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Retail Spending is up 24%, if you are not seeing a bump you may have a long-term customer problem

This is the first of a series of 4-blogs (Read Blog 2, Blog 3, Blog 4) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.

Up through the Fall of 2020, the economy looked like it was approaching a “New Normal” of economic activity. However, pessimism based on poor holiday sales and political unrest has countered the optimism coming from new stimulus spending and vaccines. Uncertainty continues to be the defining term for 2021. In this blog, we will discuss where we are on the path to the New Normal, and how retailers can support customers changes in behavior.

First question we all have is “Has the bleeding stopped?” According to TrackRecovery.org, consumer spending in week ending January 17, 2021, was up 6.5% over same time period in 2020. Driven by $600 stimulus checks, retail spending was up 25%. Consumers have dramatically shifted spending from Entertainment, Travel, and Restaurants to Essential Retail and eCommerce.

Consumer Spending up 6%; retail spending up 24.5%

Source: TrackRecovery.org

Given this situation, if your business is not seeing a rebound in Sales, you may have a problem, in that your customer may have made a long-term behavioral change. These changes can be as simple as your customer still buying your product but just not coming into the store (reducing add-on sales), to your customer finding more convenient options from your competitors. Kroger reported in their 2020 Q2 earnings call that they estimate 50% of their new digital customers are coming from their competitors.

With this consumer behavioral change, not only does a business have to worry about  competitors, but also whether they have lost the traditional add-on opportunities in the urgency of making the shopping experience safer. When adding functionality online, retailers may have neglected to identify opportunities to replace the incremental sales normally associated with in store traffic. Traditional merchandising and pricing techniques, which offers add-on sales opportunities, just may not work if the customer is not walking your aisles, end caps, shelves, tables, four ways, or seeing your accompanying promotional signage.

I was recently on a call with a Midwest Essentials Retail client, and one of the initiatives they have undertaken to address this uncertainty, is to partner with SkillNet to improve customers mobile shopping experience and to offer additional customer engagement functionality that not only mimics in-store experience, but in many circumstances enhances on it. This functionality includes additional fulfillment options, appointment scheduling, loyalty program, inventory availability, personalized marketing and an enhanced consumer shopping experience.  

What will help retailers regain lost sales is identify what has changed in their customer’s journey. One of the ways to identify this is through financial modeling by analyzing traffic and average order values, by channel, pre-2020 and post-2021. Using technology to bridge the gap and to enhance customer experience will go a long way in deepening customer engagements and help getting the dollars back while enabling growth.

Watch the Webinar on customer engagement – Real Engagement is the new normal

Martin Dempsey shares his experience of working with SkillNet

Luxottica improves technology deployment by reducing testing cycles from 48 hours to less than 2 hours

SkillNet enables Luxottica to speed up technology deployment cycles through automation and the adoption of DevOps processes.

With a strong portfolio of retail brands and 9200 stores, Luxottica is well positioned to serve every segment of the North American market with a variety of differentiated products & services, including the latest designer and high-performance frames, innovative lens options, advanced eye care, everyday value and high-quality vision care health benefits.

Luxottica aims at expanding its market through stronger retail distribution while consolidating its wholesale network and further growing its presence in e-commerce, department stores and travel retail.

As a brand leader, Luxottica has been taking initiatives to build agility in its online and offline technology and operations to continuously deliver improved customer experiences. As part of this initiative, Luxottica partnered with SkillNet to increase the speed of change in technology that is currently deployed in North America stores.

Retail applications like Point of Sale are traditionally viewed as less agile than their online counterparts, for good reasons. These applications are often complicated with dozens of intricate touch points with in-store hardware and software systems. They must work flawlessly for thousands of store employees over millions of purchase transactions. Glitches in Point of Sale can disrupt customer experience and hurt brand image. Therefore, retailers extensively test these systems before deploying to stores, and are wary of introducing frequent changes.  This poses a big challenge when shopping experiences are constantly evolving under the effect of demographic shifts and technology advances. This year COVID-19 has pushed the envelope further.

