john varvatos, Coach, Men's Wearhouse Lead the Way with Tech

— November 25, 2014

This year's Apparel Business & Technology Leadership Conference (ABTLC) got off to a rockin' start as john varvatos CIO Lee Goldenberg took the stage to share his company's story of translating the rock ‘n' roll experience of the brand to its internal organization, while Liz Dunn, founder and CEO of Talmage Advisors, rounded out the event with a call to retailers to embrace the opportunities offered by social media and digital technologies to build loyal customers and increase conversion.

In addition to these keynotes, the event, which took place Oct. 30 at the Roosevelt Hotel in New York City, also featured four interactive technology sessions on topics including inventory management, PLM and 3D; technology topic briefing sessions; an exhibit hall; and an intimate forum for networking. The event was sponsored by platinum sponsors TXT Retail, Infor, 3DXcite and DeSL and silver sponsors ecVision, Lectra, RLM, Simparel, Revionics, CGS, JustEnough and PA Group.

john varvatos builds IT from the ground up
Lee Goldenberg can't emphasize enough how important rock ‘n' roll is to the DNA of the john varvatos brand. But maybe this will help: When opening an office, "the sound system is the first thing we take care of," he says. Or maybe this will clear it up: "Rock ‘n' roll is what we do. Clothes are what we make."

john varvatos is about the rock ‘n' roll lifestyle. "Men either want to be one of two things: a rock star, or an athlete," says Goldenberg. "We cater to that. We sell vinyl records in our stores that John [Varvatos] writes a little bit about in each one. We sell music. This is a big part of our business." Its new London store, opened in August, is also the largest custom Fender guitar shop in the entire city.

Its NYC Bowery store inhabits the former punk rock club CBGB's. Willie Nelson, Jimmy Page, KISS and Ringo Starr have all been featured in the brand's ad campaigns. Its London store opening included an in-store concert for hundreds of guests.

Got it?

So back in 2012, when it was purchased from VF Corp. by a venture capital firm and found itself in the both enviable and frightening position of starting from scratch with virtually all of its IT systems (it continues to share a DC with VF), the company decided its staff would perform best if given the same rock ‘n' roll experience afforded to rock stars, i.e., we'll meet your quirky demands ("I want only brown m&ms") but you must perform. Translated to IT, it went something like this: we'll give you the absolute best and most appropriate technology to do your job, but then you have to make the company run in as seamless a fashion as possible so that we can focus our attention on the brand rather than the tech that runs it.

What does that look like? The brand ― which currently has 15 stores in the United States, four international stores (in London, Bangkok, Toronto and Mexico City); and sells 75 percent of its merchandise wholesale in more than 400 doors worldwide — replaced everything, from core transactional systems (wholesale ERP and retail ERP) to core infrastructure. Everything is cloud based, with equipment suited to the task and given out based on need, not title, with the goal of freeing employees to "work with data, not create data," says Goldenberg.

Currently, says Goldenberg, the company is involved in a number of implementations including a new T&E system, new invoice processing, and a cloud-based intranet that will provide each department its own page within the corporate site, and will publish information including documentation, manuals, calendars and IT and facilities help desk requests.

The company is also implementing a business intelligence (BI) platform which it has dubbed Crossroads (think blues guitarist Robert Johnson), where the company's "data meets." The cloud-based system will crunch data from multiple systems to give john varvatos much better insights into its customer (it will be able to see, for example, if the same customer makes a purchase in two different places). Data is fed into the staging area at 6:00 each morning (more than 10,000 lines of code and more than 12 million records) and the BI system processes that data into useable information in approximately 30 minutes, says Goldenberg.

Next up? The company is planning to implement SSO (single sign on), and an e-clienteling system as well as retail merchandise planning and PLM. It is also in the process of looking for a new domestic distribution center that will service all channels of distribution and move it out of VF's system; the company is currently evaluating various locations and 3PL providers, says Goldenberg.

