A return to its classic roots has made Talbots Inc. one of the hottest retailers in North America. And fashionable upgrades to its core business-management systems are expected to help the women’s apparel chain squeeze out more profits.
The 53-year-old retailer has rebounded from a disastrous 1997, when it experimented with trendier styles in an unsuccessful attempt to attract younger buyers. Hingham, Mass.-based Talbots is now on track to achieve record sales and earnings and is forging ahead with plans to increase its number of stores from 686 to more than 1,100 by 2005.
Talbots executives recognized that to execute those ambitious plans, they couldn’t cling to the mainframe-based systems and home-grown applications that had been running the business for more than two decades. So they boosted the information technology budget 30.5 per cent in 1998 and another 21.8 per cent last year to invest in leading-edge technologies.
So far, those investments have included a merchandise planning system from JDA Software Group Inc. in Scottsdale, Ariz., that’s more flexible and allows for more detailed analysis than Talbots’ old spreadsheet-based approach; PC-based point-of-sale terminals from IBM that will let Talbots develop more customer-oriented services; an e-commerce site built on Microsoft Corp. technology; a Web-based replenishment system; and a more user-friendly customer service system.
The new customer service system is faster and has more features than the previous system, say early users. “If you’re trying to find other things to go with (an article of clothing), it’s great,” said Jennifer Lambert, who recruits temporary help at Talbots.
“Two years ago, we were a 100 per cent mainframe-based shop. Today, somewhere between 50 per cent and 60 per cent of our functionality comes from the mainframe,” said Randy Richardson, who joined Talbots two years ago as senior vice-president of information services.
Retailers have traditionally been slow to scoop up new technology, and for some, “it’s perfectly acceptable to leave in 30-year-old systems and build on top of them,” said Janet Suleski, an analyst at AMR Research Inc. in Boston. But Talbots’ expansion provided a prime opportunity to adopt new technology and address its needs for “more robust and scaleable systems,” she added.
“Prior to their bad year, they were really successful because they read the fashion (trends) correctly for their type of customers. Quite frankly, they could live on less-than-adequate IT infrastructure because they got the fashion part of it right,” said Brian Hume, president of Martec International Inc., a retail consultancy in Atlanta.
But going forward, IT should play an important role and impact the bottom line, Hume predicts. For instance, Talbots’ merchandise planning system should reduce out-of-stock situations and lost potential sales, and its new data warehouse from Retek Inc. in Minneapolis will bring critical customer-trend analysis. Supply-chain management will also be key.
“You have to reckon about two years before you see any real paybacks from any of these projects,” Hume noted.
Talbots found itself falling behind some prominent technology-savvy retailers, such as The Limited Inc. in Columbus, Ohio, and The Gap Inc. in San Francisco, according to Hume. “Basically, if you’re that far behind, you’ve got to do something very fast,” he said. “It’s not a case of catching up. You’ve almost got to leapfrog.”
Finding the Right Fit
While retailers have increasingly turned to technology to stay competitive, Richardson has no illusions about IT’s impact on Talbots’ success. His 17 years of experience with retailers, including 10 years at The Limited and four years as CIO at AnnTaylor Stores Corp. in New York, have shown him that IT “typically adds only a little bit to the (financial) picture, and profits rise because the merchandise is clicking,” he said.
“Unlike a hard-goods retailer, there is so much art associated with this business,” Richardson said. “What IT allows you to do is exploit the ups, and (it) gives you a safety net for the downs.”
Laying the foundation for the day when they would play a greater role in exploiting the ups, Richardson and his troops recognized that technology was only one piece of the puzzle. The tougher job was changing the culture of a largely Tampa, Fla.-based IT staff that had grown distant from business colleagues up north. The IT staff also lacked the procedural discipline to pull off the rapid-fire development projects it now regularly delivers.
“When Randy came in here, I can remember he sat down with the three of us, and one of his first questions was, ‘What projects are you working on?’ And we couldn’t answer that question,” said Jon Wendell, a 14-year Talbots veteran who is director of the Tampa data centre and reports directly to Richardson, along with Carol Hewitt, director of application systems development.
“We had multiple directors within applications and sometimes even within the applications group. We wouldn’t know what the retail side was doing vs. the catalogue side. They could be working on projects, and we could be duplicating our effort over here,” recalls Hewitt, a 12-year veteran.
But that has all changed. Richardson brought in a sophisticated project-management system and promoted a more disciplined, collaborative approach. He also encouraged IT staffers to use videoconferencing to bridge the gap with the Hingham-based staffers and asked them to log more air miles to be closer to end users.
Since he flies every week, spending two days in Hingham and three in Tampa, Richardson said he figures no one can complain about travel. He said he wants his 130-person IT staff to think of itself as a business unit rather than as a technology unit.
“We’re approaching it from a business perspective first,” he said, “and supporting that perspective with technology.”