Luxottica’s technology team together with SkillNet is overcoming this challenge by applying agile DevOps techniques. First step was automation of the testing process involved in Point of Sale deployment. For this, SkillNet leveraged its expertise in developing test automation for Oracle XStore POS using xUnit, an opensource toolkit. This automation has reduced the testing cycle time from 48 hours to less than 2 hours, accelerating the deployment of technology changes to drive richer in-store customer experiences.

Next, Luxottica is working with SkillNet in automating the Point of Sale deployment process, which will complete the continuous integration and continuous deployment (CI/CD) pipeline. The success of this program has encouraged Luxottica to look at other systems in their global operations that can now be automated.

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Gross margin increase for cosmetic brand

Global cosmetics retailer increases growth margins with seamless POS unification across 50+ countries

Brief

Multi-brand cosmetics retailer accelerates digital transformation by unifying multiple POS systems to a single upgraded solution.

About the client

The client is a global leader in prestige beauty – delighting consumers with transformative products and experiences, inspiring them to express their individual beauty. With a diverse portfolio of 25+ brands, they are the only company who focus solely on prestige makeup, skin care, fragrance and hair care. They operate over 1500 freestanding stores and 1,700+ E/M commerce sites in 50+ countries.

Challenge

Most of the client’s 25+ global brands had become a part of the client’s portfolio through various acquisitions. This meant that most of the brands provided independent in-store experiences with different underlying CRM and POS systems. The diverse in-store systems meant high maintenance costs, complex license management and vendor agreements. Small changes to the system required complex planning to cascade through the overall landscape.

The client also found it difficult to rollout promotions or omnichannel capabilities globally. The systems also hampered the client’s ability to introduce critical initiatives such as BOPIS (Buy Online-Pickup-In-Store) and BORIS (Buy-Online-Return-In-Store). All of this could impact the client’s charter to delight consumers with transformative experiences.

Solution | Ensuring continued seamless omnichannel experience

The solution was to migrate different brands, retail stores in various countries and disparate content to a consolidated in-store experience underpinned by a single POS solution (Oracle Xstore POS and Oracle Retail Customer Engagement) with minimal disruption.

SkillNet started the engagement by harmonizing the global code base. The harmonization was intended to create a baseline system for all the brands and geographies while maintaining those components that had reuse value. SkillNet’s multidisciplinary agile teams and DevOps engineering helped automate and accelerate different stages of the project. The SkillNet solution also addressed the regulatory and fiscal requirements required by various countries. As a result, customizations across geographies were reduced and the delivery cycles shortened across brand silos.

During country wise implementations, a flexible design was created for extensions and services. This enabled reuse across different geographies. The global code base provided multiple layers of functionality which were applicable across regions, specific geographies, store formats and brands. The core functionality for omnichannel capability is being delivered globally. The solution also enabled BOPIS (Buy Online Pickup In-Store), BORIS (Buy Online Return In Store) and OOFIS (Order Online From In Store) features. These have been introduced at country and brand level with minimal disruptions.

The roll out has been completed successfully for a majority of countries across Asia, Europe and North America.

Results | Digital Transformation supports growth margins

Since its introduction, the client has reported robust growth in sales and growth margins due to the seamless omnichannel experience.

The unified POS solution allows the store associates to spend more time with customers on sales floor and this provides them with opportunities to cross sell and upsell products. Since the solution is being driven by services and base configurations, it has also increased customer engagement time and enabled cost savings.

The single global code base solution has also helped streamline vendor licensing, software upgrades, maintenance costs and provide system support from one single location. Faster release cycles have also helped accelerate the client’s digital initiatives.

SkillNet received the “Best Drive in Innovation and Process Transformation” award for its contribution in the client’s digital transformation.

