Digital Transformation
Imperatives for Small and Mid-sized Fashion Businesses

A recent global report from IDC reveals that over 42% of small and midsized brands worldwide are undergoing a digital transformation program. Yet, only 7% have gone one step further to optimize processes that yield business results - leaving the rest to catch up.

The following point of view details some of the most significant opportunities mid-sized companies can leverage to compete with bigger retailers, and illustrates how they can equip themselves better to successfully navigate the digital economy:

1

Compete on customer experience, not price or size

Although SMEs regard revenue growth, cash-flow improvement and cost reduction as top priorities, focussing on consumer experiences can deliver significant opportunities to strike the right notes on your business's growth agenda.


Consider the industry today: long-established retailers are closing their brick-and-mortar stores to fortify their stance against heightened competition from e-tailers. Meanwhile, consumers are demanding for greater speed and ease, putting retailers saddled with legacy systems at great risk. This growing rate of digitally-savvy consumers calls for a consumer-first mindset.

The data is clear: traditional retail is under siege and the sting is mostly being felt across small and mid-sized fashion businesses. Retail is now veering towards building an omnichannel customer experience - a trend that is quickly becoming the norm for fashion retailers. At the core lies the concept of unifying online and in-store into a single, seamless offering - with the agility to adjust inventory levels across online and offline. Fashion brands such The Rockport Group have already started integrating their retail stores and e-commerce systems to facilitate omnichannel functionalities such as click and collect, and buy online and return at any store.

By unifying channels, brands are able to get in-demand products into the hands of consumers regardless of the channel and in some cases, intelligently source inventory from another location to meet demand for out-of-stock products at the store. Instead of perceiving this shift as a risk, mid-sized retailers should be emboldened by the new trend and seize the opportunities it presents.

This viewpoint is not without merit as mid-sized retailers cannot compete with bigger retailers on endless aisles of product choice. Instead, they should be hyper-focused on driving fully responsive storefronts through a concerted effort of integrating inventory, customers, and products into a single view to attract new consumers and build long-lasting relationships – digital and physical – wherever the shoppers are.







2

Think long-term growth by investing in technology that can meet immediate and future needs

Research reveals that technology expectations of SMEs are often not strategic enough to meet growing retail demands. Fixated on the same approach, most boardroom executives ask the same questions year over year - “Which changes will lower operational costs?” or “How can we increase revenue?”.

These questions give executives a very restricted view of their technology investment. As a result, mid-sized retailers tend to invest in targeted solutions, thereby missing out on opportunities to reduce costs in other areas, become more competitive in the digital economy or serve customers in a new way. For smaller retailers, the lure of technology can be a double-edged sword. Adopting new technologies can be harrowing with concerns over time taken to train resources, high costs, and constant maintenance and optimization.

However, recent statistics show drastic changes in retail. Sales per square foot are declining, the industry is plagued by bankruptcies and store closures, retailers are rethinking their strategies in fulfillment points and new players are rapidly disrupting the industry and overtaking established retailers. Meanwhile, e-tailers (see case study below) are expanding into brick-and-mortar channels. These trends are a powerful warning for businesses that are apprehensive about digital transformation - inaction can only deter company growth. Opportunity in today's industry lies extensively on how companies leverage their own digital transformation to seize it.

The key to succeeding in the digital economy is to start transforming your business before your revenues and sales volume decline. With digital technology, retail brands are able to streamline operations to fulfill orders from anywhere, and more importantly, gain insights into customer’s needs. This places mid-sized businesses on equal footing with larger, more established brands, as brands will have the agility and back-end infrastructure to maintain a pulse on every consumer dynamic with the capability to swoop in and meet their demands.

Looking back at the IDC research, it’s encouraging to see that 49% of retail executives believe that new processes and advanced digital technologies have helped free up resources and enable business growth. Furthermore, 56.8% agree that new technology solutions have allowed them to begin or continue revising their workflow and processes to streamline operations and improve productivity.







3

Adopt an end-to-end solution as opposed to point solutions

Large retailers are losing market share, and those consumers are up for grabs. While that’s a positive trend for SME retailers, their technology may not be up to par with meeting those consumer demands.

Opting for point solutions is a common thread across mid-sized retailers. However, the rapidly shifting economic environment has taken a considerable toll on these technologies, as apparent per the struggle that many brands face in building functional yet novel omnichannel consumer experiences, while still operating out of siloed systems that were part of the pre-omnichannel era. The biggest disadvantage of a point solution is the lack of communication with other systems, thereby creating disparate, duplicate data and redundancies across the value chain.

