Retail Back to Front | BTalk Australia

(12min 43) Is your retail business making the most of available technology? In today’s BTalk Phil Dobbie talks to Brian Holder, sales director for Microsoft Dynamics about how software today can transform your retail operations, bringing real-time ties between back office and front of house systems. But how do you embrace new technologies without impacting those mission-critical applications that your business relies on?

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• Transcript

Phil Dobbie: Hello, I’m Phil Dobbie and welcome to BTalk Australia. Today, is your retail business making the most use out of available technology?

Last week on BTalk Australia we talked about the importance of ensuring that your retail operation is, what Brian Walker called, fit for business and a lot of that related to operations procedures and making good use of technology. Well let’s look more at the technology today. Brian Holder is the sales director for Microsoft Dynamics here in Australia and last week he was at the retail innovations forum that was staged by Microsoft so welcome to the program, Brian. Tell me, what was the take out from that one day seminar? Are retail businesses embracing technology more than ever before?

Brian Holder: Yes we are, Phil. I think the take out for us was there’s a group of people that are going through very, very significant change in times and there’s a realisation that technology is something that can actually help them through and maybe take them ahead of the competition, if they’re able to invest in it.

Dobbie: People have used bits and pieces of technology but the big key now I guess is integration, it’s how you pull all of those bits and pieces together but I should imagine you’ve got to have a lot of legacy software that people have been using and an integration would be a big task, wouldn’t it?

Holder: Yes absolutely, people are looking at end-to-end solutions these days, much more but it’s really important to remember when integrating components into existing systems that you don’t integrate on top of old established inefficiencies. So your end-to-end solutions are working in unison and providing all of the return on investment in a context to integrate important systems, process automation, etcetera.

Dobbie: Now are we finding as well that what is being processed in the back office I guess, I suppose that’s the terminology to use, is influencing how retail operation operates at the front end, in real time.

Holder: Absolutely and that’s one of the things that we heard last week, much, much more important these days. There’s a line of sight in absolute real time. We have more retailers talking about knowing what their businesses are doing from hour to hour, from minute to minute so to get that view at the back office is incredibly important these days.

Dobbie: So can you give one or two practical examples of how you can change how you operate in real time, based on information that you’re gathering in the back office?

Holder: So we’ve recently just, and as recently as on the day of the event last week, we have a new customer that’s in the fruit and veg business and basically what they need to know at the backend is what’s going on because when they’re buying at 2:00 in the morning or 3:00 in the morning, the decisions that they make out there with their buyers, which is another part of the front end of the business, as well as the point of sale, that’s got to impact how that day goes. And so everyone in that particular environment needs to be extremely well informed because their making decisions on the fly and minute by minute they’re making decisions that will impact that day and the rest of that week in terms of productivity and profitability at their store level.

Dobbie: Now you mentioned earlier the idea that you don’t want to put good end-to-end systems on top or try and integrate with systems that are less than complete and perhaps less than adequate. But could I mention though, there’s a reluctance to throw away cause I guess what you’re talking about is we’ll start afresh, take the software that exists for an end-to-end system but I should imagine there’s reluctance to throw away particularly critical systems that are dealing with money, that are working and doing part of the job right now. It’s a brave man who says well look we’re going to throw all of that away and start anew.

Holder: Yes, it’s really important that we maintain a line of sight to those parts of integrated systems that are all of the components that are actually doing an important job for our customers today, but then when you take a look at those we’ve got to integrate effectively into them so that can create complexity, but you’ve got to be able to integrate into them so you can extract the usefulness that’s still there but with a view sometimes. And I’ll give you an example, one of our customers is a large hardware retail chain and they’ve chosen a dynamic solution that they’re going to implement that over the next 18 months to two years and they’ll walk down the backend and make sure that that’s all happening in the back office and then the next cab off the rank for those guys is the warehouse and distribution and then at some point down the track they’ll be taking at look at the point of sale. We have another customer that’s doing it the other way around, their key critical requirement at the moment is out at the point of sale, this is a large franchise organisation, and so they’re quite happy with the way that the backend system’s working at the moment and they’ll roll out their point of sale and then gradually they’ll move back up that chain, the end-to-end chain and over the next 12 to 18 months we’ll see them with a total end-to-end solution. So it’s evolution rather than revolution.

Dobbie: Yes, it makes a lot of sense. Now online in the retail space is interesting, isn’t it? Brian last week spoke about treating online and offline equally, he was referring to inline offers, but here in Oz, many bricks and mortar retailers, they don’t seem to have embraced online particularly well. You know most websites are still brochure-ware websites so is it the technology that’s holding them back or why the reluctance to embrace online more, do you think?