About SkillNet

SkillNet Solutions, Makers of Modern Commerce provide consulting and technology services to companies that are digitally transforming their retail business to modern commerce. Our services enable clients to rapidly anticipate and respond to changing consumer behaviour. Through engineering and enterprise-grade implementation of cloud and SaaS applications, SkillNet creates rich customer journeys for local and global brands to stay ahead of the curve. Our solution accelerators enable clients to quickly become more agile and efficient in harnessing technology.

Located in the heart of Silicon Valley, SkillNet partners with industry leaders like Oracle, SAP Commerce Cloud (Hybris), Salesforce, Magento and AWS to enhance online and in-store experiences. Since 1996, we have worked with retailers across 53 countries to deliver exceptional customer experience and growth. Our award-winning solutions have enabled global retail brands in Apparel, Automotive, F&B, CPG, Grocery, Health & Beauty, Liquor, Pharmacies, Restaurants and Telecom to deliver the promise of modern commerce.

All product names and trademarks are property of their respective owners.

Premium eyewear maker doubles the speed of change deployment

Brief

SkillNet enables the client to double the speed of technology deployment cycle through automation and the adoption of DevOps processes.

About the client

The client is a leader in the design, manufacture, and distribution of fashion, luxury, and sports eyewear. The Group’s global wholesale distribution network covers more than 150 countries across five continents and is complemented by an extensive retail network of approximately 9,200 stores mostly located in North America, Latin America, and the Asia Pacific. They also have a strong online presence.

Challenge

As a brand leader, the client values customer experience highly. Their drivers for change are “need for higher customer responsiveness” as well as higher “business agility”. Both these require quick deployment of changes to technology.

The client’s team handles multiple new releases every year. With a complex landscape of products and solutions, the deployment process was laborious for even small updates and enhancements. Technology release cycles were weighed down by a prolonged release process that was manual, prone to rework, and involving physical upgrade of store POS systems. This operational inefficiency resulted in increased costs and lower business agility.

Solution | Improving efficiencies in POS solution management with DevOps and Agile

The SkillNet team assessed the end-to-end deployment process. Drawing on the team’s deep retail systems expertise, SkillNet recommended a revised efficient approach by adapting DevOps and agile for POS solution management in a phased manner.

The first phase was the automation of the quality control process for build testing. SkillNet created automated test scripts to perform the regression of point of sale application. The automation changes which were introduced were independent of the changes being made on the POS application. This not only gave the client team more control but they were able to consider newer technology adaptations for expanded functionality.

Benefits | Improving customer responsiveness and business agility

With automation and adoption of DevOps processes, the client has been able to

  • Add functionality to the POS systems to ensure quick response to customer demands without dependency on external partners. This was not only more efficient but also reduced costs
  • Two-fold increase in the speed of deployment (from 10 days per release to 5 days) by automating test scripts
  • Decrease in costs due to the reduced rework

All product names and trademarks are property of their respective owners.

POS reengineering for leading apparel retailer

A leading apparel retailer grows new personalized services line 5X in three years through speed, service & selection supported by POS reengineering

Brief 

A leading apparel retailer, successfully grew their new Custom Clothing line 5.5X in three years, with SkillNet’s reengineering of their legacy POS systems for higher speed, selection and service.  Now client’s Expert Style and Wardrobe consultants use an instore app on a handheld device to design and order custom tailored clothes.  

About the client 

The client is a leading specialty retailer, who deliver personalized products and services through an expansive omnichannel network that includes over 1,400 locations in the U.S. and Canada as well as branded e-commerce websites.

Challenge | Major technology transformation required to compete on speed, selection and service  

The client offers ready-to-wear clothing across their multiple specialty stores brands. In 2016, client saw an opportunity in offering Custom Clothing at the stores.

Expert wardrobe consultants and master tailors used an in-store app not only to order custom apparel but also advise on customizations available in styles, colors, fabric choices and for an optimal fit.   

However, the interaction offered a very narrow range of options for custom details like working buttonholes, pick stitching, lining, thread color and more.  In order to enhance customer experience and compete better in Custom Clothing, client needed to focus on three things: speed, selection and service.  

