The digital strategy behind Accent Group’s supply chain transformation

The digital strategy behind Accent Group’s supply chain transformation

Accent Group LTD boasted record profits last year and moved 6.3 million shoes – that’s one in five in Australia – thanks to its recent supply chai...

Gone are the days of successful retailers surviving on bricks and mortar alone. To be at the forefront of retail now, businesses need a booming digital presence.

Accent Group Ltd – formerly RCG Corporation Ltd – is on the ASX and delivered its FY18 results in August, revealing a record underlying net profit after tax of $47.1 million, up 17.9% on the prior year. The business – which has more than 460 stores across Australia and New Zealand – has delivered strong returns over the past five years through its brands including The Athlete’s Foot, Platypus, Hype DC, Timberland, Vans, Dr. Martens, Saucony, Merrell, Palladium, Sperry Top-Sider, Stance, Supra, Subtype, and kids’ funky online brand The Trybe.

Its recent success is thanks to a major collaboration across many business units involving a stunning digital transformation over the past 24 months, which involved a one key stream full supply chain transformation led by Tim Greenstein, General Manager Supply Chain and Technology, and Supply Chain Manager Mark Rizza.

“Our digital team led by Mark Teperson, our Chief Digital Officer, in conjunction with our technology team have effectively enabled 13 websites for the business in the last three years,” Greenstein reveals.

In terms of the space that we play in – athletic leisure footwear and general footwear – we're fortunate that that space has been growing and we've been able to open up more stores across Australia and New Zealand, which has also contributed dramatically to our growth. “But so has listening to our customers.”

Online sales are growing fast - Accent’s FY 18 digital sales are up 131% on FY 17 and up c88%YTD in FY19 – with approximately 40 to 50 per cent of online sales now coming directly from the stores, of which the majority are omni-enabled. New functionalities including ‘click and collect’, ‘ship from store’, same day delivery and endless aisle, are all now enabled.

“We initially projected at 20 or 30%, so you can imagine the overflow of that, and what that means in store land…” adds Rizza. “Adding another layer to that to give it a bit of context, our business tradition started as a wholesale business and over the last decade or so has ramped up its retail presence.

“As that footprint has got bigger, having more stores and hitting the market with these technological capabilities is allowing the business to leverage its 460-store network to drive growth with a true omni channel strategy.

“We've also enabled new warehousing capability which again, using state-of-the-art automation at our new Toll operated Preston facility in Sydney, will help us handle the business growth, increase volume and improve speed to market requirements, which ultimately advances the service to consumers.”

Accent recently constructed a purpose-built digital hub of excellence in Melbourne,  which concentrates the digital expertise under one roof. There's not one all singing, all dancing system these days in a big business that handles things end to end, and so Accent has utilised its current providers, as well as new providers to enable its omnichannel strategy. The websites’ eCommerce platform is Magento and Accent uses three key enterprise resource planning (ERP) systems – Apparel 21 , Erplyand Pronto  across its group of stores.

“You have to have web and ERP platforms that are capable of handling complex integrations these days,” explains Greenstein. “From our core systems, we needed to facilitate that. The technology must enable the ability for orders to be taken online and sent to different stores or warehouses for fulfilment, in a particular and ideally seamless way, in particular sequences, based on certain rules that the business requires in terms of being effective.

“Another key system aspect, certainly for our store enablement, was the ability to effectively use third party software (middleware) providing us with intelligent shipping and fulfilment solutions to assist us in handling the freight and dispatch flow, particularly from our store network.

The middleware, in Accent’s case, have three applications, given the numerous business divisions – Temando, Fluent Commerce and Shippit – which allow for distributed order management at stores, as well as integrations with numerous freight providers to produce the freight labels and support the multi option freight requirements to make the store process more seamless. Fluent Commerce is used for The Athlete's Foot to manage click & collect fulfillment with their in-store technology.

Its successful next day and same day delivery services is due to its existing relationships with Australia Post’s StarTrack Courier and Direct Courier. Being one of the first businesses to roll this capability out nationally across all stores, Accent hopes to ensure its delivery capability is never far from the customer and will safeguard it from online competitors such as Amazon, which recently launched in Australia.

“Interestingly, some of these purely online players are starting to play around with the physical stores,” muses Rizza. “Many Pure online players have or are contemplating a physical store presence, with Catch of the Day launching a pop-up recently.