What does this look like? Lack of real-time or accurate insights due to the time taken to merge the data together, limited inventory visibility to orchestrate omnichannel orders, high integration costs, additional specialized software to achieve even modest visibility across channels, and recurring expenses due to the maintenance of multiple systems.

Consequently, fashion brands resort to gradual tweaking of existing systems, adopting work-arounds to complex problems within their existing IT infrastructure, and executing piecemeal integrations between separate business verticals. While such approaches do of course provide limited results, it is quickly becoming clear that radical re-thinking of existing systems and processes is critical in order to become more nimble, expand, and turn the table on much larger competitors.

Mid-sized brands such as Rockport are already leveraging a single platform across wholesale, retail and e-commerce to gain a comprehensive, up-to-the-minute view of their inventories at every stage of the supply chain, across geographic locations and formerly segmented channels. The result: innovative retail experiences with endless aisle capabilities that leave the consumer intrigued and ready to come back for more. Read the case study here.







4

Choose the right technology to grow revenue and keep costs down

It's clear that an end-to-end, digital platform is not a “nice to have” – it’s about survival. If mid-sized companies don't start on their transformation journey now, they may miss out on significant opportunities to expand operations, gain new customers and strengthen brand loyalty.

Yet, as important as it is to have a robust end-to-end platform, it is equally important to choose the right one that can meet all your business goals in the present and future. Here's what companies should look for:

  • One platform for all channels instead of multiple systems for dramatic simplification and cost reduction.
  • A single pool of inventory for optimal usage of inventory that helps reduce safety stock and retail stock-outs while increasing customer service, inventory turns and profitability.
  • Harmonized processes and one set of master data across retail, wholesale and e-commerce to reduce silos, improve data accuracy and simplify running a global vertical business.
  • Enterprise access to meaningful insights across the value chain that will help drive immediate value by providing the capability to capitalize on the full potential of an opportunity or offset the full impact of an emerging risk quickly.
  • Omnichannel order orchestration capabilities to satisfy the customer’s desire to buy from any channel. In case of in-store stock-outs, the ideal platform should help brands profitably and intelligently source inventory from another in-stock location, regardless of the channel.

As evidenced by Rockport investing in a suite of SAP enterprise solutions, there is an indisputable shift in how mid-sized businesses are turning to advanced technologies, which was once regarded as too expensive, too complex, and only focused on large enterprise. This new crop of digital technology has dramatically reduced the budget, time and complexity needed to store and manage data while accelerating and simplifying data exploration.

With cloud deployment models in particular, small or mid-sized businesses can afford technologies that was once reserved for large enterprises without accruing unmanageable costs. According to the IDC report, more than 80% of surveyed executives worldwide believe that implementing and adopting digital is either easier than they thought or required the same level of effort and budget that they initially expected. Furthermore, 49.3% of decision makers believe that technology levels the playing field for small businesses versus larger corporations.







5

Leverage the flexibility of being small

The concerns relating to new technology raised by mid-sized players are valid - transitions can be challenging, especially since digital transformation calls for a new way of working. However, size is one of the key competitive differentiators that SMEs have an advantage over larger competitors.

This statement rings true as uncovered in the IDC survey: around 40.8% retail executives cite their size as an advantage over larger companies that are less able to take advantage of digital innovation in a timely manner. The inherent flexibility helps mid-sized retailers to be better prepared in altering operations and meeting rapidly-evolving needs quickly, especially when it comes to exploiting gaps and seizing opportunities in the marketplace.

Agility is an SME strength - owing to its flatter organization structure, shorter chains of command and, typically, less organizational complexity due to fewer products, services, locations and business units compared to their large counterparts. This smaller footprint allows digital transformation to impact the entire company faster, with minimum disruptions in operations and sales. Consequently, CIOs can focus on creating a “transparent technology platform”, where all lines of business can see, make decisions and work with the same data, freeing up IT resources to reimagine better ways on creating greater value from their technology investments.







Conclusion

Digital transformation is not a destination, it's a process

It's clear that even though digital transformation programs are being initiated by many SMEs, it's still in its rudimentary stages. The key to winning in the digital retail economy is to keep every piece of existing and new technology connected to a digital core throughout the infrastructure and across your business network. This way, processes from merchandising to sourcing to store and e-commerce operations - all underpinned on a foundation of unified data – can be executed seamlessly on a robust platform.





