Retailers must be embracing the new breed of digital customer. Gen X and Y are driving trends. It is easier than ever before to market to attract. People will spend 100 minutes a day on their mobile devices and over 90 minutes watching television. With over 8.5 million smart phones in use in Australia alone, there is a lot of opportunity to sell to Generation Y on the run. Am I going to be talking about how to market to people with a smartphone? No!
More than ever before, with over 50% of the market place buying on-line, you must ensure that your systems are integrated to reflect an overall business strategy. Decisions must be made through having the correct information at your fingertips.
Today I spoke with Stephen Duncan, product manager of Retail and CRM at Pronto Software, and found out a little more about how Pronto Software can help retailers integrate the business of Bricks and Mortar and online shopping. Duncan provided me an education on how to have a happily integrated back-end and front-end system supporting all parts of the business.
Can you please tell me a little about Pronto?
Pronto is a born and bred Australian company that has been in business for 30 years. Pronto’s portfolio provides a broad range of software and services. It’s an integrated business solution and its goal is to maximise productivity and be aligned with the supply chain to deliver better service to the clientele, whether they are in a wholesale environment, retail environment or manufacturing. The key is to listen to the customer’s needs and create a solution that provides increased access to the information when they need it, giving insights into the business performance. The goal is that retailers become more strategic in the business. If they can streamline their operations and become more efficient, then they can focus on the strategic side to grow the business.
Which departments of the retail business that would most benefit from Pronto software?
Pronto is what they call an “enterprise business solution” or ERP; it covers the wide gamut of business processes. We are not just a point-of-sale provider or an e-commerce provider; we handle a complete retail value chain. Potentially, that means starting off at budgeting, merchandising, aspects of purchasing allocations, replenishment, promotion, point-of-sale. From there, you’re looking at CRM and online as well. To wrap all that up is the reporting.
We are utilising IBM, Cognos and we’ve integrated that into the solutions. The key is access back into the database throughout the application. For example, you can look at sales against particular customers, even sales against suppliers if you want to. You can see if there is a lineage that tells a story.
Who can have access to this software when it’s installed into the business?
We structure this around the retailer’s needs. The software is based on roles and the security that the client requires. What we do is provide an out-of-the-box smarts and dashboard and KPI’s. For example, we have a retail console as a base dashboard which enables the retail manager to see hourly sales and what’s in the cash drawer. They can configure alerts telling them the cash drawer is holding too much cash, and it measures sales by operator.
You’re only going to give access to the people that you deem require it. That’s the beauty of working with Cognos; you can structure reporting around that need.
Can it be installed into existing POS systems?
Yes, absolutely! It can be installed into existing POS systems if that is the requirement and if they have a bespoke system. We have a couple of clients that run either standalone or bespoke systems. They’ve then chosen Pronto in the back-end to deal with the financials and potentially the purchasing and the inventory.
So, in this case we’ll be focusing on the supply chain aspects. For example, Lowe’s Menswear have their own system for two reasons. Number one: it was a legacy system that was near and dear to the business and they had invested a considerable amount prior to the engagement. Two: their employees were already familiar with the system and change management would outweigh the necessity of putting in a new POS system.
How does Pronto Software help retailers in moving towards an Omni-Channel ecosystem?
There are multiple touch points when we talk about Omni channel. It came from initially saying, “Here’s my bricks and mortar and here’s my online business.” The retailer may think, “I have a successful bricks and mortar business and I now want to move into E commerce. I want to sell stuff online.” This is where we are seeing companies struggle. They get a website up and running and begin taking orders, but what probably hasn’t been thought through is any sort of diligence. For example, what’s going to be happening in the back-end? Where are the orders coming from? Are they in-store or online? How are they supplied and supported?
For instance, I might sell an item online, but again I might be completely unaware of it in my bricks and mortar business. This is a disconnect; the industry is trying to get them to create the ecosystem. If I buy something online and I need to return it, can I bring it into the store? Is there any difference in terms of warranty or exchange?
