TRANSFORM THE ECONOMICS OF RETAILING

A Simple, Intuitive User Experience:

The Last Mile in Delivering on the Promise of Enterprise Software

Executive Overview We have built the engine…now we must construct the car around it. Using this car analogy as a guide, software developers are embracing the one missing piece that may be holding customers back from fully utilizing their software packages: Simplicity.

Technology has provided the tools and means for retailers to deliver the best

service and experience to consumers. Now technology vendors must bring those

tools to the next level by creating simple, intuitive interfaces to help every user

easily achieve the outcomes the software was designed to produce.

“To date, enterprise software companies have been so focused on functionality,

process and the mechanics of what software can do, investments in user

experience have been orphaned,” says Duncan Angove, General Manager and

Senior Vice President of Oracle Retail.

The infrastructure is in place. Enterprise software firms have developed the

technology that enables single-data platforms, incorporating offerings from

various vendors in a single interface. But what has been missing is the over-

arching integration layer that enables the pieces to work together easily, so end-

users can learn to interact with the system with little or no training and work more

efficiently. It can be a win-win for all: a better retailer user experience translates to

a better customer experience.

In today’s retail environment, the primary goal is to improve the customer

experience. More than 50 percent of retailers surveyed in 2009 by the National

Retail Federation say their emphasis will be on customer service and experience

in 2010. Taking the lead from retail customers, Oracle is adopting this focus as

well. By improving retail enterprise user experience, software companies will help

deliver a better experience for consumers.

It is time to deliver next-gen user interfaces that will bring the consumer Web user

experience to the retail enterprise, making systems easy and fun to use for

employees, bringing the store to the headquarters every day, and putting

merchants and vendors effectively in the same room.

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“Bringing together formerly silo’d business processes, infusing them with science, and

wrapping them in a next-gen user experience can deliver compelling financial benefits.”

Richard Flaks, Senior Retail Industry Executive

The Three-Ingredient User Experience Fix

It may sound simple – just three key ingredients will bring the ultimate user experience

to life – but executing on those ingredients successfully can only be accomplished with

extensive industry experience and insights. The most forward-thinking enterprise

software companies will combine Business Process, Science and Innovative

Interfaces to deliver the next-gen user experience.

“Bringing together formerly silo’d business processes, infusing them with science, and

wrapping them in a next-gen user experience can deliver compelling financial benefits,”

says Richard Flaks, Senior Retail Industry Executive.

This three-pronged user experience approach currently comes into play within Oracle

Retail Integrated Inventory Planning and Integrated Fashion Planning bundles

introduced in 2009 and Merchandising 2.0 scheduled to roll out throughout calendar

2010.

1. Business Process

Retailers must be able to bring significant business functions together and help all

members of their team identify their places in the workflow. The suite of software may

include a number of functions such as assortment planning, item management, order

creation, inventory management and price execution. The performance of these

functions must be visible so that different teams can collaborate to capitalize on

business opportunities, mitigate risks and make changes quickly.

The systems must work together to effectively handle transactions and feed the data

from all channels back into the planning processes to ensure better inventory selection,

capital investments and labor distribution. With an effective system in place,

headquarters, vendors and store personnel can work on the same page at any given

moment in the business process.

Beyond simplifying the overall workflow process, the most innovative enterprise

software solution also will customize the workflow for individual employees. Store

associates should be able to view a simple screen that provides the information needed

for specific tasks, such as POS or inventory look-up; and corporate HQ personnel

should be able to view inventory and merchandising information to help them make the

best decisions for the upcoming selling season.

With Oracle Retail’s Merchandise Financial Planning solution, retail customer service

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Fact: Oracle Helped Retailers Increase

Incremental Gross Profit by More

Than US$3.2 Billion

leader Nordstrom is able to create holistic plans across all channels and gain visibility to

key financial indicators, including sales, markdowns, receipts, inventory, gross margin and

open-to-buy.

2. Science

Without science, retail is about intuition and guesswork. While intuition retains a role in

retail, today’s smart retailers know that science brings the business light years ahead. To

make the cycle complete, the software suite must take the business intelligence derived

from science and infuse it into the complete business process, allowing retailers to use

insight to make better and more profitable business decisions.

Science-based applications can turn transactions into easy-to-understand customer

profiles that can provide buyers and category managers with a clear idea of who is driving

their business. Using science, retailers can use an intelligent prediction of sales to more

accurately distribute inventory to each warehouse and every individual store. Science-

based inventory analysis can localize products demographically, regionally or to the store

level, reducing out-of-stocks and overstocks for a better gross margin return on

investment (GMROI).

