IT Management

Efficient Processes and Appealing to Customers

The retail trade must invest in IT because otherwise it cannot meet customers’ demands, according to Zygmunt Mierdorf, Management Board Member at the METRO Group. The trading concern is a trendsetter for technological innovations in trade, which are tested at the group’s Future Store in Rheinberg, Germany.

Mr. Mierdorf, your Future Store caused a sensation three years ago when it made innovation in the retail trade a focus. What have you learned since then? At the Future Store we want to get a feel for what is possible. In doing so we have found out that customers are much more adventurous than we had expected—even across all age groups. But above all new technology must be user-friendly, like an iPod: It is best to have no more than four buttons. Another very important insight is that we need time to introduce our employees to the new structures because they must change how they work entirely.

What do consumers accept easily? Customers are particularly interested in speeding up the checkout process and in anything that makes it easier for them to find what they are looking for. As a result, self-checkout counters are very well-received, as are intelligent scales that recognize fruits and vegetables automatically through a camera. Also the networked information terminals are so popular that we are implementing them in our other stores in greater numbers.

What is the main driver for the retail industry to invest in IT? Is it to cut costs or to increase innovation, image, customer loyalty? There are two main drivers: On the one hand, there is shopping for supplies. When doing so customers expect to find what they need right away; they want to get through the checkout line and back home as quickly as possible. And then there is experience shopping—for example, when looking for clothes or consumer electronics. Customers talk with a sales associate about things like flat-screen televisions; they research them before buying.

The technology has to give consideration to both shopping situations. For the first one we need a thoroughly structured supply chain and a highly efficient, smooth process at the store. We must use our resources so that they achieve the greatest effect; after all, the retail trade is a low-margin business. So we are automating administrative processes and reallocating our employees to real value-added activities in customer service.

If you find a salesclerk in the department store who will help you, you will gladly pay for your purchase at a self-checkout! We are working on putting more people out on the floor. Automating our processes also makes them more secure, but data quality remains a challenge. Processes sometimes get hung up because they must be reworked to enter missing information manually. Our processes in the retail trade still include a lot of format conversions, and we have to get rid of them.

So gaining productivity is at the forefront of process optimization. We must work in both directions. Efficient processes are a basic requirement for keeping costs under control. The other side is more exciting of course: Investments in appeal, customer loyalty, customer retention. Something like the Smart Mirror: You select a hair color from the shelf, and then the device scans your face and shows you how you would look with it. These are emotional things in which technology is an important factor. If we speak of process optimization, however, we are still talking about the things that do not have to do directly with operational commercial transactions…

Such as? Corporate governance and compliance: How do we make sure that our processes are structured and documented so cleanly that we can prove if necessary that the decision paths have been followed and that there is a documented set of rules that precludes organizational failure and individual error? The management’s responsibility to investors is to plan security structures to provide risk-free processes. To do this we need systematic business process management, which we are now working on with IDS Scheer.

The process is the engine for change The business concept is the engine from which the processes are derived. You have to be constantly screening new technologies—while being aware of the processes: What fits or could fit in the future? There are two things to look at: What helps customers? What annoys them? What perturbs them the most? And: How can I help our employees? Nothing else concerns CIOs these days, because everything is largely standardized. They have experts on their team who negotiate with IT manufacturers and network operators. The crucial added value of CIOs really comes from their knowledge of the processes.

What do you think are today‘s greatest technological challenges? What would you like to see from the IT industry? Two or three years ago that would have been the interoperability between individual manufacturers. In the meantime this has increased a great deal. It is important to us to be able to integrate data from the back-end systems so that employees can access it from their workstations all at once.

Eventually, our employees should be able to handle all necessary work processes via single sign-on without having to think about which applications and systems are behind what they are doing. Your prediction: How will shopping change over the next five years? That is a short period of time. Even the most innovative store has a volume problem: We must equip 2,000 branches. I would be happy if we could roll out all the ideas that we have today within the next five years. •