Case Study: The Rockport Group
Mid-sized company revitalizes and reboots systems with an omnichannel platform.


The Group was formed in 2015 as a result of the sale of the Rockport brand by Adidas to investment firm Berkshire Partners LLC and New Balance's investment arm New Balance Holding Inc.

  • The acquisitions resulted in a technological breakup. The Rockport Group was given two years to remove itself from the technology platforms at New Balance and Adidas and build its own stack — a task that required The Rockport Group to replace 161 systems worldwide.
  • New independent IT organization with limited resources and ERP budget
  • Required a robust, scalable technology platform to support planned product line and international expansion goals
  • Needed cutting edge omnichannel capabilities to run in a digitally-driven fashion world
  • The selected technology platform had to be capable of supporting Rockport’s ambitious growth plans
  • SAP Fashion Management was selected as the ERP platform based on scalability and agility to respond to the digital economy
  • Rapid deployment: Rather than starting the implementation from ground zero, Rockport leveraged attune’s pre-configured solution for SAP FMS - the attune Fashion Suite™
  • Scaled down from 161 systems to just 13 with SAP FMS as the core platform
  • Rockport will continue to build out omnichannel capabilities such as endless aisles and utilize insights gained from SAP CAR to introduce a loyalty program.
Company

The Rockport Group

 
Location

Newton, MA

 
Revenue

USD 400M

 
No. of Employees

400+

Line of Business

Footwear Manufacturer & Retailer

 
Customer Website

www.rockport.com

 
Competing Products

Infor

 
SAP Solutions

SAP Fashion Management, SAP Customer Activity Repository, SAP Hybris B2B, attune accelerators and tools: attune Fashion Suite







Case Study: UK-based multi-channel retailer
Online retailer expands into bricks-and-mortar leveraging a robust digital backbone.



The fast-growing brand based in UK and an established etailer was looking to expand the business into the retail format, tightly integrated with their digital platform; enabling the brand to engage a wider market, allowing consumers more diverse ways to shop and interact with the brand.

  • Needed to upgrade core systems due to custom developed legacy systems unable to scale with rapid growth
  • Time-critical project: needed an operational system to launch the first store
  • Expand to other markets quickly, drive footfall to the retail outlet, increase the merchandise range
  • Needed a sustainable, scalable platform for rapid growth
  • The etailer recognized that the system they chose should be capable of supporting their meteoric growth. It also needed to be a fashion industry specific solution; providing functionality that is built on best practices.
  • As opposed to other solutions in the market place, SAP FMS provides a strong foundational platform which will be able to support Missguided through its growth.
  • Built in collaboration by SAP, attune and leading Fashion Brands, FMS is the only ERP solution which is purpose built for fashion
  • The etailer is on the path to becoming a true omnichannel player and has its sights set on opening more stores as well international expansion
  • The UK fashion etailer will continue to build out their IT platform with SAP FMS as the core
  • With SAP CAR in place, the platform will provide the backbone for customer engagement, loyalty and promotions
Location

Manchester, UK

 
Revenue

GBP 117M

 
No. of Employees

400+

Line of Business

Multi-channel Women's Fashion Retailer

 
Competing Products

Microsoft Dynamics

 
SAP Solutions

SAP Fashion Management, SAP Customer Activity Repository





Digital Core Tailored for Mid-sized Fashion Brands
Based on a Pre-built Rapid Deployment Solution for SAP Fashion Management and S/4HANA
Pre-Built Template
A stand-alone pre-configured ERP solution that includes fashion-specific business processes around seasonality, segmentation, order allocation and fashion product management.
Lower Costs
The subscription-based model allows fashion brands and retailers to take advantage of a full enterprise solution while saving on upfront costs.
Speed and Flexibility
The cloud operation model enables flexibility and speed in resource provisioning, making it easier by automating IT processes.




Kickoff your Digital Transformation journey

See first hand how we can help your business forge ahead in the Omnichannel fashion world. 

  • We are the Co-innovation Partner starting from FMS 1.0 continuing with FMS 2.0 and beyond with ability to carry out FMS POCs.

  • Our preconfigured FMS solution is available on the cloud as a subscription service at a fraction of the time and cost.

  • We have the most number of FMS projects in the SAP ecosystem, being involved in almost 70% of all current FMS projects.