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A new breed of integrated ERP: How SAP FMS is changing the face of multi-channel fashion retail

Tue, Nov 15, 2016

multi-channel fashion

It’s a new world for fashion retailers. Giants in the online retail space, like Amazon who last year achieved sales in excess of US$ 107 billion, is now moving into the brick-and-mortar retail format. Meanwhile, traditional brick-and-mortar retail companies like Burberry have made exponential leaps ahead of the competition through a concerted effort to develop its online and in-store retail experience into a single, seamless offering. The trend is towards omnichannel retail and it is a trend that is quickly becoming the norm for fashion retailers.

However, omni-channel experiences bring with them a host of unique challenges. Fashion companies are locked into a tightly contested battle for new customers, and new markets. Consumer behavior itself has changed dramatically, particularly in recent years. Today’s digitally empowered consumer has more choice, greater access to information and an unprecedented ability to track down the best deals – either in store, or online.

Conversely, fashion companies too are beginning to reap the benefits of specialized technology and processes aimed at delivering a seamless consumer experience that is homogeneous across channels. Industry leaders take it a step further, realigning their supply chains, design schedules and promotions in order to leverage the unique characteristics of each sales channel, and in the process, setting new benchmarks and raising the minimum standards expected of fashion retail as a whole. At the core of these success stories is a platform designed for the new fashion reality - SAP Fashion Management.

The Challenge of Merging Disparate Systems

Many brands have taken the plunge into setting up multi-channel operations, either by launching an online presence parallel to their established storefronts, or by transitioning from e-commerce to include physical stores. However while a majority of fashion brands have – to all outward appearances - made the transition, they still struggle to cope with increased sales volumes while managing promotions and inventory distribution across channels.

Typically, organizations prefer to draw out their investments in legacy back-end systems by making piecemeal improvements in order to cope with the increased demand on their systems. Often times, a brand’s physical retail systems are operated completely independently of its wholesale and online systems with further specialized programs and processes having to be developed in order to enable each silo to communicate their demand relative to the other.

These systems often lack the crucial functionality necessary to support day-to-day operations across online and store channels, particularly when considering the backdrop of an increasingly competitive and fast-paced fashion industry where demand for a given style can fluctuate over a matter of weeks in some cases.

Legacy systems lack the agility and responsiveness required to seamlessly orchestrate orders in a multi-channel business. While it is certainly possible to operate across multiple channels using such systems, brands that resort to incremental improvements in their legacy systems will tend to face serious difficulties in terms of tracking sales and demand for their products. Similarly, from a production standpoint, the lack of up-to-date information will cause inefficiencies when such brands attempt to replenish their stocks. Legacy systems force brands to operate using wider margins of error and in the case of brands operating across a global supply chain, delays and bottlenecks.

Meanwhile, consumers now have all the tools they need to seek out the best value for money and this has resulted in the rise of entirely new categories of consumer behavior. Depending on where the best deals are located, and based on their own preference and convenience, consumers are now choosing to go beyond merely ordering online and waiting for delivery or visiting a store to try clothes on before purchase. The previously clear lines between these two channels have blurred beyond recognition and many consumers are now opting to either browse products online before purchasing in-store (web-rooming) or trying out items in-store before finding the same item for purchase online.

Crossing the Omnichannel Chasm

The end result? Those who are slow to adapt to this new fashion landscape are being squeezed at both ends of the supply chain while the most innovative brands, companies like Burberry and Rockport are able to operate at dizzying speed in order to consistently achieve just-in-time replenishments of stocks, flexibly drawing from inventories that are no longer segmented according to channel.

Leveraging the functionality of SAP FMS to radically simplify and breakdown barriers between channels, such brands are now able to secure consumer loyalty by crafting innovative, integrated multi-channel experiences. Those tied down to legacy systems will struggle to maintain the outward appearance of an effortless multi-channel retailer all while creaking under the weight of disjointed, unresponsive systems and increased transaction volumes arising out of a growing, increasingly sophisticated, multi-channel consumer base.

SAP Fashion Management Omni-channel Retail

A solid business strategy, superior product quality and even strong brand equity are all valuable, but in the execution of a unified strategy, it is increasingly clear that fashion companies require unified systems to compete. Digitally driven companies are disrupting the industry at every turn. A new breed of technology is empowering forward-thinking fashion companies with unprecedented competitive advantages.

By shifting to systems capable of managing disparate processes within a single deeply-integrated platform, such companies have gained a comprehensive, up-to-the-minute view of their inventories at every stage of the supply chain and across geographic locations and formerly segmented channels. Quality products are being combined with innovative retail experiences that leave the consumer intrigued, and ready to come back for more.