Chico's will spend about $10 million implementing SAP for Retail in as many as 30 stores across the United States. The company, which is being highlighted at the Sapphire '06 user conference this week, said the investment is part of a plan to expand its Soma intimate apparel line to compete with Reynoldsburg, Ohio-based Victoria's Secret Stores Inc.
The company chose SAP over Oracle after a lengthy evaluation process that included business scenarios and demonstrations to more than 60 business users over the course of several months, said Gary King, executive vice president and CIO of Chico's, in an interview with SearchSAP.com. The company uses niche retail software from NSB Retail Systems to run its operations, but executives wanted to break away from the traditional best-of-breed mold among retailers, King said.
"It became clear through the evaluation process that SAP has put a lot of effort into their retail feature and function set, and it was […] their integration capabilities that put them ahead of others, including Oracle," King said.
Chico's has about 800 stores and sells exclusively designed, private-label clothing and accessories. The Soma line is being added initially at specific store locations and will later be generally introduced across all stores in the United States.
SAP and Oracle went on a shopping spree in 2005 to bolster their retail suites in what some analysts say signaled the end of best-of-breed among retailers.
King said SAP's various acquisitions didn't factor into his firm's decision. However, Chico's will continue maintaining some current applications, including warehouse management and point-of-sales, through NSB Retail Systems. King said the company decided to implement SAP on one of its brands rather than rolling it out across all its lines, to mitigate risk.
"We'll use Soma as an incubator for how SAP for Retail operates," he said.
SAP for Retail will be used for product development through sourcing, in the supply chain and for distribution out to the stores, King said.
The company began implementation in March. Chico's IT personnel along with consultants from Hamilton, Bermuda-based Accenture and SAP consulting services, will conduct the rollout, which will go live this summer. A test environment will be set up to give end users training and validation before going live, King said.
"The integration element really resonated with everyone, having lived in a best-of-breed environment," King said. "That common view of data across the company was important to us."
SAP and Oracle saw retail as a growth opportunity in 2005 and began buying best-of-breed retail software vendors. The shopping spree began with a bidding war for retail software vendor Retek, which was ultimately won with a $670 million bid by Oracle. Retek gave Oracle a big boost among retailers. Retek had about 200 customers in more than 20 countries around the world; its 2004 annual revenue was $174.2 million.
SAP followed up with the acquisition of Khimetrics Inc., a retail software vendor with expertise in profitability forecasts and pricing strategies. SAP also bought out Triversity Inc., which makes point-of-sale software for the retail industry, to block Oracle from building a fully featured retail suite.
Oracle also acquired ProfitLogic Inc. to bolster its retail suite among clothing retailers. ProfitLogic produces similar demand intelligence software for pricing, markdown and merchandising analysis. ProfitLogic's expertise has been mainly with clothing retailers.