This was now a technology challenge for the legacy POS system. Clients heavily customized POS, still using flat files, required a three-month cycle to add every single custom option. As a further challenge, each of the nine sub-brands had their own customized legacy technology.  

Over the years, as no commercially available system could match the unique requirements, the legacy POS had been built with heavy customizations to match the business needs of client’s nine brands. This introduced technical debt and a limited ability to introduce new features without high risk of operational impact in multiple areas. 

The client realized the need to re-engineer their existing monolithic solution to enable further changes to their systems. In order to do this redesign from within they needed a partner with deep experience and capability on POS solutions that could work both with the latest technologies and the deployed legacy. They engaged SkillNet. 

Solution | Technology transformation using microservices, implemented incrementally 

SkillNet proposed a microservices approach for the legacy POS replacement. Their POS and stores expertise allowed them to identify the microservices to be extracted and used across multiple channels, providing omnichannel capability from the ground up. The creation of these services also meant the removal and simplification of existing POS customizations.

The first step was to re-architecture their data model. SkillNet created catalog, store, inventory schemas and built the micro-services on top of these schemas.  

The Store Service updates the data pertaining to a store and also manages the events and product labels available for the store within the company. Catalog service focuses on information pertaining to products, fabrics, models etc. It also holds the key information of a factory, company and labels available. When customers browse online, this application provides the information which is displayed.  The Inventory service provides information on any given fabric, based on the factory where its available.

In order to make the changes in the monolith system, the team not only needed a different architecture and tools but also introduced a different way of working, The DevOps enablement and agile approach represents complete transformation from previous practices for software development and project execution.   

While the transformation is ongoing, the initial phase has allowed introduction of new features in stores. To introduce these changes, SkillNet proposed a “Strangler Pattern” for incremental transformation of the overall solution. This allows for new features to be available early and avoids the need for a big program with a cliff hanger at the end of the implementation. 

Benefits | Increased Selection and Service Leads to 5.5X growth in three years 

The addition of new options (like a buttonhole or a thread, for example) would take three months before the transformation. After the reengineering, the client is able to add new options within days, which means that customers now have a higher selection and service available to them quickly. 

At one of the brands, the reserve custom line offers over 150 fabric choices from the most prestigious Italian mills and can be ordered in various silhouettes and styles. Customers can select from a variety of authentic custom details like working buttonholes, pick stitching, lining, thread color and more. Another of the brands custom line offers over 120 fabric choices. Customers can personalize their suits, sport coats, dress trousers, vests, tuxedos, and dinner jackets with various fits ranging from slim, tailored, and traditional.

The Custom Clothing business has grown to $276 M across brands in 2019, from $50 M three years before, a 5.5X growth. 

Given that the state of the art, leading-edge Retail systems are modular and support upgrades across business processes, the client’s team can easily maintain and deploy them independently. They can also adapt to leading-edge technologies easily.

SkillNet’s approach has resulted in the creation of a platform that can support continuous evolution. With a solution that can be tailored and modified quickly, the client can now offer a seamless customer experience.

During Covid-19, client’s team has used the microservices architecture to seamlessly enable online ordering for curbside pick-up.

All product names and trademarks are property of their respective owners.

Making “click and collect” possible at more than 3000+ stores worldwide

Retail makeover allows shoppers to “click and collect” at more than 4200+ stores worldwide

Brief

SkillNet makes the mammoth task of integrating 4200+ stores to legacy systems seamless. As part of the solution SkillNet used its StoreHub platform, deployed on the cloud to integrate a vast array of inbound and outbound interfaces from Xstore solutions, Oracle Retail Customer Engagement (CE) and legacy enterprise systems. The system handles millions of daily transactions with more than tens of millions customer records.

About the client

The client is the largest distributor of professional beauty products in the U.S. based on store count. The Company operates primarily through two business segments and operates two formats of stores; one for salon professionals and other for retail shoppers. It sells and distributes through 4200+ stores, including 158 franchised units, and has operations throughout the United States and 13 countries.

