or erratic utilization of fixed assets can lead to a high level of cost per unit of measure and lower than desired inventory turns per square foot.

Competitive Supplier Pricing – In an environment with rapidly rising costs, retailers must engage in competitive pricing with their suppliers to encourage consumer spending. Many retailers have great difficulty arriving at competitive price points with suppliers. Retailers must be certain that price points are quantity sensitive, their requirements for purchase are clearly communicated to the supplier, and they have a clear view of the suppliers’ forecast.

Generally, retailers should look to:

Optimize inventory management & merchandising decision
•    Gain insight into product, department, store performance
•    Respond immediately to trends in customer purchasing behavior
•    Improve product pricing management with fact-based decisions

Improve customer service
•    Shorten lines and decrease check-out times
•    Handle complex transactions including couponing and special offers
•    Check product availability in stores and warehouses

Support multi-channel operations
•    Process orders and returns via any channel
•    Gather and analyze real-time, multi-channel data to respond quickly to customer demand
•    Coordinate and track customer interaction across multiple channels

ERT Group Solutions Benefits:

Optimize inventory management and merchandising decisions

• Gain insight into product, department, and store performance
• Respond immediately to trends in customer purchasing behavior
• Improve product pricing management with fact-based decisions

Improve customer service

• Shorten lines and decrease checkout times
• Handle complex transactions, including couponing and special offers
• Check product availability in stores and warehouses

Support multichannel operations

• Process orders and returns via any channel
• Gather and analyze real-time, multichannel data to respond quickly to customer demand
• Coordinate and track customer interaction across multiple channels