Factoring in airport logistics at LS Travel
If you travel by air there's a good chance you've been in one of LS travel retail North America's airport stores, which carry a wide variety of products and brands ranging from travel essentials and food to luxury and duty-free brands and much more. Managing assortments and deliveries in any retail environment is an enormous undertaking, but operating in airports poses its own set of unique challenges, says Mario Bartolozzi, vice president of IT for LS travel ― which uses TXT Maple Lake for assortment planning, delivery and stock-level maintenance.

Airport retail is now typically owned by about four to five companies, vs. just one, which creates intense competition and a greater number of different rules and regulations within each airport as well as from airport to airport, he says. Furthermore, although LS travel plans most assortments centrally, most product is shipped directly from the vendors to the stores; this is problematic, says Bartolozzi, because most airports give out the logistics rights to their own agents, which poses security as well as delivery challenges. Sometimes stores have to send employees down to the receiving dock to claim goods, for example, while other times they are dependent on a 3PL. The company is looking to move to a warehouse-to-store model which Bartolozzi says will alleviate some of its logistics problems.

FGX International ditches the spreadsheets
At sunglass designer FGX International, the company has turned to Infor Fashion PLM to get away from spreadsheets and build a more transparent and efficient foundation for planning, creating, developing and sourcing its collections. "Everyone wants to move to big data, and you can't do that with a spreadsheet," said Bob McKee, senior product development director, Infor. Without big data, you can't see the big picture, which means you can't answer essential questions — such as, "What was the cost of the sunglasses that made it [into production]? What was the cost of the ones that didn't?" — that are crucial to making better decisions down the road. "Companies wait too late to address the business vs. the creative/fashion side of the business," says McKee, and spreadsheets in the apparel industry are still ubiquitous.

Coach expands use of 3D to handbags
Luxury lifestyle brand Coach had been using 3D for about five years for the "low hanging fruit," i.e. the hardware on its coveted handbags, but more recently the company partnered with its technology provider, 3DXcite, to use the technology for prototyping the entire handbag.

"It's easy to simulate hardware in 3D," says Chris Lo, Coach's DVP project management of operations, but recently the company has taken on the more difficult task of using the technology to render the entire handbag in 3D — trickier because drape, "slouchiness" and gravity pose a greater number of challenges in rendering the product in 3D.

In looking for the biggest bang for the buck, the company began by using the technology for handbag samples. Traditionally, this part of the cycle is very time consuming and challenging; at the time of prototyping, the company is still developing materials, so it's challenging to procure all the necessary pieces to produce the prototypes. "It's hard to satisfy designers and merchandisers. They want to see different designs, finishes and hardware combinations. We spend millions of dollars every season on samples," says Lo.

Using 3D technology, the company has been able to drastically reduce the number of physical samples it produces by rendering many color and hardware combinations digitally. "For our wholesale customers, we can leverage virtual samples with physical samples," says Lo. With 3D, the number of samples it can produce is now "limitless;" also, 3D samples can be produced in a matter of days vs. weeks for a physical sample. Coach is now trying to get that down to one day to meet the increasing demand for more 3D samples.  Making this task more realistic is the fact that 3D enables modifications on previous designs. "You don't have to start from scratch each time once you have a basic model in your design library," says Lo.

As for the end consumer, Lo says the company is "just scratching the surface" when it comes to the potential of 3D. In the works: Coach merchandisers want a 3D store and 3D merchandise, which will speed the cycle and also save money on product photo shoots. Coach is also contemplating customized merchandise, and is moving into 3D for its apparel and shoes.

Men's Wearhouse streamlines its supply chain
The Men's Wearhouse (TMW) — which of late has been on an "acquisition binge," pulling Joseph Abboud under its umbrella in 2013, followed by Jos. A. Bank in early 2014 ― had, until a few years ago, been running its entire business "with band aids, Excel, Adobe, Outlook, voice mail and faxes," says Will Silveira, executive vice president.