“We'll look to cover everywhere, and because we're utilising our store footprint to assist in the fulfilment process, our aim of faster delivery nationwide will be greatly assisted by this capability.

“We have a really good opportunity, given our current enabled capability across stores and digital, at solidifying, growing this further and continuing to build on our digital and store strategy, so that we can stay at the forefront of the marketplace.”

Customer care is also front of mind going in 2019, with 24/7 coverage, including across live chat and email. Live chat launched in October 2018 across Vans, Skechers, Timberlands, Doc Martens,Platypus,Hype DC  withThe Athlete's Foot coming soon.

“Two and half years ago, we had one team member that looked after retail and ecommerce,” laughs Rizza. “Now, we have more than 25 people based at the hubs in Melbourne, Sydney and Manila, and that's only going to get bigger. It's driven by consumers demanding out attention and demanding increased support, and also our stores’ demands for support.

We started live chat with some of the smaller brands and in a short space of time it's taken off quickly. To put in perspective, over the last few weeks, it went from being a few tickets to now being nearly a quarter of overall volume through the chat channel, and that's with us currently really only covering business hours, so we know for a fact that consumers want to talk to us.”

Obviously, such a digital transformation has been a huge culture change in the business, with the technological improvements putting increased onus onto the store teams, and what their day to day roles look like.

In some cases, staff have gone from being purely salespeople to having to manage order fulfilments, and the group ensures that with every innovation that’s rolled out and executed, full training programmes and mechanisms are there to support the team, who still need to be able to trade and fulfil the consumers’ needs.

“Part of the learning for us is that we’ve created roles that we didn't expect to create,” says Greenstein. “We had a view of how some of the requirements, monitoring procedures and some of the operational processes would work, but what it's actually led to wasn't quite what we thought.

“As a result, we've had to tweak and create new roles to deliver and help with the process management of all these functionalities that we've built on, as these roles never existed in our business before. So, it's been understanding and navigating the training path well.

“The business has a strong focus on stock integrity and stock trade mechanisms, as this is key to ensuring the end to end omni channel experience is effective and accurate.”

They both concur that in order to succeed at Accent, employees need commitment, drive and a “can do” attitude.

“We want to make sure we're the best retailers out there,” explains Greenstein. “Our CEO always says we don't do average – we try to be different and really make a difference and it's part of the 'make it happen' culture to make sure we try and recruit the right people.

“It’s very important to retain talent and give people the opportunity to grow within the business. We also need people that can be very agile. The rate at which business rolls out projects is really not matched anywhere else that I've seen in my time, so you need people that can come in and be ready to move, depending on your role of course.

“Certainly, from the supply chain point of view, if you're coming here just to have a day to day job of one task, that's not going to fly because our business continues to grow and evolves so quickly that you need to have people that can thrive in that environment – it's not for everyone.”

Accent’s footprint and capabilities are set to increase when Accent moves at some point internationally potentially  to Asia in 2019.

“We'll never lose focus on our roots here in Australia,” adds Greenstein, “as demonstrated by our recently opened 600sqm Platypus Superstore in Melbourne Central and a Pitt Street Sydney Superstore opening mid-2019. But we’re starting to explore how we broaden our footprint is the next stage, especially as the digital economy continues to grow.”

The long-term visions of the AGL Supply Chain team are focusing on that speed to consumer portion. At board level, it’s to create greater opportunities from a vertical product perspective too.

Accent recently secured the rights to the Supra brand, launched kids' specific online brand, The Trybe, and also purchased premium footwear brand Subtype, which plays in the premium space with one store and an online presence.

“Our strategy at the moment is very much to continue to invest in store infrastructure where it makes sense and where we see growth, while obviously driving all the other channels at the same time,” adds Greenstein.

“Our CEO and board are very proactive in finding brands that are going to align with us and help us solidify that leadership space in the athletic footwear or the leisure footwear space.

“We’re definitely in the phase of a growing businesses; new digital presence, opening new stores, acquiring businesses, as well as looking for brand opportunities that we can bolt on to our existing business.”

From the market perspective, the consumer continues to come up with new ways and new requirements of wanting product – how they purchase, and speed, is becoming more and more critical.

“We must make sure that we can keep up with the requirements of what the customer wants while always being flexible and able to make sure that we deliver and meet their requirements,” he surmises.

“Customers these days have a different way of operating and engaging, and what's convenient for one is not actually the same for another, so the time to be able to keep up with the demand and need is going to be a critical factor going forward.”

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