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11
March 2009
Microsoft Retail Innovation forum
22
Making Macro “Retail Ready” –Our Technology Experience
Glenn Elith, Chief Financial Officer
Macro Wholefoods Market
3
Who is Macro Wholefoods?
Macro has grown to become the largest multi-site specialty retailer of
organic and natural food in Australia, harnessing the strong trend
towards healthier eating and sustainable agricultural practices.
“Strong Industry Growth” – Australian organic retail sales have achieved
over 18% compound growth in the last 5 years (14% globally).
“Rapid Business Roll-out” - zero to 9 large format stores in under 3 years.
“Large Product Range” - over 12,000 active product lines across 5 quite
distinct departments (grocery, produce, delicatessen, café and naturopathy).
“Large Fragmented Supply Chain” - over 300 different suppliers, who deliver
either direct to store or via National Distribution Centre.
“Large Customer Base” - over 40,000 customer transactions every week.
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Why Macro Invested in Technology Early?Macro decided to invest in a robust end-to-end system early in its life,
seeing an investment in technology as a “core foundation” for developing
genuine retail capability.
Get a good system bedded down whist business was still relatively small to
avoid a massive distraction and greater complexity later on.
Forced us to think about how we use technology as a “strategic enabler” to
drive business process efficiency, service customer needs, and respond to
competition.
Decided to be a leader in driving „sophistication‟ in the overall Organics
industry – become the benchmark.
We wanted to harness the power of „information‟ early in life of the business
– “what is measured in managed.”
5
The Technology Decision?
Macro was effectively a „start-up‟ business with plans for rapid growth, and
needed a robust system solution to grow with it. Key selection criteria
included:
Genuine “end-to-end” solution on a strong software platform.
Cost effective – could not afford (and didn‟t need) a Rolls Royce.
Confidence in vendor commitment – didn‟t want to deal with a small player who
might not be around in the future.
Needed to be highly scaleable – handle multiple locations; add functionality as
business needs became more sophisticated.
Support for retail innovation – looking for competitive advantage
Easy/Intuitive to use – especially for team members serving customers.
6
The Technology Solution?
Macro selected and installed an end-to-end Microsoft retail solution in
December 2004, with the help of our Microsoft Partner Hands-on Systems.
Microsoft Dynamics NAV
(Back-end)
General Ledger
Warehouse & Distribution
Stock Ordering & Receiving
Product & Pricing Maintenance
Payables & Receivables
Customer Loyalty Database
Reporting / Business Intell
Microsoft RMS
(Front-end)
Customer Transactions
POS Customizations
EFT Integration
Scale & Scanner Integration
Store Level reporting
Live interface between the
front-end and back-end.
Daily downloading of RMS
transactions into Dynamics.
Robust reporting from both
RMS and NAV.
The only business function
outside of this system is
Time Attendance and
Payroll processing.
7
Retail Innovation - Systems
We recognized technology innovation was critical to
achieving business efficiencies and competitive
advantage.
In the early days we implemented:-
Customer facing marketing screens at POS (very early
adopters).
Creative “scanning” noises used at POS (sensory theatre).
Customization of POS Screens to facilitate customer
service (user friendly layout, hot-keys).
Flexible product discounting functionality (% off, multi-buys,
spend level discount, promo periods, gift vouchers).
8
Retail Innovation - Systems
As Macro grew, we implemented further innovations, all of which have
been readily supported by our Microsoft partners Hands-on Systems:-
Paperless supplier Purchase Orders, Remittances, and correspondence
(replacing the old print & fax/mail methodology).
Electronic Receipting of stock into stores and warehouse using hand-held
devices (eliminating duplication, lost paperwork and delays).
Automated “Ticket” generation for store ticketing (price changes, new
products & promotions).
Warehouse „bin locations‟, and stock picking „workflow‟ for warehouse team
(more efficient use of warehouse space).
Sales reporting distribution by mobile phones.
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Macro Minded – Knowing
Our Customer Better Loyalty Database of over 30,000 customers
managed on the Microsoft NAV database.
Targeted/segmented promotional and
educational activities based on purchase
histories (maintained on system), location,
dietary preferences (eg gluten free), and other
interests (eg. organic agriculture).
Loyalty customer specific promotional activities,
including „deeper‟ promotional price cuts.
Integrated with Internet for „on-line‟ registration
and maintenance of personal details.
10
Auto-Replenishment – Leap in Efficiency
18 months ago we commenced rolling out automated stock replenishment in
Microsoft Dynamics based on sales trends, stock on hand, and other
important factors such as supplier lead-times and minimum order levels.
Removed guesswork of manual ordering.
Cut excess stock levels, reduced out-of-stocks, and reduced overall inventory
holding by over 20%.
Improved store compliance with product range and store planograms – positively
impacting store sales & customer satisfaction (5% increase in ave basket size).
Reduced each store headcount by over 1.5 FTE, partly offset by creation of a
centralized Demand Planning function.
Reduced stock receiving errors and shrinkage.
11
System Innovation in Tough Times
Tough economic conditions have caused Macro to be even more “hungry” in
using available system information and functionality to formulate actions.
We can be very „agile‟ with our promotional activities and responses to
competitor initiatives.
We can be „ruthless‟ with costs and inefficiencies (duplication, low value tasks).
We can drill down on transactional information to really understand our
Customer needs, and emerging trends.
New technology innovations (including those I have discussed today) are largely
inexpensive and fast to implement with the assistance of our Microsoft Partners
Hands-on Systems.
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Our Microsoft Partners – Hands-on Systems
We don‟t want to be system experts….. We want to focus on retailing,
which is what we are good at! That is why Macro engaged the services of
our Microsoft Partners from the very beginning, and have maintained an
active close relationship.
Hands-on Systems participated right up front by helping Macro define our
system architecture and solution.
Macro has access to a broad range of IT expertise without the fixed
overhead cost.
We scale-up and scale-down IT resources as required.
Helpdesk coverage for extended retail trading hours.
Pro-active in staying up-to-date with retail functionality opportunities.
13
Implementation Tips – What Macro learnt the hard way
Allow realistic time for initial system installation and data migration – and
don‟t forget data „cleansing‟.
Think about the functionality you want “now”, but also functionality you might
want down the track – can impact your solution framework.
Re-engineer „broken‟ processes as part of design & implementation – don‟t
create a system to support existing inefficiencies.
Walk before you run – auto-replenishment might sound very sexy, but get
the retail basics right first.
Put lots of effort into team training – otherwise those newly „cleansed‟
databases will be “swamps” again in no time at all.
Planning, Planning, Planning – engage the right resources & expertise;
communicate lots to your team (build trust & confidence).
14
Contact Microsoft:
Speak to one of our Microsoft Solution Consultants,
we can help you:
• Find your local, certified Microsoft partner
• Request more information
• Find the best Microsoft solution for your business
www.microsoft.com.au/retail
Phone |+ 1800 197 960
E-mail | [email protected]
1515
Thank you………