No Need to GUESS?

Guess plans to open more than 180 stores across Europe and has been using Colombus retail management software to improve stock and service levels

Later this month, a new Guess store opens its doors in Portsmouth, England. A further 180 new stores are planned over the next three years, as part of an aggressive new strategy to develop the US fashion brand in Europe. According to Luca Tacchi, IT director for Guess Europe, so many new stores means a much greater need to manage the business more efficiently. And he acknowledges that without integrated retail technology, the companys ambitions could not be achieved.

The expansion has already started in earnest, following the recent opening of Londons flagship store in Covent Garden at the end of 2005, as well as many others across Europe, where the brand now has over twenty company-owned stores. Guess says it plans to expand further through a franchise-style system of sub-licensing, which is already popular in southern Europe. It means more autonomy for the retailer, although inventory still being supplied by the brand. Typically, the franchise partner secures a suitable location and then works closely with Guess European headquarters in the running of the shop.

Guess currently has around twenty more franchise-style outlets spread mainly across southern and eastern Europe. A large wholesale business in Europe is also supported through hundreds of concessions operating through department stores and independent fashion retailers. Globally, the brand has become a $1.2 billion multinational retailer with over five hundred stores worldwide.

Euro Expansion

Many other fashion retailers, including Naf Naf, Branded Apparel and Calvin Klein, have expanded along similar lines. They all rely on VcsTimeless technology, which provides them with the necessary multi-lingual and multi-currency platforms to manage complex inventory needs, whether from a store, retail head office, or overseas franchise.

Were finding more and more fashion brands looking at shared licence agreements as a low-risk means of expanding across Europe, says Tania Oakey, marketing director at European software vendor VcsTimeless. Yet not all Anglo-Saxon or American retail software systems cater for the franchise, wholesale and multi-channel operations typical of Europe.

Forecasting Fashion

For Guess, the use of the VcsTimeless Colombus retail management suite has led to improved stock and service levels, since installation began in 2005. All company-owned stores are now kitted with a store interface which, via the internet, gives instant links to the head office in Florence, Italy, and allows them to monitor new product lines or check on stock availability. From head office, a team of fourteen people in the IT department can now see what stock is left in each store, as well as look at the best ways of avoiding lost sales or heavy discounting, because of either too much or too little merchandise left on the shelves. In-depth analysis of sales data is made easier using a business intelligence module, called Optimum. Tacchi says that the software has helped the company enormously in decision-making, especially when it comes to planning sales promotions. Reporting has also greatly improved, he says, thanks to a constant exchange of information with stores, as well as scorecards for management and reports to the US corporate headquarters in Los Angeles.

Generally, all products are reviewed on a weekly basis, and the software works by looking for anomalies and weighing them up against current stock levels and other variables, such as seasonal sales patterns, price or profitability. The software then comes up with a best-fit to satisfy forecasted demand and suggests what products any store should be stocking to meet the needs of their local market.

Previously, everything was manual, and we had to regularly telephone every store to say what stock was available, and ask what they needed, says Tacchi.

The Guess IT department intends next to focus on automated replenishment, with a planned project completion date by the end of 2006. Given that Guess will shift its production of shoes to China later this year, Tacchi says that automated replenishment, and the need to monitor the supply chain over long distances, will become even more crucial. Currently, most of the European merchandise is manufactured in Italy, with some products purchased direct from Guess in the US. It is also considering adding another VcsTimeless module, Colombus Regional, which gives greater control and autonomy to overseas stores, whilst allowing them to continually stay in touch for stock requirements.

This, says Tacchi, is particularly useful for countries like the UK, where Guess firmly has its sights fixed. A more autonomous, yet linked, IT system gives retailers more freedom over pricing, for instance; and the IT investment costs are offset when you have more than just a handful of stores in one country.  Tacchi acknowledges that without the software, Guess would no longer be able to manage the entire infrastructure. And given the plans to massively expand the number of overseas stores through more franchise networks, a shared integrated system is vital for everyone, he says.
With appropriate technology in place, theres no longer any need to Guess. Especially when it comes to decisions over stock, the most important - and costly - consideration in fashion today.