The best user interface will orchestrate a unified layer at the top of the core enterprise

technology footprint, providing the ability to bring together the inevitably heterogeneous

retail IT footprint – effectively connecting applications from multiple sources in a way

that capitalizes on existing IT investments and enables retail end users to work smarter

and faster.

3. Innovative Interfaces

The challenge presented to today’s enterprise software companies is making the

complicated retail science and business analytics work within a user-friendly interface.

“Ten years ago, developers were so focused on getting the science right that they figured

the interface could be changed later,” says Angove, “but in most cases that did not

happen and now we are seeing that user adoption has been slow and has prevented

retailers from realizing the full value of these advanced technologies. We have to present

the data in a way that is consumable by the average end-user.”

Each piece of the technology puzzle must be accessible by all business units and brought

together in a way that enables the enterprise to devise more creative and relevant offerings

for their customers more quickly.

COMPETITIVE EDGE Retailers can gain competitive edge by

enabling seamless workflows across key

business applications such as assortment

planning while capitalizing on and extending

those core capabilities with newer

technologies such as:

• Intelligent Search

• Visualization of Products, Stores, Time and

Customers

• Collaboration Frameworks

• Social Networking

• Unlimited Product Delivery (from wireless

phones, handhelds, laptops, store kiosks to

home or store)

• Exception Management and Alerting

• Usability Tools (drag and drop, product

carousels, configurable financial performance

widgets)

• Digital Asset Management

• Video Streaming

• Image Support

• Seamless Business Intelligence

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“We have always viewed our technology efforts as customer service initiatives to improve

our merchandise offering and the way we serve customers. Our partnership with Oracle

continues to drive measurable results to our business.”

Jan Walsh, Vice President and Business Information Officer, Nordstrom

Today’s retail insights must be extracted from the latest sources and delivered to all

personnel from headquarters to store associates. This means being able to get feedback

from all consumer constituencies through social media, enabling store associates to

upload photos on wireless devices to make real-time merchandising decisions, and being

able to get the latest and greatest products out on the shelves before the competition

does.

The best user interface will orchestrate a unified layer at the top of the core enterprise

technology footprint, providing the ability to bring together the inevitably heterogeneous

retail IT footprint – effectively connecting applications from multiple sources in a way

that capitalizes on existing IT investments and enables retail end users to work smarter

and faster.

A Retail Day in the Life with Next Gen User Experience

To put the puzzle together and visualize the next-gen user experience in action, take a

look at Oracle Retail’s Fast Fashion solution. Oracle has combined best-of-breed

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“We chal lenged Oracle Retail to provide us with solut ions and technology

across our ent i re retail footprint within an integrated framework. In the end,

there was no one else in the market close to delivering the broad range of

solutions that Oracle could for our business. They made it an easy decision for

us to partner with them.”

Kristen Blum, Chief Information Officer, Abercrombie & Fitch

FAST FASHIONSOLUTION

The Fast Fashion screen shot shows how

complex business information is presented in a

visually appealing and easy-to-understand

format:

• Alerts define the biggest immediate risks

• Category Performance information assists in

future product planning

• Location Performance drills down sales

information to region or store

• Top Key Items show which products are

driving the business

• Navigation Bar helps execute against

priorities

capabilities from the retail applications suite “to provide a systemic approach to fashion

planning that will drive top-line sales and maximize bottom line profitability,” according

to Angove. To help retailers identify fast-moving merchandise and make real-time

merchandising decisions, Oracle started with the end-to-end business processes

developed in Oracle Retail’s solution suite, expanded it with business intelligence from

Oracle Technology, and infused fashion science throughout the workflow. The Fast

Fashion application uses forecasting to understand how items will perform and

leverages optimization to identify which items to send to which stores and what price

will achieve the best financial outcome. All of these ingredients together wrapped into a

simple, intuitive and visual interface deliver a powerful, next-gen user experience.

Integrating all of these capabilities into a holistic offering takes the financial impact to a

new level, enabling up to a five percent increase in sales, eight percent improvement in

gross margin and seven percent decrease in inventory, according to Angove. For a $1-

$3 billion fashion retailer, that adds up to nearly $50-$100 million in value annually.

Using the Fast Fashion solution, a retailer can easily view the previous weekend’s

performance on Monday morning. In the past, the Monday morning report may have

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Fact: Retailers Running Oracle Are

48% More Profitable Than Their Peers

been compiled from multiple systems in Excel-based or mainframe reports. Although

this example portrays the interface designed for the fashion industry, the same premises

hold true for grocery, fast-moving consumer goods and other retail segments.

