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Case Study Best Foot Forward Adidas Retail 'connects' with merchandise Adidas-Saloman has no shortage of star power on its payroll. Tbe global performance footwear and apparel com- pany witb $8.3 billion in U.S. sales is endorsed by numerous accompLisbed athletes. But for Vince Jackson, tbe compa- ny's real stars are the products on tbe store shelves. Tbat's why Jackson, who is the director of retail informa- tion systems of adidas Retail, Portland, Ore., is a fan of his company's recentLy installed suite of merchandising soLu- tions. Simply put, the chain's investment in merchandising and related solutions makes it easier to track tbe buge num- ber of permutations of style, color and size throughout the retail division's chain of 70 stores in North America. Sales volume has tripled over the last five years, and the cbain is looking to continue its momentum. "Retail is a very volatile industry," Jackson said. "Ap- plications that change as tbe demands of business change are important for success." With that concept in mind, the company formed a partnership with NSB Group and tbe so- lutions that are part of its Connected Retailer suite. Tbe need for speed and accuracy in a competitive field is wbat pushed adidas Retail toward the solution. In early 2003, adidas recognized its po- tential for strong grovrth at about the same time tbat its parent company was moving to an SAP financials system. "To be where we needed to be, we had to make some changes," Jackson noted. Adidas sought integration with all of its corporate systems. It came up with a solution from NSB Group, which might bave been expected based on the retailer's long relationship with the Montreal-based vendor. Adi- das had been a customer of NSB since 1999. The Connected Re- tailer Merchandising solution was chosen for its ability to use consistent data to inform decisions. It integrates key functions including (among others) planning, ordering, pricing, sales and margins. As with any apparel retailer, size and style preferences vary widely based on the store's unique demographics. The system can identify tbe movers from the non-movers and mark down accordingly, Jackson said. That end result was possible witb the old system, but was not as quick or easy. "Mercbandise Analytics is a great tool," he said. "We can set up predesignated times for product to be marked down, depending on elements such as tbe cycle for tbe season. turns, age or special promotions. If an item is doing welt, we can take it off tbe markdown list. The system provides pre- cise reporting on the performance of an item and how it reacts when we mark it down." The previous merchandising solution was a Unix-based legacy system that was steady and reliable, but limited. "The R12 was our legacy application, and you couldn't get to the data easily or interface it easily with SAP," Jackson noted. "We needed to speed up processes and information flow." The allocation and replenishment components of Connected Retailer Mercbandising are based on Microsoft's .NET technology, which maximizes the ease of inte^ation, according to Jackson. It does so by providing the ability to operate "one of the thinnest systems out there," be said. With applications centralized in a tbin-client system, as opposed to re- siding on multiple terminals in stores, the system promises flexibility. One key benefit A new solution at adidas integrates key functions such as planning, ordering, pricing and sales margins. of the new system will take place in tbe future, when tbe company Looks to build on existing applications. "We'll be able to do tbat seamless- ly," he said. Still, tbe rolLout of Connect- ed RetaiLer wasn't pain-free. "Like anything new, we had a few more issues than we wouLd have liked to have, and some things had to be tweaked," Jackson said. "But it was notbing outside of our expectations." The company's efforts have paid off in a merchandise analytics tool that is well-Liked by those who use it. "Tbe abiL- ity to get data out of tbere is great. Tbe roLlout of the system was governed by strategic pLanning, too. Representatives from various departments provided their ideas of Ideal functionatity even before tbey met for a formaL product-review meeting. When the project began rolLing out, t h ^ were invoLved in the early training. 24A Retail Technology Quarterly October 2005
Transcript of 18540515
Case Study
Best Foot ForwardAdidas Retail 'connects' with merchandise
Adidas-Saloman has no shortage of star power on itspayroll. Tbe global performance footwear and apparel com-pany witb $8.3 billion in U.S. sales is endorsed by numerousaccompLisbed athletes. But for Vince Jackson, tbe compa-ny's real stars are the products on tbe store shelves.
Tbat's why Jackson, who is the director of retail informa-tion systems of adidas Retail, Portland, Ore., is a fan of hiscompany's recentLy installed suite of merchandising soLu-tions. Simply put, the chain's investment in merchandisingand related solutions makes it easier to track tbe buge num-ber of permutations of style, color and size throughout theretail division's chain of 70 stores in North America.
Sales volume has tripled over the last five years, and thecbain is looking to continue its momentum.
"Retail is a very volatile industry," Jackson said. "Ap-plications that change as tbe demands of business changeare important for success." With that concept in mind, thecompany formed a partnership with NSB Group and tbe so-lutions that are part of its Connected Retailer suite.
