Is there a more prestigious retail name than Harrods?
The luxury London department store introduced the U.K.’s first “moving staircase” in 1898, and extended London’s first lines of credit to the likes of Charlie Chaplin, Sigmund Freud and the British royal family. It’s where the world’s top designers want to launch their new luxury lines.
And, it’s the only retailer with enough power and clout to cut ties with the royal family and still profit. In 2000, then-owner Mohamed Al Fayed, an Egyptian tycoon, accused Prince Philip of masterminding the 1997 Paris car crash that killed Princess Diana and his son, Dodi Fayed. The accusation led to a decade-long hiatus from Royal Family patronage.
In 2010, Harrods was sold for $2.37 billion to Qatar Holding, the fifth owner of the company, and tensions eased between the retailer and the royal family (guests of last April’s royal wedding shopped at the store). Harrods is such an image-focused shopping experience that there is a strictly enforced visitor guidelines policy, including a dress code.
Given its station and cachet, Harrods surely must also be one of the most efficient, well-organized retail systems in the world. To the contrary. “We were using the prehistoric tool of Microsoft Excel to manage our workbooks and planning,” says David Llamas, chief information officer for Harrods.
The system was “extremely clunky, nonintegrated, non-real-time and very, very limited for information,” he says. “We didn’t do any assortment planning. ... We didn’t have the tools to go to the level of styles, colors and sizes to do a proper assortment plan.”
In January, Harrods teamed with Predictix to implement a series of merchandise planning solutions at its Knightsbridge store, airport locations and on its website. The Predictix software allows more in-depth and efficient forecasting processes, Llamas says, and gives Harrods “far more granular and dimensional information that allows ... you to go through your planning cycle in real-time and make decisions.”
The Predictix Merchandise Financial Planning application gives Harrods performance goals prior to each fashion season. Users can adjust budget parameters and buy according to the plan, and Harrods can review critical performance data each week and determine what adjustments are needed in order to meet financial targets.
“Predictix is a process-based tool, not just a tool kit,” Llamas says. “The quality of the data is phenomenal.”
Harrods uses the Predictix application with SAP’s data warehousing tool to gain quicker inventory insight. The solution allows Harrods to see inventory levels for merchandise in relation to trends and store variables. It can then take action to ensure that it has the right inventory levels for best-selling merchandise and reduce inventory on slower-moving products. There also are fewer out-of-stock items, because inventory is matched by in-season demand.
Clearly, maximizing sales is one goal, Llamas says, and markdown planning is another important area. He estimates that the company spent millions annually on unwarranted markdowns, and “that markdown expenditure goes straight to the bottom line. If you spend five million more, that is five million less that you have.
“What should be the level of discount you need to apply to your merchandise, and [at] what time during the sale process?” he says. “If you could optimize that process, every percentage of margin that you recover goes to your profit. That is a huge financial gain.”
Covered in the cloud
Harrods enjoys virtually unlimited processing capacity via cloud computing, where shared resources, software and information are provided over a network. Rafael Gonzalez Caloni, COO and executive vice president of marketing for Predictix, says his company’s cloud means having the scale to answer the really tough questions in retail.
“Today’s and tomorrow’s applications have to help you make better decisions,” he says. “You need to be able to crunch a lot of data, and you need to be able to throw very powerful science against it. An old architecture that forces you to limit yourself to one computer doesn’t really allow you to do that.
“The retailer’s world changes constantly,” Gonzalez says. “In a world where you don’t know where the next Twitter or Facebook is going to come from a year from now, unless you have data flexibility and scalability, how are you supposed to incorporate all these changes into your business?”
To suggest that every retailer “can just flip a switch and take advantage of the cloud would be getting ahead of ourselves,” he says. “But our belief is, by cracking the code on these very tough problems for some of the largest and most sophisticated retailers, we are paving the way for that technology for all retailers.”
It’s all about improving efficiency and enhancing control. Just ask Harrods. The iconic retailer went from using little technology to a massive injection of data in a relatively short amount of time.
“Being able to have control throughout the season is essential for a retailer today, especially when we are in the midst of an economic recession,” Llamas says. “You have to have the most effective and efficient processes around both financial and merchandise planning."