“Clothes R Us” Point Of Sale Initiative- Situational Analysis

Ajay Srinivasan Ravi & Pooja Prabhu

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Clothes R Us- An overview

Situational Analysis

Problem Statement

Project Management Canvas

Project Timeline

Goals and Benefits

Strategic fitment

Cascade Map

Agenda

Clothes R Us- An Overview

The following illustrates the growth of Cisco since its inception and business strategy

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Origin (1986)

Began apparel operations in

Portland

Built reputation for hip but affordable clothing for men,

women, and children

Growth (1990-1997)

Experienced tremendous growth

between 1990 and 1997

Employee base doubled and store operations

increased by 50%

Net earnings rose by 18% to $534 million and

revenue by 23% to $6.51 billion

Decline (1998-2001)

Expanded to 400 stores thereby doubling its

debt

Total headcount was down by 20% and

number of employees per store by one-thirds.

Commenced cost-cutting in 2001 and reported net loss of

$124 million

System Current State

TRADITIONALSYSTEM

Old Fashioned POS system at front end

Non- integrated credit authorization

device + Private LAN

Standardized PC (Back office)

Factors governing traditional IT system for Clothes ‘R’ Us

Front end Server Back end2

Delayed cash draw and item database pricing

Flawed integration with the server

Circuitous routing via 3 servers

Relying on standard office productivity software for back store management functions

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Situational Analysis

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Listed below are the SWOT of Clothes R Us in 2001 prior to the implementation of POS initiative

1. Strong reputation2. Leading retailer between 1990-19973. Highly knowledgeable product

managers4. Nation-wide operations(42 states)

Strengths

1. Store office operations2. Circuitous authorization methodology3. Insignificant IT capabilities4. Flawed revenue growth strategy(failed

to factor in key issues)5. Outdated product line

Weaknesses

1. Gap Inc. ,Eddie Bauer , and Pluto2. Walmart in the low price segment3. Depreciating gross margin4. Dismal sales and attrition5. Burgeoning debt

Threats

1. Leverage IT at store level2. Optimize authorization process3. Improve Customer interaction- CRM

implementation4. International markets

OpportunitiesPosi

tive

s

Ne

gati

ves

Problem statement

Problem: Clothes R Us is a retailer of hip and affordable apparels across 400 stores in 42 states in USA. Recently, the

company has been losing market share to competitors and has doubled its debt. The “as-is” store processes require the

manager to spend about 75% of his person day in reconciling close outs, cash management, inventory tracking, and staff

scheduling among others. Also, the old-fashioned Point Of Sale(POS) systems have a circuitous authorization process that

routes transactions via 3 disparate servers consuming 30-45 seconds per transaction on an average.

Impact: This has resulted in the company facing a net loss of $123.62 million and reporting its first fiscal year loss in more

than 15 years thereby causing a significant financial burden on the company. Furthermore, the cash dividends shriveled by

83% to $12,857 in 2001 from $79,503 in 2000, making the stockholders lose confidence in the company.

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Problem statement

Problem: Clothes R Us is a retailer of hip and affordable apparels across 400 stores in 42 states in USA. The current store

processes require the manager to spend about 75% of his person day in reconciling close outs, cash management, inventory

tracking, and staff scheduling among others. Also, the old-fashioned POS systems have a circuitous authorization process

that routes transactions through 3 disparate servers consuming 30-45 seconds per transaction on an average.

Impact: This has resulted in the company doubling its debt with a net loss of $123.62 million and reporting its first fiscal year

loss in more than 15 years thereby causing a significant financial burden on the company. The competition from Walmart is

intense in the low-price segment, which happens to be Clothes R Us' primary product segment. Furthermore, the cash

dividends shriveled by 83% to $12,857 in 2001 from $79,503 in 2000, making the stockholders lose confidence in the

company.

Proposal: The company looks to address this issue by freeing up the store manager’s time and automating cash

management processes via enhancing the IT capabilities at the store level to promote increased sales.