Tbe need for speed and accuracy in a competitive fieldis wbat pushed adidas Retail toward the solution. In early2003, adidas recognized its po-tential for strong grovrth at aboutthe same time tbat its parentcompany was moving to an SAPfinancials system. "To be wherewe needed to be, we had to makesome changes," Jackson noted.Adidas sought integration withall of its corporate systems.
It came up with a solutionfrom NSB Group, which mightbave been expected based on theretailer's long relationship withthe Montreal-based vendor. Adi-das had been a customer of NSBsince 1999. The Connected Re-tailer Merchandising solution
was chosen for its ability to use consistent data to informdecisions. It integrates key functions including (amongothers) planning, ordering, pricing, sales and margins.
As with any apparel retailer, size and style preferencesvary widely based on the store's unique demographics. Thesystem can identify tbe movers from the non-movers andmark down accordingly, Jackson said. That end result waspossible witb the old system, but was not as quick or easy.
"Mercbandise Analytics is a great tool," he said. "We canset up predesignated times for product to be marked down,depending on elements such as tbe cycle for tbe season.
turns, age or special promotions. If an item is doing welt, wecan take it off tbe markdown list. The system provides pre-cise reporting on the performance of an item and how itreacts when we mark it down."
The previous merchandising solution was a Unix-basedlegacy system that was steady and reliable, but limited. "TheR12 was our legacy application, and you couldn't get to thedata easily or interface it easily with SAP," Jackson noted."We needed to speed up processes and information flow."
The allocation and replenishment components ofConnected Retailer Mercbandising are based on Microsoft's.NET technology, which maximizes the ease of inte^ation,according to Jackson. It does so by providing the abilityto operate "one of the thinnest systems out there," besaid. With applications centralized in a tbin-client system,as opposed to re-siding on multipleterminals in stores,the system promisesflexibility.
One key benefit
A new solution at adidas integrates key functionssuch as planning, ordering, pricing and sales margins.
of the new system will takeplace in tbe future, when tbecompany Looks to build onexisting applications. "We'llbe able to do tbat seamless-ly," he said.
Still, tbe rolLout of Connect-ed RetaiLer wasn't pain-free."Like anything new, we had a
few more issues than we wouLd have liked to have, and somethings had to be tweaked," Jackson said. "But it was notbingoutside of our expectations."
The company's efforts have paid off in a merchandiseanalytics tool that is well-Liked by those who use it. "Tbe abiL-ity to get data out of tbere is great.
Tbe roLlout of the system was governed by strategicpLanning, too. Representatives from various departmentsprovided their ideas of Ideal functionatity even before tbeymet for a formaL product-review meeting. When the projectbegan rolLing out, t h ^ were invoLved in the early training.
24A Retail Technology Quarterly October 2005
and were expected to pass on much of that training to endusers. Adidas has a name for these trainers: "super users."
Extracting the right information isn't something thatevery end user is expected to do, Jackson said. But in theright hands—^those of a super user—the tool delivers.
Of particular benefit is the exception reporting. "Thathelps us key in on what we need to focus on. It telLs wherethe problems are," he noted.
By gaining a central, accurate view of inventory, severalgood things are happening at adidas Retail. By knowing theon-hand inventory, planners save about 20 hours a week,Jackson said. That visibility also makes inventory countsless costly. These counts used to require a freeze of inven-tory twice a year for two weeks per freeze. That led to lostsales, as the stores at times couldn't hold all the inventoryneeded to fill the shelves and last through the freeze period.
The new system provides full visibility into inventory intransit during these counts, leading to "minimal" interrup-tion of product flow, Jackson said. "We expect to lose fewersales during inventory counts."
Visibility is one thing, but acting on new information isanother. And Jackson believes that with Merchandise
Analytics, the system promotes the kind of intelligent deci-sions required of growing companies.
One thing the chain is continuing to develop is an inte-grated workforce-management application for use at thePOS, he said. "The end users shouldn't know when they gofrom one application to the next"
"The one we're testing is a Microsoft .NET-based POS,"Jackson said. "We liked what we've seen so far. We'reexpecting it to be more reliable and flexible during trans-actions."
A new POS and NSB's assortment planning are also onthe horizon, as are efforts to improve the retailer's wirelessnetwork. "We have a long road ahead of us," notedJackson.
Adidas' plans to acquire and merge with rival Reebokmade headlines this summer. But Jackson isn't gettingexcited yet about synergies or integration issues with thecompany's former rival. "We don't know a Lot at this point,"he said. "The stockholders aren't voting on the deal untilne)ct year."
Until then, the company plans to do as its stable of ath-letes does: work hard to improve performance. ]SSi
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