Speed And Information The Key To Retail Industry Success
Nirmalya Kumar, London Business School Director and globally renowned Professor of Marketing, last night warned that speed and information were the biggest changes affecting the Retail sector over the past 20 years and would remain the biggest challenges and barriers to success in the years to come.
Professor Kumar, also a Board director of Zensar Technologies, a joint venture of India's giant RPG Group and Fujitsu Services of the UK, was speaking to an invited audience of leading retail specialists, including representatives from Marks and Spencer, House of Fraser, John Lewis, Tesco, Bird's Eye and Mothercare. The event, "Strategies for Success in the Retail Industry", was staged at the Institute of Directors in Pall Mall and Mr. Kumar illustrated his keynote address by reflecting on the experiences of the US store chain Wal-Mart and Spain-based fashion giants Zara.
"While their markets are vastly different, the need for speed and the thirst for information to provide knowledge quickly are equally in demand," he told the audience.
"In fashion, for example, flexibility has to be optimised because the biggest challenge to fashion is change. You are trying all the time to predict what will sell. Even if you are a genius you are going to get it wrong some of the time. And even if you get it right you could run out of stock which is still in demand and therefore lose sales.
"By having great IT information a quick response system can enable fashion retailers like Zara in Spain to see what is selling and react."
Professor Kumar used Zara to show that most fashion items remained in stock in their worldwide stores for less than a month. This not only encouraged customers to buy immediately but it meant that on average customers visit their local Zara store 17 times each year compared to the market average. Clothing goes from design and selection to store delivery in just two weeks.
"Knowing what is selling and what isn't is not just good for the store, which has to mark down less clothes, but is great for the customers because they know they are buying something different from their friends and this all aids their desire to move with the fashion and go back to Zara repeatedly."
Zara's IT backup and support is largely geared to production of the garments, while Wal-Mart, reputed to have the largest computer system in the United States outside of the Pentagon, uses its IT to track every single item sold in all of its stores over the past two years and even the whereabouts and precise movement of its 500-vehicle delivery fleet.
Mr. Kumar is Professor of Marketing, Director of Centre for Marketing and Co-Director of the Aditya Birla India Centre at the London Business School. He serves on the school's Board of Governors as the elected faculty representative and as the program director for three open enrolment executive programs: Market Driving Strategies, Building the Customer Focused Organisation and Accelerating Sales Force Performance. He has also taught at the Harvard Business School and is currently serving on the Boards of several companies, including Zensar Technologies, BP Ergo and ACC.
Also speaking was Steve Ash, Head of IT at Mothercare the UK's leading parenting store. Mr. Ash, in charge of all software purchasing and development at Mothercare, spoke about how IT has helped revolutionise the company during the past three years as it has strengthened its position in its market.
IT had been at the heart of a three-year business improvement programme, which has seen Mothercare dramatically improve its performance and it has just won Retail Systems' IT Project of the Year and Retailer of the Year award for its IT.
Event host Zensar employs over 3,400 people globally with nearly 200 people based in the UK and Europe. It has a robust customer base, and has formed strong partnerships with Fujitsu, Sun Microsystems and Oracle. In the Europe market, the company focuses on large clients in Retail, Financial Services and Utilities and has succeeded in winning major contracts on the strength of its innovations in IT and Business Process Outsourcing in each of these segments.
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