Holder: Yes, I think you’re right. I think that online is becoming much more important and I think maybe there are infrastructure issues, I mean you can only do this stuff effectively if you’ve got the right infrastructure in place, technology infrastructure, but also there’s a mindset and personally I’m becoming more of an online shopper myself and I think a lot of people are becoming that way and therefore it’s going to be so important for Australian retailers to embrace that. An example of it is so I’m a mountain biker and I have strong loyalty to my local bike shop and I’ll always go down there if I’m going to buy a new bike and I’ll buy it from him, but I’m now being marketed to by an online reseller for things like intertubes and chain lube and that sort of thing and I find that I’ll shop for those sort of things at my desk when I’m at work because they’re communicating effectively with me. Now in all honesty I’ve also realised that the retailer, down there in Manly that I’m loyal to, they’d really rather have my accessory business than my once every two-year bike business.

Dobbie: So you crash the bike every two years, do you? Is that what happens?

Holder: I can tell you I crash it an awful lot more than that.

Dobbie: Hence the accessories.

Holder: Exactly

Dobbie: I guess part of it is stock control as well, because if I’m searching for something online I actually want to physically pick it up, I want to go to a store where I know they’ve got that product in stock and actually they’re expecting me as well. I want it all wrapped up nicely waiting for me at the desk and I guess that again is part of this integration between online and offline, isn’t it?

Holder: Yes, it’s so important and, just to extend that example I just gave you, the last time I went down to buy a significant accessory, which was believe it or not some body armour for my youngest son, he’s into more extreme bike riding than I am, they didn’t have it and I was forced to go to the store down the road, which I didn’t feel good about but it was a birthday present and it needed to be there. Now that was a $150 sale that was out the door.

Dobbie: Right, so the benefit of technology it’s not really then just about raising revenue, that’s part and parcel of it, but the emphasis really is on customer service and if you’re able to provide good customer service then the revenue flows on because you’re getting a lot of repeat business and that’s the way retailers should be thinking about technology.

Holder: Well we’re actually seeing that one of the major growth areas, in terms of technology, isn’t just these end-to-end solutions that we’ve talked about. It’s about customer relationships and so it’s becoming so much more important that retailers can have a means to listen to their customers and respond to what their customers are saying because what we’re hearing is it’s not anymore about the importance of a supply chain, it’s about a demand chain so we’re seeing our retailers having their behaviour driven by the demand level of their customers. Their customers are shopping in different ways and their shopping with different competitors so that’s a huge growth area that we see already out there in terms of being able to attract the customers and then deal with the loyalty and frequency of shopping.

Dobbie: Which means we’re getting on to things like customer relationship management and CRM systems. Everyone’s cringed at those words in the past because they’ve meant something rather elaborate, very expensive, tailor made and quite often never ever actually fully implemented because it gets so complicated. Have those days gone and are good CRM systems that are workable and easy to use now really available even for mid- to small-size retailers?

Holder: Absolutely, you’ve hit the nail on the head in terms of why a lot of the, shall we say, the more traditional approach to customer relationship management is all about huge functionality and what it neglected was those systems are only as good as their ease of use and their acceptance by the people that are using them so it wasn’t about the technology. It was about attracting people to use them so they could extract the information that was required to get your return on the investment. So these days the key, the critical component, and we see a successful CRM type applications, it revolves around simplicity and enough functionality to do the job rather than bolt monolithic functionality that actually turns people off.

Dobbie: Like a lot of things, isn’t it, in the technology space. I think maybe there’s a shift in emphasis these days. Most off-the-shelf packages are being developed with so much experience behind them. They will do the job for 99 percent of people whereas in the olden days, maybe three years ago, we were looking at developing bespoke systems for almost everything and that’s where the expense and complexity came in.

Holder: Yes exactly, so you’ve got to have a strong balance between the out-of-the-box functionality and the practicality of what you really need for a niche application. What is it that you really need? Rather than being told there may be a better practice out there or whatever, that you should be following. I think that what people need to realise is they’ve got their own business strategy and what this new sort of technology should do is enable their business strategy rather than having the business strategy moulded by other people’s best practise, so-called best practise. So it is really important and this is just so key, that you align the systems and your investments with your business strategy rather than having to bend your business strategy to other techniques and new technology.

Dobbie: Alright Brian. Thank you very much for your time today and I look forward to talking to you again soon on BTalk Australia.

Holder: Thanks very much, Phil.

Dobbie: And that’s it for today. Thank you very much for your company. For BNET.com, I’m Phil Dobbie, thanks for listening.