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Getting Started with SAP for Retail

An overview of SAP's solutions for the retail industry and corresponding user space on SAP Community Network.

As globalization, consolidation, and other major trends continue to define and shape the global retail industry and the processes that drive it, the SAP for Retail community on SCN gives you the opportunity to focus on those areas in the retail industry that are of most interest to you – from store and multi-channel to supply chain and planning to SOA. In an industry as diverse as this one, there are many areas from which to choose – all influenced by the macro trends and business challenges that confront the retail industry today.

Macro-Drivers of the Retail Industry

Today’s global market trends bring both risks and opportunities to retailers and wholesalers. Globalization and consolidation lead the way with a huge impact on how consumers are shopping and buying. These market forces are also leading to unification of products across regions and the continued increase in large buying volumes. At the same time, diversification of channels is redrawing the industry landscape to one of best-of-class business process chains. In addition, business-to-business e-commerce continues its rapid growth. Increasing energy and labor costs add pressure for new operational and process efficiencies. Finally, deregulation is shaping the retail industry, opening up new channel opportunities for retailers and wholesalers.

Retail Product and Customer Challenges

You can see the impact of market forces on retailers and their customers on the retail store shelves. It is here that retailers must decide, often on a daily basis, what cohesive assortment of products they will offer to their customers from the huge multiplicity of product colors, patterns, sizes, prices, and types available on the market today. Picking "winning" products is a challenge, especially when past AMR studies reveal the vast majority of new products do not make money for their manufacturers the first year. Moreover, pricing products is difficult. With the increase in low-cost competitors, standard markups may no longer apply.

The retailer must also decide whether to overlay the base price with promotional costs, since another AMR study reveals that, with over US$110 billion spent on promotions annually, 70% of customers make their buying decisions in the store. Also complicating product mix decisions for the retailer is today's retail customer segmentation, which has changed radically in recent years with teens flocking to Web sites and malls, single parent households, and an energetic elderly market, to name a few. Even as the customer segments increase, an AMR study shows the time shoppers spend in the store is decreasing - from 10 hours a month to less than three hours since 1980. Furthermore, the loyalty of customers has declined for many retailers, because customers now have such a tremendous and ever-growing variety of choices available to them.

Retail Industry Dynamics

Of interest to business process experts across the retail industry and its landscape, and around which many topics of discussion revolve, has been consolidation and the rise of the supercenters, with the concurrent decline of traditional retailing. The increase in square footage for mass merchants and the decrease in square footage for department stores continue unabated. The growth in supercenter market share leaves little margin of error for retailers that have not scaled to accommodate changing times and customers, although retailers of all types are extending their reach beyond borders, accelerating the pressures on traditional retailers. It is survival of the fittest in the retail industry and challenging times for the retail business process expert.

Another industry dynamic is the collapsing of the boundaries of the selling channels. As e-commerce grabs increasing market share, manufacturers are becoming retailers and retailers are becoming wholesalers – and all of these emerging models are putting great stress on the ability of retailers to manage what was once the simple business of buying products and selling them to customers. The customers themselves are adapting to all these changes by cross-channel shopping at an accelerated rate, and these cross-channel shoppers are more open to alternatives and less receptive to traditional retail communications.

Surviving and Thriving with the New Corner Store

Although supercenters succeeded in lowering costs for the customer, they also lost the customer connection so prevalent during the era of the corner store, when retailers knew you personally and could anticipate your wants and needs. However, customers do not forget; therefore, in response to supercenters, the retail industry has witnessed the emergence of the "new corner store," established by a new breed of retailers to achieve competitive advantage by simultaneously executing both product strength and customer connection. There is a wave of retailers trying to achieve “customer centricity” across the globe, but to survive, it must be done at scale; therefore, the "new corner store" occupies the upper right quadrant of innovative retailers. These stores do not limit themselves to just lower prices, but they also strive to become superior in terms of product selection, quality, location, and especially customer service.

Pertaining to SCN and the processes retailers must create to transition to the new store model, a number of new capabilities are required. These include advanced supply chain management to achieve the flexibility needed to serve multiple channels, markets, and customer types; the enablement of a renewed customer experience that is able to scale the experience of the corner store; and demand insight that puts the customer first while enabling scaleable innovation on the product side.

Find Your Place in SAP for Retail@SCN

Whatever area of interest you have in the retail industry and its many topics, you can get started by visiting the blogs, forums, and discussions evolving on SAP Community Network around those areas and topics. Many of these discussions will focus on SAP thought leadership for the retail industry:

The Customer-Centric Retailer:

Understand: Demand Insight

  • Consumable retail science empowers business executives.
  • Neighborhood assortments bring back the corner store.
  • Manufacturing and retail capabilities link products and customers.

Anticipate: Advanced SCM

  • Manage products, space, and inventory under one solution.
  • Unify demand forecast up through the supply chain.
  • Simplify collaboration via common solution assets, since many vendors already have SAP solutions.

Inspire: Customer Experience

  • Common multi-channel platform provides consistent experience.
  • Disciplined simplicity for the repeatable execution to satisfy customer.

            Extended Enterprise

  • Best practices and content come from 26 industries under one platform.
  • SAP NetWeaver supporting SOA can easily integrate external, specialized solutions from partners – key for sub-verticals and the unique needs of retailers.
  • Solutions are internationalized.

          Across All Areas

  • Modularity lets retailers bring in systems as they need them.
  • A scaleable solution – from small retailers to the largest global players.

From an SOA standpoint, a subject of increasing focus by business process experts, SAP is placing significant emphasis on the sub-vertical industries, including food, grocery, and hard line retail. Although SOA extends a retailer's footprint to additional business processes and users, from vertical to vertical, the stores are different, having varying requirements for SOA. How to enable the agile and flexible enterprise for these retailers invites the contributions of partners, customers, and the SAP Community Network.

A final area worthy of discussion on  SCN is the expansion of the SAP retail solution platform in supporting the retail efforts of other industries. Today, anything that touches the customer relates to retail, for example, manufacturers that sell directly to customers, as well as oil and gas companies, convenience stores, or even postal companies that sell envelopes and stamp product innovations to their customers. In education, students are becoming consumers of educational products and the automated tools they need to learn. Furthermore, with entities such as the Army Air Force Exchange Service, government has also become a retail marketplace. This view of retail as a platform invites the participation of companies and business process experts across industries to determine how to take retail outside of retail and into other verticals and industries.

SAP Process Support for the Retail Industry

The SAP for Retail solution portfolio supports the most important business processes in any retail company and, for greater efficiency and effectiveness, provides tools to manage these processes. SAP solution maps give the business process expert a clear overview of the business processes relevant to the retail industry. Solution maps are multilevel blueprints of processes defined for a particular industry. They help you visualize, plan, and implement a coherent, integrated, and comprehensive business solution.

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