News flash: Men don't like to shop for clothes.
That's a problem if you're a men's specialty retailer. The Men's Wearhouse Inc., a Houston-based chain with more than 500 stores and $1.4 billion in revenue, is acutely aware of male "shopophobia" and is attacking it with an application that lets store clerks help shoppers build entire wardrobes in a single trip.
"Guys don't like to go shopping, so we want to satisfy them once they've made the trip to a store," says Jeff Marshall, former CIO at Men's Wearhouse and now CEO of its uniform and tuxedos division.
The proprietary software helps ensure that customers buy not only the sport coat they came in for, but also matching slacks, shirts, ties, belts and shoes -- even if some of those items need to be shipped overnight from another store or warehouse.
Few industries possess as much raw customer data as retail. And in today's retail world of limitless choice, overlapping niches and savage price competition, driving sales through differentiation and a unique customer experience is more important than ever.
"When you have parity in other aspects, you have to look for another angle, especially to drive topline growth," says Carl Steidtmann, chief economist at Deloitte Research and author of a paper titled "Synchronicity: An Emerging Vision of the Retail Future."
Focus on: Retail
Top business challenge: Increase sales in face of ever-expanding "nichification" that
Solution: Squeeze more revenue out of existing customer base, especially most frequent shoppers.
How IT can help: Do a better job turning customer data (which is plentiful) into predictive information.
With the industry forecast to grow a tight 3.5% this year, compared with 6.7% last year, according to the National Retail Federation, new business is a big concern. One way to achieve differentiation and thus drive sales is to do a better job identifying and catering to the most frequent shoppers.
That's an effort far too few retailers have undertaken despite its benefits, Steidtmann says. "Those that are doing anything are doing it on an ad hoc basis," he notes.
Indeed, retail is not yet maximizing analytic or business intelligence (BI) tools. The industry ranks sixth in its use of BI, behind financial services, communications, manufacturing, health care and technology, respectively, according to London-based BI research firm Datamonitor PLC.
"Most CIOs live in a world where IT cuts cost," says Greg Buzek, president of IHL Consulting Group Inc., a retail consultancy in Franklin, Tenn. He cites an IHL event for CIOs at which attendees were asked what they would prefer: a 10% increase in sales or a 10% decrease in cost. "Eighty percent chose the cost reduction," Buzek says. "These programs [to maximize revenue from frequent shoppers] must be sold internally by marketing, or they won't get through the organization."
For IT, that means partnering with the business side, but with no guarantee of new budget dollars. The number of retailers that plan to increase IT spending in 2005 is below average, according to Cambridge, Mass.-based Forrester Research Inc. Of those that will increase budgets, the survey found, infrastructure is the top priority. That means IT must achieve better results with existing tools in any effort to squeeze more revenue out of existing customers.
Cleaning up and consolidating customer data is a solid, if unspectacular, way to get started.
This was first published in March 2005