That's changed since the company started implementing a new PLM, SRM and ERP solution in June 2011 from DeSL, which has eliminated some previously cumbersome and opaque processes in favor of one system that streamlines processes from design, to receiving in the warehouse, to reconciling.
Three years and two phases into the four-phase, five-year project, wasteful meetings have virtually disappeared, says Silveira. "Now we can see problems, and meet about exceptions," he says. There's no more "marathon going through spreadsheets. … Production doesn't have to chase. Buyers get costing. There's no manual punching of orders.

"We have a lot of inventory movement, so stock movement and visibility, not only from accounts payable, but also how to match it up, is pretty much automated. We're looking at information less, and managing vs. reacting."

The transition of Jos. A. Bank into the system was relatively painless, while having data in one system has provided key transparency and cost savings. For example, the company has moved from ordering materials on a "first-cost" basis to a BOM basis, which the first time out saved approximately $750,000.
There are other huge benefits that are less easy to quantify but are huge. Its new systems are a big plus when it comes to recruiting new talent, for example. "Young people are not going to come into an organization full of spreadsheets and dictators. They want to see what system you're on," says Silveira.

Since its acquisition of a Massachusetts manufacturer with its Joseph Abboud purchase, TMW has also been at work on advanced customization of suits that takes into account body traits such as  stooped shoulders in creating the appropriate cut and fit. It is also working to improve its promotion cadences and pricing optimization with a solution from Revionics.

Engaging the consumer with technology
The good thing about clothing? "It's not digital, and it never will be," says Liz Dunn, founder of Talmage Advisors. Even so, much of it is now being purchased and researched online, and although the goal of retailing remains the same — more customers, greater share of wallet, more profits ― technology is putting the winning cards in the hands of those companies that can best use it to serve their customers, says Dunn, leveraging it both in and out of the store.

Consumer expectations are rapidly changing — they want more speed, channel flexibility, seamless service, competitive pricing, product information and personalization, says Dunn, and to meet those needs retailers must effectively collect data, manage it and use it to customize the information they send to consumers. "Maybe you think it's invasive to offer a coupon for something they were previously viewing online, but customers want this," she says.

Meanwhile, social e-commerce is finally reaching a viable stage. The top 500 retailers generated $2.69 billion in revenue from social media referrals in 2013, up 60 percent year over year, says Dunn. Peer influence is driving sales, shoppable user-curated content is on the rise, and Like2Buy capability is expanding, with Nordstrom using the app to make its posts on Instagram shoppable. Social media offers retailers a different approach to traditional marketing, says Dunn, allowing them to present a lifestyle approach that lets consumers "behind the scenes" of the brand with frequent, timely, high-quality and brand-relevant messages.

When it comes to capturing sales, retailers must be where the customer is, and that continues to evolve. Customers are constantly on their mobile devices, but mobile conversion is still very low: more than 60 percent of traffic for top retailers comes from mobile, but only 11 percent of total spending, she says. Apps are key to improving conversion and share of wallet: 72 percent of mobile engagement takes place on apps vs. browsers, says Dunn, while optimized sites and apps produce a 160 percent higher conversion, plus a larger basket size vs. unoptimized sites.

Smartphones also allow retailers to connect directly with consumers in other ways, such as via mobile payments and beacon technology, which provides the opportunity to push out promotions and information to a consumer based on her location within a retail store. American Eagle, for example, recently announced it will be using beacons along with a couponing app, to the tune of, "If you try on these jeans, we'll give you five dollars off your purchase," says Dunn.

Another customer-facing technology in the omnichannel mix is the kiosk, which Kohl's is using to great effect in combination with its low-staffing model. "They can't have sales associates [spending their time] looking up prices," says Dunn, and the kiosks allow customers to easily find answers to their questions. At a cost of less than $3,000 per store, if just one person uses the kiosk each day, it pays for itself in less than two months, Kohl's reports. "It's not just about supersizing the order, it's also about providing them with service," Dunn concludes.


Jordan K. Speer is editor in chief of Apparel. She can be reached at jspeer@apparelmag.com.

Editor's Note: Apparel's next technology conference, Apparel West, will take place in March 2015 in Los Angeles, Calif. Agenda and location details will be available soon on www.apparelmag.com.
   

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