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“Stop renovating and build it from scratch!”

Interview with Michael Tsifidaris, Founder and Chairman KPS AG

What is the best defense for bricks-and-mortar retailers against attacks from digital pure players?

The key question conventional physical retailers need to ask themselves is: “How do I integrate e-commerce, customer relationship management and traditional enterprise resource planning into a single system and leverage the opportunities that arise as a result?” Without serious service and process innovations, retailers are missing the chance to start a new dialogue with their increasingly mobile customers and boost brand and customer loyalty.

So you’re talking about building omnichannel capabilities in the retail space?

There are a lot of retailers that have mastered the scenario with online purchasing and in-store collections or returns. Omnichannel is about more than just servicing customers across all channels; it’s about getting to know them personally. Retailers need to provide customers with a personalized experience at every single touchpoint: in the retail outlet, on social media and in the call center, and set up systems to sync every customer, stock and order movement in real time.

What strategies are retailers using to address these challenges?

We are seeing two basic coping strategies. The first is to rush into hasty, piecemeal solutions: phase one, open a webshop; phase two: get on Facebook; phase three: build a cross-channel system to enable online purchases and in-store collection. The second strategy takes a different approach: build a completely new retail platform and avoid the complexities and restrictions of their legacy system landscape.

KPS is advocating a radical solution: build a new retail platform from scratch instead of tackling individual projects one-by-one. Why?

With the classic piecemeal approach, companies break the solution down into individual projects, but that can only take you so far. So, you’ve got your web presence, you’ve built up a customer loyalty program and you’re on social media, but the cracks start to show in the classic approach when it comes to synchronizing every goods movement and every customer movement in real time. And it keeps getting more and more expensive to maintain the status quo. With the sophisticated standard software solutions on the market today, retailers can build 80 to 90 percent of their new platform right out of the box. That means you can stop throwing money at tinkering with a legacy system and invest instead in a brand new build. All of the tools – and above all the IT systems – that are giving digital pure players the advantage will be at your disposal, without having to factor in the limitations of a legacy system. You will be better equipped to use the expertise you’ve acquired to drive success and turn the innovative processes and ideas you come up with into reality, without the old systems holding you back.

What kind of time and cost benefits are we talking about?

For the past 15 years, KPS has been all about finding novel ways to speed up the transformation process. It takes us about 6-12 months to map a retailer’s entire process stream into a prototype and 24 months at the most to complete the new architecture. According to our estimates, companies can gain up to a 50 percent advantage in turnaround time and cost benefits with our approach. Of course, it’s the fast turnarounds that appeal to our customers.

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