Infusing Social Networking into the Retail User Interface

Retailers have a new and exciting opportunity to reach consumers and their peers in an

immediate and impactful way – through the use of social media. Social networks and

blogs are now the fourth most popular online activity ahead of personal email,

according to a March 2009 report from Nielsen Online. Member communities are

visited by 67 percent of the global online population, and time spent is growing at three

times the overall Internet rate, accounting for almost 10 percent of all Internet time,

Nielsen reports.

For retailers, this paradigm shift poses major risks and opportunities. “The key is to

understand and harness the medium, capitalizing on it to understand the customers,

what they want and how to deliver it in a way that’s relevant, unique, compelling,

efficient and profitable,” says Flaks.

Retailers can join in the social media revolution in several ways. They can advertise

within relevant media, monitor communities to elicit trend information or participate

actively by creating company blogs, posts, chats, surveys and groups. Enterprise

technologies such as Oracle Beehive and Web offerings such as Facebook and

YouTube make it possible to easily devise ideas and test them or take input from key

constituents on trends and act on them quickly to capture a hot market trend.

Retailers can go further by incorporating social media information into the business

process. Following is an eight-step strategy example in which social media capabilities

might come together to support a next-gen workflow within the user interface:

1. Create a Merchandising Concept that brings together several items from your assortment to deliver an “outfit” to your customers, helping them to think about how they might wear the latest styles and helping the retailer build their market basket size or up-sell opportunity.

2. Review Customer Dashboard for a quick view into key segments and who is

buying certain items. Also find out what other items key customers are purchasing.

Create a fan club on Facebook for the purpose of collecting feedback on products.

3. Post to Facebook: From a posting set up screen, grab a hot item merchandising concept, such as “Fall Day to Night Look” and post it via Facebook to a selected

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“To date, enterprise software companies have been so focused on functionality, process and

the mechanics of what software can do, investments in user experience have been orphaned.”

Duncan Angove, General Manager and Senior Vice President, Oracle Retail

group or fan club for feedback.

4. Collect Fan Club Feedback & Analysis: Fan club members comment on the merchandising concept and rate the offering and the styles included in it on a variety of

dimensions – color, styling, coordinates, etc.

5. Create Item Scorecard: The feedback from the Facebook fan club powers an item

scorecard which has been derived from a combination of quantitative metrics, such as

sales, and gross margin as well as more qualitative metrics, such as fit, fabric, quality,

styling and coordinates.

6. Review Visual Feedback from Store Managers: Through the collaboration

dashboard, review a running list of feedback on the merchandising concept and new

ideas for what might work in the store, including iPhone pictures of outfits devised by

your store managers and their associates.

7. Review Market Dynamics: Through Listening Post technology, access a running list

of where the item and the vendor/brand have been featured in the press to understand

what’s hot and what’s not.

8. Update and Execute Merchandising Strategy: With social media information in

hand, make final tweaks to the merchandising strategy and execute in a coordinated way

to store visual merchandising, e-commerce and marketing teams.

Conclusion

By harnessing the power of simplicity, enterprise software companies can bring the end-

user what they most desire: an intuitive and easy-to-use software solution that provides

the insights and information necessary to move the business forward.

To achieve this goal, retailers must respond to needs at each of three primary touch

points: consumers, employees and vendor integration. Then, the end-product must be

infused with three components: business process, science and innovative interfaces.

Retailers also should keep a keen eye on the movement of social media and how to insert

social input into the business process, leveraging the power of the data captured through

customer ratings and other online feedback frameworks to add a more comprehensive

and meaningful picture around business performance.

Once all the technology pieces are in place, connecting retail stakeholders in new

compelling ways, retailers can jump-start an era of retailing that enables all key

stakeholders to understand customers, devise more innovative offerings and

merchandising strategies, and execute flawlessly against business objectives.

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Fact: Oracle Helped Retailers Drive

an Additional US$11.2 Billion in

Annual Revenue

About Oracle

Oracle is the number one provider of innovative and comprehensive industry software

solutions for retailers – enabling organizations to serve their customers better by

applying insight into daily business decisions for more profitable results. With software

that provides supply chain, operations, merchandising, store systems, optimization as

well as enterprise applications and infrastructure software, Oracle partners with the

world’s leading retail companies, including 20 of the 20 top retailers worldwide, to

transform the economics of their businesses.

Contact Us

To learn more, please visit oracle.com/industries/retail, or email

oneretailvoice_ww@oracle.com to contact an Oracle representative.

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