Challenge | Complex integration with Oracle Xstore Upgrade

The client wanted to enhance their retail customers’ omnichannel experience and embarked on a digital transformation program which included the upgrade of their POS systems to Xstore.

Since the client had diverse technology for managing business operations, the upgrade and new store solution implementation would involve highly complex integration. The client also wanted to get a single version of truth with reporting at enterprise level. This meant that they had to ensure data integrity globally, across various brands and stores.

Solution | StoreHub, SkillNet’s platform framework for integration

The client partnered with SkillNet to take advantage of their deep expertise in retail systems and Oracle Xstore to address the integration challenges.

SkillNet’s expertise in retail data management not only helped resolve documentation gaps and application scalability issues, but also enabled the team to reverse engineer complex issues. SkillNet used its proprietary StoreHub accelerator, to surmount the complex integration challenges and speed the data integration process. The transaction and data records run in tens of millions customer records. Deployed on the cloud, StoreHub worked seamlessly with the legacy systems & the new POS systems. It also processes store inventory and pricing data daily and offers alerts in case of exception. These alerts help take preventive and corrective action. Finally, SkillNet also created a single version of truth data and enterprise level reporting at the Head Office with data from 4200+ stores.

Results | Enhancing customers’ shopping experience through the convenience of “click and collect at store” and “click and same day delivery”

Currently, 4200+ stores are live on Oracle POS systems. The new commerce systems and the ability to process vast amounts of transactions data means that the client’s team can generate customer inventory and other business insights seamlessly for making mission critical decisions without any delay. Maintenance costs have also been reduced.

The ability to process high volumes of transactions has enabled the client to support safer shopping experiences during COVID-19 by offering customers the convenience of “click and collect at store” and “click and get same day delivery”, 6 months ahead of schedule. This has resulted in a 40% increase in online orders.

All product names and trademarks are property of their respective owners.

In-store & mobile digital experiences

Enabling 20% growth & safe in-store shopping for a leading athletic apparel retailer

Brief

SkillNet supports an athletic apparel retailer‘s ambitious plans for growth by enabling localization of store systems in 20+ countries across Asia, Europe and North Americas and safe store experiences during COVID-19.

About the client

The client makes athletic apparel for men and women for yoga, running, training and most other sweaty pursuits. The company has expanded internationally via their online platform and about 500 brick and mortar locations spanning North America, Australia, New Zealand, Europe, and Asia.

Challenge | Ensure rich in-store experiences across geographies

The client was bullish about achieving consistent double-digit growth through international expansion across Europe, North America and Asia Pacific. The expansion in these regions was planned via a decentralized model, allowing for local community insight and consumer preferences to drive in-store experiences.

This meant that the client had to upgrade their payment systems and integrate their Xstore POS systems to support richer in-store experiences store including staff mobility. Other disparate retail systems also had to be integrated simultaneously to a tight deadline. For each country implementation, data migration, quality analysis and deployment delays had to be addressed in a timely manner.

Solution | Enabling seamless in-store experience with localization of retail systems

The Retailer partnered with SkillNet to deliver rich in-store experiences in 20+ countries. The program encompassed upgrade of POS systems and included country and region-specific localization. One of the key challenges of the upgrade was the large amount of data that needed to be migrated. In order to expedite the process of migration, SkillNet used its StoreHub platform to load data to the new solution. StoreHub, allowed the team to use the service connectors available in Oracle Xstore thus avoiding customization. Given the tight deadlines, SkillNet introduced DevOps for the automation of build, tests and releases and ensured productivity early on in the program.

