New research from Hitachi Solutions and K3 Technologies has found that many retailers didn’t have the technology foundation in place to capitalise on the eCommerce boom over the last year. In fact, over half (57%) of retailers reported that they weren’t agile enough. However, the retailers that made early investments in digital ERP reported fewer issues around agility and were quicker to deploy efficient digital sales strategies. This is because they had access to better data insights, generated through ERP.
Significantly, early adopters of digital ERP were a third more likely to capitalise on the shift to online shopping. This suggests that pouring money into an eCommerce strategy alone isn’t enough to win over shoppers. Instead, fashion retailers need to build their digital strategies from the ground up, starting with a single source of data for operations and inventory.
Visibility is the key to meeting customer demand
It’s been estimated that acquiring new customers costs anywhere between 5 to 50 times as much as retaining existing customers. Inconveniences caused by a lack of visibility like out-of-stock products, or the absence of cross channel returns threaten a smooth customer journey and could result in the loss of loyal customers.
Having a seamless supply chain is critical because any issues will reflect negatively on the customer journey. The research found that the number one cause of internal bottlenecks, and therefore one of the biggest barriers to meeting customer demands, is lack of visibility (86%).
This is often due to outdated systems throughout the supply chain. Respondents made it clear that ERP is a critical tool to gaining this visibility, and being able to scale up, citing that the greatest benefits of digitalising ERP are enabling growth (28%) and visibility (20%).
Fashion retailers don’t need to totally overhaul their systems to see results, but by updating parts of the ERP systems and updating existing technology, they will be able to better understand and respond to customers.
ERP is the solution
The research shows that having a strong digital strategy depends on having a strong digital foundation. Yet, around 1 in 5 fashion brands have yet to digitalise their ERP, with France being the slowest adopters in Europe. This highlights a significant opportunity for retailers to improve their technology to boost business agility and meet customer demands.
There is a clear case for digitalising from the ground up, but many issues are getting in the way. The biggest challenge is making the business case for updating (28%), which has always been a challenge for fashion – before and during Covid-19. Updating ERP systems can be a long and arduous task, especially if your organisation is resistant to change – so it’s critical that potential solutions integrate easily, and build on your existing strategy.
In fact, when it comes to implementing ERP, easy integration is the most important factor for retailers (58%) with usability a close second (56%).
All respondents see the value in digitalising ERP, yet this year ERP has seen a decrease in digital investment of up to a third, while eCommerce funding has absorbed this budget with a 61% increase. Covid-19 likely influenced this as retailers had to invest heavily in digital; for many, it was the only way to reach customers. However, if fashion brands want to deliver a great experience and retain customers long term, they have to move their focus to updating the ERP systems that are fundamental to the health of their digital channels.
Tony Bryant, Director Global Business Development and K3 Technologies said, “2020 provided a reset moment for retail and fashion, with many brands completely pivoting to meet customers through digital channels. But customers’ demands are becoming more complex, and the fashion brand landscape is in adapt or die mode. For many fashion retailers, a lack of visibility into operations and inventory has been a spanner in the works for meeting customer demands. This is why laying the foundations for a single source of real-time data through ERP is critical. It delivers competitive advantage for fashion brands in a world that increasingly values convenience, personalisation, and flexibility. Fashion brands need to meet customers where they are, and a strong digital foundation plays a critical role here.
View the full report here.