A few years ago, in the olden days, they were kept completely separate. If you called the store, you were often told to do it online. They wouldn’t accept it in the store.
The ecosystem in the software is saying that I can manage the multiple streams so that all of my promotions are the same online as they are in store. In essence, online is driving the in-store experience. The things that I am doing online pushes traffic into the store, and I’m supporting and supplying my warranties and returns and my people on both ends are speaking form he same play book.
Then think about supply chain: Do I have a separate warehouse to handle my online orders? Or am I cannibalizing my bricks and mortar store? How are those two managed? I think a lot of retailers weren’t initially concerned about those things before they got online. However, now the shift is to be all part of the same structure, same story and same branding.
Can your software be tailor-made for the small retailer, or is it for medium to large retailers only?
A single store retailer wouldn’t necessarily look to Pronto because it really only starts to become more cost effective when you have a network of stores, that is at least 4 or more. When there is a network of stores, that’s when managing the network starts to become more difficult. You have to deal with things like allocations, promotion, stock levels aggregated reporting by territory. Benchmarking becomes more important, as does cost management across the business. This is when Pronto becomes more cost effective to them.
Please walk me through the process from when a customer decides they want Pronto to installing it and post-sales service.
Once the retailer has signed up with Pronto, we look at their needs and requirements based on why they purchased the system. It then changes direction to a structured implementation, and that methodology is really about working through the business processes to map the particular functionality and workflows.
We provide each business with a project manager. They structure the implementation via Gantt chart as we guide the client through that journey.
Typically Pronto will gets champions within the business to break down the workflow to discover the most appropriate design and software configuration. Part of the strength of Pronto is that it’s highly configurable. It’s because of this that many clients don’t need to go into heavy customisation to enable them to work or map out the flow into Pronto. This is one of the benefits of Pronto. We can help support additional flexibility in the event that a client wishes to have specific functionality built.
After installation, we offer many services for training that the retailer can either access internally or externally. Clients can choose to have their own internal training or come into our local offices as a group to be trained. It may be more cost effective for them to come in as we are also training other companies. For example, if they want to learn more about CRM or end of the month processing, then they can access a refresher course..
What happens to retailers that continue to use out-dated inadequate systems?
Because of the way the market is shifting we are seeing a shift towards increased operational efficiencies through technology being put into place. If we take an example for one of Australia’s major retailers Kmart, you can see what Guy Russo has done to meet a market expectation being a lower standard price point. What he did was upset the trend of heavy discounting via catalogues. Kmart was noticing that through their catalogues they were putting their customers into a cyclical buying pattern. Mum would go out and she would buy clothes for the kids, and she knew exactly when they were going to be on sale. The reality is that she wasn’t going to pay $20 for a shirt if she knew she could get it at $12.95 on sale. She would wait for the $12.95 sale and the cyclical buying spike was based on the catalogue. What Kmart did was condition the market into buying based on their cycles. So essentially they were not only giving away their profit, but made staffing and ordering more difficult; it was simply false economy.
What Guy said was, “I’m going to take the catalogues away and cut out a couple of supply chain layers: specifically the wholesale importing layers. Where I can I’m going directly to the manufacturers or buying groups overseas, and cut those layers out because that’s where my profits are being decreased. So if I want to get a shirt for five dollars, what do I need to buy for if it’s direct and how many do I need to purchase if it’s sourced directly from the manufacturer?”
The only way you can do that is by having systems in place to manage that because if the wholesaler was the importer and the warehousing, he now needs to put those layers in place within the busniess. Whether it’s through his own warehouse or the importing facilities, he needs to manage all those touch points.
That’s why people move to software like Pronto or SAP. They can then look at more efficient ways to manage operational efficiencies. Mid-market retailers need to be concerned that that larger companies will just swallow them up or overwrite them. Another way to become unique in today’s retail world is to offer a unique value proposition or create advocates within the business. Otherwise, the larger companies are always going to be more efficient, more strategic in the way that they are positioned.