Results | Contributing to 20% growth & COVID-19 readiness through safer and richer in-stores experiences

The partnership has seen more than 20+ successful store solutions roll outs across geographies. It is live in close to 400 stores and there are plans for adding more stores in the coming months. The upgrades have not only ensured richer in-store experiences through staff mobility which allows for better customer support but also ensured safe shopping during COVID-19. Guests who shop online can now ship gifts to home, and also drop off their returns at the door instead of entering the stores. The upgrade also improved reporting capability for better decision making.

About SkillNet

SkillNet Solutions, Makers of Modern Commerce provide consulting and technology services to companies that are digitally transforming their retail business to modern commerce. Our services enable clients to rapidly anticipate and respond to changing consumer behaviour. Through engineering and enterprise-grade implementation of cloud and SaaS applications, SkillNet creates rich customer journeys for local and global brands to stay ahead of the curve. Our solution accelerators enable clients to quickly become more agile and efficient in harnessing technology.

Located in the heart of Silicon Valley, SkillNet partners with industry leaders like Oracle, SAP Commerce Cloud (Hybris), Salesforce, Magento and AWS to enhance online and in-store experiences. Since 1996, we have worked with retailers across 53 countries to deliver exceptional customer experience and growth. Our award-winning solutions have enabled global retail brands in Apparel, Automotive, F&B, CPG, Grocery, Health & Beauty, Liquor, Pharmacies, Restaurants and Telecom to deliver the promise of modern commerce.

All product names and trademarks are property of their respective owners.

lululemon creates history almost 100% growth in stock price, wins Forbes “Retailer of the year” award

lululemon has grown multifold in last 15 years. This year the next feather in the cap is Forbes Winner “Retailer of the Year 2019”. We congratulate them for the success and cherish the partnership.

We are delighted when our clients succeed; a case in point is lululemon Athletica. lululemon has beaten the S&P Retail index by a huge margin. Furthermore, this thanksgiving season lululemon was featured as one of the best Thanksgiving retail winner of the year.

The other feather in the cap is Forbes naming lululemon as the retailer of the year ahead of Walmart, Target etc. Forbes writes – “lululemon stands out from the crowd for what it has accomplished in one of the most hotly competitive areas around, specialty apparel.”

With this performance, no wonder the stock price of lululemon has grown about 100% in a year. Congratulations team lululemon for outgrowing the whole Retail index of S&P by a whopping margin, record-breaking holiday shopping weekend and winning the Award “Retailer of the Year 2019” by Forbes.

The MarketWatch reports that the retailers who have strong multiplatform capabilities, which makes shopping convenient won this seasons holiday shopping. Do you have a multiplatform strategy in place?

Another research by Adobe Analytics suggests that Buy-online-pickup-in-store has grown 43.2% year-over-year in 2019. Is your technology ready to cope up with the retail evolution?

Forbes states – to paraphrase – lululemon is on its way to create a cult of lululemon lifestyle with its two newest stores in Chicago and Minneapolis with its experience stores. Do you have the technology and partners to execute such bold ideas?

Reach out to us for learning how we do retail transformation, including enabling BOPIS solution, faster deployment with DevOps and cloud enablement for our clients.

Additional resources –

lululemon Stock Is Up Over 80% viz-a-viz industry S&P by 5%

Analysts say lululemon in top 3 Thanksgiving weekend retail winners

Forbes: 2019 Retail Awards

Meet SkillNet at NRF 2020 booth #1334

NRF (National Retail Federation) is the biggest global industry event for retail with 40k+ attendees and 800+ exhibitors. As always, NRF2020 will be held at Jacob Jarvits NYC location from Jan 12-14, 2020. According to NRF, it is the must-attend week where retail movers and shakers from around the world come to learn, share, collaborate, network and inspire. SkillNet will be in presence again this year. Come join us, at NRF booth #1334 and learn how we are transforming retail. 

We will also host our annual customer appreciation event “Spark” on Jan 13th. Spark is an invitation only event where SkillNet’s past, current and future customers come together to network and exchange experiences in a fun, informal setting.

Visit_SkillNet_NRF_Booth_1334

For invitation reach out to us at http://www.skillnetinc.com/contact/