Retail today is so driven by promotions and gimmicks that the term “class act” rarely comes to mind when describing a multi-national, tier-one retailer, but it is the perfect way to describe Clarks Companies, North America, which is one of retailing’s true class acts.
For evidence, consider the location of the Clarks North American headquarters, which sits on the banks of the Charleston River in a beautifully remodeled historic building in Newton, Massachusetts, an old-line New England town just outside of Boston.
Adding to the company’s stature is its heritage, which goes back to a village in southwest England not far from Glastonbury, where it was founded in 1825 by members of the Clark family, who still maintain a controlling interest today.
But class acts don’t stay that way unless they pursue a policy of continuous improvement, and as impressive as the Newton headquarters building is, it is not where one of Clarks’ busiest departments is located. The IT department is located a few miles away in a modern corporate campus where it had just been moved at the time of my interview with Steve Katsirubas, the North American division’s CIO.
The space was still a work in progress when Katsirubas and I sat down to talk about the large IT projects taking place at Clarks. Some of these, such as rolling out a new POS and an e-commerce platform, reflect an effort to refresh solutions that had become chokepoints and needed upgrading to gain more control over customer engagement.
On a macro level a more profound goal for the busy IT department is to create a centralized platform for the footwear and accessories company that has its global headquarters in England. Long-term plans call for Clarks to expand into emerging global markets, and the leadership team realized the best way to support this was by consolidating its fragmented ERP systems.
To make this happen, the Americas division of Clarks, which accounts for about a third of the company’s overall wholesale and retail business, will migrate to a global system based on an SAP suite of ERP applications, which is currently used at company headquarters.
Katsirubas is deep into this huge project right now, and it was this project and the need to rapidly expand his staff and business project team members that prompted the move from the main headquarters to a large, dedicated space nearby.
The IT Trifecta
POS, e-commerce platform and ERP. These are the big three in retail technology. The IT trifecta. Tackling just one of these projects is considered a disruptive challenge, but tackling all three at once is a recipe for carnage, unless you plan out every element of the operation, including a formal risk assessment, like a military battle plan.
Fortunately, Katsirubas has a military background, and an eye for detail. To help ensure success he set the projects in motion on different timetables, so that critical milestones did not overlap and multiply risks. He also helped assemble a strong global team with solid business partnerships and leadership that includes top executives from the parent company in the U.K.
“The e-commerce platform was launched in early January in a snow storm,” says Katsirubas, who is quick to note that Clarks has no lasting issues with its former e-commerce provider, Zappo’s. “We have a great relationship with Zappo’s and they are a great strategic partner for us, but they were running our direct-to-consumer business and we wanted to take over more control of the website and the e-commerce platform.”
By more control, Katsirubas means “owning the customer experience and the online interaction, and ensuring customers are getting the full brand experience from a single source.”
It also means gaining more control over customer analytics, Web data, pricing and the ability to use the Web to help drive traffic to Clarks’ 280 stores in the U.S and Puerto Rico.
After a careful vendor search, Clarks partnered with hybris (formerly iCongo) to provide an online solution for the e-commerce platform. Clarks also contracted with hybris to host the website and use its business-to-business portal. This latter solution is important to Clarks since about two-thirds of its business comes from the wholesale arm.
After the launch of the new website, Katsirubas reports he is pleased that online volume is higher than expected and returns are lower than expected. However, one challenge that now needs to be addressed is beefing up fraud protection. Without going into detail, Katsirubas makes it clear that along with the welcome increase in e-commerce revenue comes a related increase in online fraud. And just added are ratings and reviews from Bazaarvoice, which adds feedback to the website.
Following Up E-Commerce with POS
No retailer heads into a POS project without working out a detailed plan and making a comprehensive vendor search, and this was indeed the case for Clarks. The planning and search process took place throughout most of 2010, and then in 2011 the decision was made to go with Micros-Retail Xstore Java POS.
At the time of the interview, Clarks was in the process of stabilizing a 40-store POS deployment and getting ready to roll out the POS to another cluster of stores after the holiday period.
The new POS software helps bring Clarks’ stores up to date with a host of new functionalities, such as as time and attendance, soft-clock punch in, special orders, ship-to-house, ship-to-store, inventory look up at other stores and loyalty/CRM.
And the POS refresh involved hardware and touchscreens as well, which are from IBM. Project completion is scheduled for 2012.
Now that the e-commerce migration is largely complete and the POS upgrade is well under way, the next big project for Clarks is consolidating the North American division’s ERP system onto an SAP platform, which Katsirubas describes as a “big-bang, end-to-end” project.
The motivation for making this decision was clear, explains Katsirubas: “Achievement of our growth objectives globally are dependent on leveraging our scale and being able to drive down costs in our supply chain while at the same time identifying the best practices in each region and exporting these to the rest of the world.
“The U.K has 600 stores and it is using an SAP platform for financials and ERP,” he adds. “Our goal is to move to a common global platform and become more closely integrated with our parent company. We want to consolidate onto a single ERP platform that has the capability to handle global business processes that are unique to retail and also business processes that are unique to wholesale. And finally, we want to establish a global supply chain management system that operates seamlessly.”
To accomplish these goals Katsirubas and the team have set up a dedicated ERP project staff that is “freed from other responsibilities and this team has been joined by SAP and Deloitte consultants that have moved into the new office. The U.S-based team is working in collaboration with another team based in the U.K. The head count for the ERP project, which we call Project Atlas, is more than 100.”
In addition to creating a unified platform to produce IT and business efficiencies, the new ERP will help Clarks gain control over rising costs throughout the supply chain. “In order to achieve our five-year cost and growth projections, IT infrastructure investments need to help us adjust to increasing sourcing costs, for example with China, which are currently on the rise,” says Katsirubas. “Fuel costs and labor costs are rising throughout our supply chain and this is having an impact on price and margins on product, which is something we need to control.”
If tackling three large technology projects weren’t enough for one IT team, Clarks is also in the process of building a state- of-the-art logistics center in Hanover, PA that will be highly automated and support distribution throughout the region. At the time of the interview, ground had just been broken in Pennsylvania and the LC is scheduled for completion in late 2013.
Retailers rise and fall with the shifts in the overall economy, and recessions tend to make it clear which ones aren’t built on foundations strong enough to pull them through. “Clarks has pulled through many challenging periods in its long history and continues to thrive by continuing to be extremely customer focused and increasingly innovative,” says Katsirubas. “These things will continue to drive enormous value to our business, and the best way to execute them is by layering on top of strong fundamentals.”
Clark’s current five-year plan will take it through 2016, just nine years short of its 200th anniversary, and it will hit that milestone with state-of-the-art IT systems that will enable it to hit the ground running as it enters its third century.