Retail Technology December 2007

In order to secure the long-term future of its 300,000 square foot department store and adjoining buildings, as well as improve the customer shopping experience, Arnotts is redeveloping its Henry Street site into a 1 million square foot complex.

A critical part of Arnotts' plans for the new site has been the implementation of a new enterprise resource planning (ERP) system to drive efficiencies throughout the business. The project, involving the implementation of Oracle Retail solutions, was internally named Project Merlin and won a BT IT Inspiration Award.

Arnotts has implemented an Oracle Retail platform incorporating back office, merchandising, supply chain and store systems to transform its operational capability, enhance inventory management processes, reduce stock levels in the store and warehouse and improve price management.

Having started its rollout in May 2005, the retailer expects the full Oracle Retail implementation to be completed by the end of 2007 and to break even on the investment in three to five years.

Peter Madden, group chief financial officer & IT director at Arnotts said: "If you want business benefits and improved efficiencies, you have to change your business to reflect the process, not the other way round. It is not necessarily all about cost cutting, it's about implementing efficiencies and best practice that will take us forward, giving us the capabilities to be more agile in our decision-making."

The fundamental business driver at Arnotts was to create a working retail solution that could support the development and expansion of the Henry Street store, but also one that would act as a backbone for the business as Arnotts expands to more stores.

Madden added: "We tried to hook the IT strategy to what drives the business and to do it in as vanilla a way as possible. This not only sped up the deployment but promoted the technology as an enabler closely tied into key business objectives aimed at creating a more efficient organisation."

Over the last couple of years, Arnotts has changed about 90% of its technical and applications footprint. Not only has the Oracle platform incorporating Oracle Retail merchandising, planning and stores solutions been introduced alongside Oracle Financials but additional human resources (HR), chip and PIN and restaurant systems have also been implemented as part of Project Merlin.

The Oracle Retail solution, which is fully integrated with Oracle Financials, provides management with detailed, item-level reports promoting a more accurate assessment of the business performance and helps turn information into profitable business decisions. For instance, Arnotts is now achieving efficient and rapid item-level stock counts using radio frequency technology, enabling real-time tracking of stock losses across the store.

The Oracle Retail system allows Arnotts to align in-store stock offering with customer demand, in order to drive better in-season and fresh inventory management and allocation throughout the store. This is enabling Arnotts to be more creative around promotional and pricing activity, while optimising its use of retail space.

Prior to the Oracle implementation, buyers could not identify the success of key products from sales information and management had little visibility to what was selling best.

Ger Ryan, head of homebuying at Arnotts said: "Now planning is better, sales are improving and Arnotts is forecasting sales and seasonality more accurately. Because the company is aware which brands are most popular, it is able to give them a higher profile on the shop floor.

"Previously, everything was judged on six-month cycles, looking at sales and gross margins. Since the system went live, results have been impressive. We have grown sales on an absolute basis and doubled gross margin because we are delivering better on the space. We are doing everything better with less product."

Contact

Oracle Retail
www.oracle.com/retail