Retail Management 12th Edition by Barry Berman ,Joel Evans

Exercise 7

Case 4: Chico's Steps Up Its Technology
Chico's (www.chicos.com) is a women's specialty retailer with a past history of multiple store formats, shifting target markets, and "boom" or "bust" successes and failures. At the end of 2008, Chico's board of directors recruited David Dyer as its new chief executive. Dyer's immediate past position was as chief executive of Tommy Hilfiger Corporation. In turn, Dyer hired a number of key executives from Lands' End (www.landsend.com) to help restructure Chico's.
Immediately on taking the presidency of the company, David realized that Chico's information technology (IT) system was insufficient to handle its 1,000+ stores and its direct-to-consumer business. As a result, in 2010, Chico's invested more than $30 million (over one-third of its total capital budget) in a new IT system based on the JDA Merchandising suite (www.jda.com/solutions/merchandise-operations-overview), which is integrated with SAP (www.sap.com).
According to Gary King, Chico's chief information officer, the new system "allows us to hold as much product as possible in the distribution centers until the last minute, so we don't overwhelm the back room of the store and have to mark it down or move it to outlet stores to liquidate it. And selling online is a much more profitable way to handle slow-moving items."
Another component of this system is a work-force management component. This component not only handles labor scheduling and staff training, but also tracks shipments, handles home deliveries, and locates merchandise across stores. To reduce conflict between Chico's store and its online divisions, inventory is not attributed to a specific channel until it is sold. Thus, merchandise can be sold across channels. Markdowns can also be reduced as each channel has an equal opportunity to sell all goods.
In addition, Chico's has implemented SAS OnDemand: Marketing Automation software. This program has been used by Chico's to analyze data from its customer loyalty program to better understand important trends and opportunities. Among the key findings of this loyalty data were that Chico's had a lower share of its Northeast customers' disposable income than in other regions (due to extensive competition and product choice in this region). As a result, Chico's Northeast stores needed to stock a greater variety of merchandise than stores at other locations. Another important observation was that a majority of Chico's customers first went online to evaluate available styles and then visited the store to shop. In some instances, Chico's in-store customers ordered goods online only after visiting a store and determining that the goods are not available at the store.
Besides fine-tuning its current systems, Chico's plans to develop and implement a product-to-consumer life-cycle management system. Then, programs can track the development of Chico's private-label products from their inception to the creation of a purchase order for specific styles, colors, fabrics, and sizes. The product life-cycle management effort is very important to Chico's as it designs all of its products in-house. Other new software applications that are being planned include RFID (radio frequency identification) item-level tagging, point-of-sale automation, apps for smart phones, and evaluation of customer feedback via social media.
Questions
1. Describe the potential improvements in productivity that would warrant Chico's spending more than one-third of its total capital budget on a new IT system.
2. Discuss the value of labor scheduling for a retailer such as Chico's.
3. List ten different types of customer data that Chico's can obtain from its customer loyalty data base.
4. Comment on this statement: "A majority of Chico's customers first go online to evaluate available styles and then visit the store to shop."