HIGH POINT — Consolidation, remaining viable in a recessionary economy, getting the customer into the store and increasing profitability are issues the retail technology community sees as affecting its customer base as the furniture industry enters another year.
And while those issues affect their customers, the retail software industry has issues of its own. Two most often cited by executives replying to a Furniture/Today questionnaire are lack of industry standards and the reluctance of customers to make technological investments in down times. But the opportunities that exist in an industry becoming more agreeable to technology as a competitive advantage are growing, vendors said.
"We target independent furniture retailers, and the biggest challenge for them is surviving consolidation in the retail furniture business," said Gary Sauther, president of Genesis Furniture Software Systems. But it's also the independents that will provide the company with opportunities for the future.
"I am continually impressed by the resilience and ingenuity of independent retailers," said Sauther. "This is a market that needs our services, and I don't think it will go away easily."
Since furniture isn't something that customer have to buy, remaining afloat and making money are issues that are tough on retailers, according to Brian McCarthy at ProfitSystems. Right now, that is no easy feat, he said, with primary and secondary home sales down, unemployment up and consumer confidence off.
A balancing act
An issue for retailers, as it relates to technology, is "how to they get the most bang for their buck," said Ellison Crider, vice president of marketing for RSSS. "They must weigh cost against efficiencies gained, and obviously the benefits of increased efficiency must overweigh the cost. Also, many of our current and potential customers have delayed upgrading their systems due to the economic uncertainty caused by the Sept. 11th attacks."
The good news, added Crider, "We see that uncertainty eroding and eventually disappearing."
Don Vander Beke, executive vice president of marketing and support for GERS Retail Systems, says an issue facing retailers is "regaining the percentage of consumer discretionary spending that has dropped over the last few years."
Other challenges he sees for retailers are enhancing customer service; reducing the supply chain, inventory and operating costs at the store level; and focusing on loyalty programs that retain high-value customers and gets them in the store more often. In addition, he said that improving efficiencies and lowering the cost of both direct and indirect goods and services by investing in efficient collaborative systems is something that dealers will have to face.
Likewise, Peter Charness, senior vice president of global marketing and chief product officer for JDA Software Group, said, "The main issue for our customers really hasn't changed in year: Getting the right product to the right place at the right time. But today there is the added pressure for a whole lot less cost, inventory and expense to get there and all the while focusing more on the consumer."
Ira Bakst, executive vice president and co-founder of Storis Management Systems, sees the economy as being the primary focus of his customers. "We also believe that many retailers need to put greater emphasis on changing their business model to support future business requirements," he said.
"Many find it difficult to break away from traditional models and such a lack of vision could result in a retailer's inability to be positioned for future opportunity," said Bakst. "By example, we continue to hear from retailers that consumers are not going to buy merchandise over the Internet as if actually selling of product is the only way to offer their business and consumers e-commerce capabilities."
"Right now," added Tom Rhea, president of FurnServe Inc., "the main issues furniture retailers are focused on are getting customers back into the stores and spending money. They are also trying to save money wherever they can in the short run by not spending themselves."
Opportunities, obstacles
Some of these issues translate into both opportunities and obstacles for technology vendors, who have tailored their systems accordingly. By having a solid software system in place and available through the Internet, it creates the foundation for rapid growth, according to Rhea. "The primary obstacle is the furniture industry's tendency to continue doing what they see others do and their reluctance to take advantage of the newer technology."
"We see an opportunity to better manage inventory and create product assortments that are more exactly tied to specific customers and customer demand to be the best stimulus for growth," said JDA's Charness. The greatest obstacles he sees are the economy and the hesitancy of clients to make software commitments.
Similarly, said RSSS' Crider, "Probably the greatest obstacle in the furniture industry is the slow adaptation of new technology by the dealers. Many furniture companies are being run by second and third generation family members who are just now moving from manual or outdated systems to a system specifically written for their business."
He sees his company's multi-tasking systems along with Internet and wireless technology as keys to success.
GERS' Vander Beke sees opportunities in participating "in an industry that is beginning to embrace technology as integral to business growth plans," particularly in terms of both consumer and supplier facing opportunities.
On the other hand, "overcoming the complexities caused in reaching, educating, training and supporting a very fragmented industry" Vander Beke sees as obstacles.
Storis' opportunities lie in an extensive portfolio of modules combined with base software that allows customers to have complete integrated technology from a single vendor. "We believe that our open systems operating environment positions us to provide product offerings spanning all size retail operations," said Storis' Bakst.
Internet plays vital role in future of retail technology
HIGH POINT — What's in store for furniture retail technology in the future? Furniture/ Today asked software vendors to explore their crystal balls and tell us what to expect in the future.
"Whether we like it or not, we will be a lot more Internet driven," said Ellison Crider of RSSS. He says software companies and their clients will become more reliant on the power of the Internet and the hardware that goes with it. "One of the standard options for accessing and using RSSS software two years from now will be to access and use it over the Internet."
Added Tom Rhea of FurnServe, "The last two years have started validating our software service through the Internet. We envision this area will grow significantly over the next two to five years." He believes that, within five years, software services through the Internet will be common.
Don Vander Beke of GERS said that "newly-developed applications will have to incorporate significant abilities to provide significantly greater business capabilities, as they will penetrate not only large, mid mid-size retailers."
In addition, he said that tools for planning, replenishment and allocation "will be required to meet certain portions of a home furnishing retailers needs. But the most important single element will be the transition from point of sale to point of service. Any software provider not able to deliver that functionality will not survive."
Electronic communication between retailers and manufacturers, with software vendors as facilitators, will increase in the future, said Brian McCarthy of ProfitSystems. "That … will substantially improve the health of the industry and response to customer needs," he said. "We see this transition from paper to XML communications as key to industry strength and competitiveness for the consumer dollar."
Ira Bakst said Storis is moving ahead with a number of technological advancements. "The expansion of broadband communications will increase e-commerce, and our Internet experience should position Storis for continued future success. Wireless technology in combination with improved broadband is going to enhance connectivity.
"We will be introducing wireless terminals shortly to compliment our existing wireless products (palm pilots, warehousing processing, etc.)," he noted.
Peter Charness sees a tremendous rate of growth for JDA Software in the next couple of years. "The key difference," he said, "will be that we will be selling more of the same solution set to all our clients— retailers, wholesalers and manufacturers — with collaborative emphasis tying them all together."
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| Use of the Internet is a key tool for technology providers (shown above and at right) and users. |