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Project Management Canvas

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The canvas talks about the overall planning of the project

Resources

Core Team• Nancy Orlin- CIO• Product ManagersStakeholders: • EMT• Operations Steering Committee• Executive Oversight Committee• Product Management Team• Store personnelABC Consulting team• Marcus Nord- Program Manager• Ben Richards- Deployment Manager• Rich Burke- Infrastructure Manager• Linda Hansen- POS Project Manager

Activities

Phase1: PlanningDecide monitoring andreporting parametersPhase2: Development• Define system objectives• Develop data and

software architecture designs

Phase 3: Implementation• Prepare Functional and

ancillary requirements• Design UI and system

interfaces• Code -• TestPhase 4: Deployment• Phased roll out beginning

with pilot stores

Deliverables

• POS and Credit Systems• Store management suite• CRM data interfaces to new CRM• Inventory data interfaces to

corporate inventory legacy systems

• Extension of email services• VOIP at stores and HQ

Goals

• Optimize store manager’ s man hours

• Automate cash management processes at store level

• Provide on-network connectivity allowing dynamic processing

• Bring down credit authorization processing times

Benefits

• $15 million per year• $20000/ year/resource in

salary and benefits• $11000/ year savings through

back office applications

Capabilities• Insignificant IT resources & systems• Highly knowledgeable Product

Managers

Cost Risk /BenefitsDelayed Sign-offsEmployee PoachingWorldCom debacle

Performance Measures/metricsCost impact Control ratio Schedule impact Monthly Total planned expenses

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Project Timeline

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The project timeframe is illustrated by means of a Gantt chart

June Jan Feb

Project Commencement

Review meeting

Jan 2002

Feb – Apr 2002

Planning phase

Product Definition & Architecture

Implementation

Completed on time

Mar April May Jun July Aug Sep Oct Nov Dec Jan Feb Mar April

2002 2003

May – Dec 2002

Jan – Apr 2003

Completed with delays At Risk

Deployment

Project Goals & Associated Benefits

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Free up the store manager to work the store instead of the store office

Automate cash management processes to include credit/debit at store level

Provide on-network connectivity

Allow cross-store inventory checking and reduce authorization times at POS

Increased Man hours(66% more time ) in the store operations

Savings to the tune of $20k per resource and

increased Customer satisfaction

Real time processing of sales data and increased efficient utilization of resources

Improved productivity and lesser waiting times

for clients from 30-25 seconds to < 5 seconds

Benefits

POS

Benefits Cascade Map

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• Store managers to spend 66% less time than earlier• Savings to the tune of $20k• Increased employee efficiency• Reduced Authorization times to less than 5 seconds

This will occur on a daily/ yearly basis

EMT and Consulting firm

• New store management suite• Automated electronic messaging ,email, and VoIP• POS ,credit systems, and CRM

• Store Manager• Customers & employees• Business stakeholders

Yes, Store managers will spend 1.5-2 hours per day as opposed to spending 6 hours per day

• Measured in man hours• Employee efficiency• CSI• Processing times• Sales figures

• Improved CSI• Long term savings of

$37k/year/store• Increased sales figures

WIP

Will be achieved in a span of 1 year by implementing new system capabilities by associating with ABC consulting firm

What?

When?

Who ?

Change?

Who? How & When?

Achieved?

How More?

Quantifiable?

Strategic fitment of benefits

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Benefit Parameter Strategic Fitment Achievability

Good Fit

Adequate Fit

Poor Fit Easily achievable

Achievable

Difficult to achieve

Store Managers spend66% more time than before working the

store

Very Very. Needs additional capability. Has to outsource to a consulting

firm.

Savings to the tune of $20k per resource and

increased Customer satisfaction

Very Very. Needs additional capability. Has to outsource to a consulting

firm.

Real time processing of sales data and

increased employee efficiency

Yes Very. Needs additional capability. Has to outsource to a consulting

firm.

Reduced Authorizationtimes to less than 5 seconds – Improved

productivity and lesser waiting times for

clients

Very Very. Needs additional capability. Has to outsource to a consulting

firm.

Strategic fitment Achievability factor

Their strategy was to reduce operating costs, increase sales by multiplying stores , improve customer satisfaction

Thank You

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Situational Analysis-2

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The company went back to the drawing board to perform a SWOT analysis

1. Strong reputation2. Leading retailer between 1990-19973. Highly efficient managers

Strengths

1. Store office operations2. Circuitous authorization methodology3. Insignificant IT capabilities

Weaknesses

1. Gap Inc. ,Eddie Bauer , Walmart, and Pluto

2. Limited schedule for additional changes and delayed sign-offs

3. Product managers lack of focus4. Hardware-software incompatibility5. Deployment deadline slippage

Threats

1. Leverage IT at Store level2. Optimize authorization process3. CRM implementation4. Revenue increase to the tune of $15

million

OpportunitiesPosi

tive

s

Ne

gati

ves