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Business Advice

Custom-made tracking systems prove a good fit

Heatwave invested between $60,000 and $80,000 in technological upgrades
The Straits Times - January 17, 2012
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Custom-made tracking systems prove a good fit -- PHOTO: LIANHE ZAOBAO

SELLING shoes might seem a straightforward process, but dig into it a bit deeper and the considerable risks should make anyone think twice before taking the big step to set up shop.

There are the swiftly changing fashion trends, fierce competition from rival shoe brands and lack of available space in good locations to open up new stores.

Shoes, in short, are a serious business, but footwear firm Heatwave, which specialises in women's shoes, knew what it was up against and realised that the best thing it could do was to embrace technology.

A few years ago, the company designed and launched an online store at www.heatwaveshoes.com while also developing its own custom-made electronic resource planning (ERP) and customer relationship management (CRM) systems.

ERP systems are computer programs that help a company keep track of its inventory and sales.

CRM systems, as the name suggests, allow the firm to build a database of customers and offer them promotions and other services.

Software firms that provide such systems tend to offer only a very basic version sufficient for companies that manufacture a uniform product.

But that did not fit Heatwave's needs, given that the firm makes shoes not only in thousands of different designs, but also in different sizes.

The company spent about a year working with a software firm to develop an ERP system that would meet its requirements.

And then it had to spend more time manually entering information about all the shoes in its inventory into the new ERP database.

The company invested between $60,000 and $80,000 in the technological upgrades - time and money well spent, said its business development manager Elizabeth Tan.

'The systems have been in place for only about a month, but we have already seen results,' she said.

'They allow us to see which designs are moving faster, which shops are performing better. So when we make decisions, they are informed ones based on actual sales data. It's a way to help us plan for the future.'

The ERP system was installed in all of Heatwave's seven stores in Singapore to collect data, which is pooled into a central server at the company's headquarters.

This allows the system to detect if a certain shoe design is running low in stock, for example, and alert the company to order more.

It can also track how many pairs of each shoe design are sold and then analyse the data in terms of factors such as colour, material and heel height. Such analyses help Heatwave quickly spot fashion trends and immediately design shoes that would cater to the latest tastes.

'As we can track sales very clearly now, we can quickly allocate resources to the top performing stores and shoe designs and produce more similar designs that we think customers would receive well, and quickly,' Ms Tan said.

'So the system has helped us in making such decisions faster amid a very competitive business environment.'

The system has also boosted productivity.

'Previously, everything was very labour intensive,' said Ms Tan. 'But with this IT system, everything is automated and store supervisors are freed up to come up with creative ideas to promote shoes instead of conducting very basic duties such as inventory checking.'

Also, it is not easy to recruit staff these days, as fewer and fewer Singaporeans want to work in retail sales, Ms Tan said. This was one of the reasons Heatwave launched an online store.

The virtual outlet store began receiving orders from the day it was launched and now has buyers from overseas.

Other motivations behind launching the online store are that retail rents are quite high and good store-front locations are difficult to come by, Ms Tan said.

Shopping mall operators cap the number of shoe shops in any one mall, so Heatwave would have to wait until an existing shoe shop vacates a spot before it could open an outlet.

Heatwave has 35 outlets in eight countries in the region. Its local network includes stores in Wisma Atria, Far East Plaza and HarbourFront Centre.

It expects total sales will increase by at least 30 per cent over the next 12 months as a result of its new IT systems, with about 25 per cent of sales coming from the online store.

Meanwhile, its new CRM system will help ensure customers keep returning to all of its existing stores and website.

Heatwave used to have a card-based membership programme, and it is now in the process of getting all of its existing members to create online profiles of themselves on its website.

Each time the member makes a purchase, information about what he bought will be added to the CRM database, which Heatwave can then analyse for future promotions.

'We'll be able to communicate more effectively with our customers then. We could segment customer promotions with this system because we'll be able to easily see who spends more on what items,' Ms Tan explained.

More importantly, the CRM system allows customers to communicate with Heatwave more effectively by leaving feedback on their online profiles.

'We wanted to have this direct communication channel with our customers. We didn't want our membership programme to be just about discounts. We wanted it to be more of a community.'

 

 

 

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