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How Healthy is the Heart of Your Retail Operations?

Lara Livgard
Senior Director, Oracle Retail

Breathe New Life Into Your Business With Merchandising In The Cloud. 

Merchandising operations has been called the “heart and lungs of retail,” and it’s a pretty good description. Every business team touches the merchandising foundation in some form or another, from buyers that procure the items; to the supply chain that track items; the marketers that advertise and promote them; and the channel operations, stores and websites that sell them. In the midst of all this, the ‘merch’ team makes sure the product appears in the right store or on the website at the right time and in the right inventory quantities to gain customer confidence and entice a customer to buy.

“Merchandising is the heart of our operations, in the sense that it enables us to deliver the right product at the right time to our customers, and to deliver a seamless experience between the channels.” – Bruno Mourao, Head of Business Demand and IT Architecture, Sonae

The centrality of merchandising makes it one of the most important functions in the entire operation, and it is also one of the most data-intensive, driving everything from pricing to inventory to financials. Because it’s so important there’s a natural human tendency not to want to disturb it. After all, if it’s doing what it’s supposed to do, the thinking goes, let’s leave it alone and focus elsewhere.

For that reason, retailers will often continue to rely on aging, on-premises merchandising systems long after (in some cases) they have moved functions like store operations, financials, loss prevention, and planning to the cloud. It’s not that retailers don’t recognize the potential operational and financial benefits of cloud-based computing for merchandising, it is that since ‘merch’ is the heart and lungs of the business, it can be scary to elect a system ‘transplant’.

The problem though with not making the move is that the more cherished/loathed and relied upon a legacy merchandising system may be, the more likely it has been carefully tweaked and customized to meet the requests of the users (good or not so good). The more customized it is, the harder it is to update. It’s doable — we have many good customers who use on-premises merchandising, and we gladly help them stay up-to-date — but it’s not a trivial effort, and it’s not cheap.

Nonetheless, it is essential because if the system isn’t being regularly updated, it’s getting old. The older the system gets, the more likely it is to impede  growth rather than enable it — especially in the world of 21st-century retailing — where the dominant competitive strategy is focusing on the customer experience. Facilitating the needed innovation for success is, beyond the financial and operational benefits, the primary reason we encourage retailers to move merchandising to the cloud.

Cloud-based merchandising enables you to feed information — accurate, timely, consistent information — to finance, store operations, commerce, supply chain, planning, and anybody else that looks to merchandising for critical item and inventory data. It keeps merchandising modern, simple and most of all healthy.

How We Can Help

Oracle Retail Merchandising Foundation Cloud Services encompasses the heart and lungs (or core retail operations) capabilities into a single set of cloud services.

Capabilities Include:

  • Foundation data (items, locations, suppliers, HTS)  The Power of Exception Based Retailing with Oracle Retail Merchandising Video
  • Purchase orders (domestic and foreign)
  • Cost and deals management
  • Estimated landed costs (ELC)
  • Inventory (transfers, receipts, adjustments, stock counts)
  • Allocation and replenishment
  • Regular, clearance and promotion price management and execution
  • Sales audit, invoice matching and stock ledger 
  • Exception-based reporting, which enables retailers to find increased efficiencies and reduce cost.

Oracle Cloud solutions provide installation, monitoring, patching, and upgrading of the cloud services, freeing retailers to focus on innovation and more important business initiatives like the customer experience. As one of our retail customers stated, “Think cloud first and get out of the data center business.” Now is the time to enable the heart and lungs of your retail enterprise to operate at full speed into the future with our Merchandising Operations cloud services.

If you are interested in more, read my blog on '3 Innovations in Merchandising Operations - Why You Must Innovate or Die Trying'

Join the discussion

Comments ( 2 )
  • Rob Shorey Tuesday, October 9, 2018
    Great article Lara and very on point for most, if not all, big bricks and mortar retailers on the UK high street.
    I imagine most retail execs and all CIO/CTOs agree with you but retail has got itself into a bit of a mess with I.T over the years and the tough economic climate means that funds are simply not available for the level of investment that is now needed.
    The question of the day is how can vendors, like Oracle, lower the short-term barriers to entry (cost) of upgrading their systems.
    Longer term partnerships perhaps where software vendors benefit from the increased profits that their solutions will surely drive rather than an upfront fees that carry no risk for the vendor but an existential risk for the retailer?
  • Lara Livgard Monday, October 15, 2018
    Great comment Rob, thanks. I agree with you that software vendors must be looking at how to make it easier to upgrade their solutions and also at different approaches to do so. I think your idea of a change in how fees are recovered is interesting. I’ve seen that type of approach more often in optimization solutions (ex. markdown, replenishment) where results are more easily attributable and quantified. However, even now, with SaaS, the traditional fee paradigm has changed. Although there is still an initial fee in terms of a subscription contract, the subscription model at least better incentivizes the vendor to provide an ongoing service and therefore share part of the risk – if the project doesn’t produce the gains for the retailer that was expected they can cancel the contract. Granted, that’s harder to do for a core merchandising project, but it is still quite different than a large initial license fee.
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