Question

GoodClothes and MIS: Case from struggle to revamp

Headquartered in Dubai, GoodClothes is a highly successful department retailer offering completely designed casual clothing and accessories. The company operates 10 stores in all seven emirates and 1 store in Al Ain. The company owns 6 stores and franchises 5. For some time, marketing managers targeted population between the ages 40 and 60 who like loose, comfortable clothes. Then, management was tempted to stock its stores with clothes for a younger population as well. The disconnect between the new items and the marketing strategy became clear. A new customer loyalty program failed. Sales figures fell. Apparently, GoodClothes had lost touch with its best customer. The apparel retailer needed to reconnect with them. The 27-year-old retail chain had to make remedial steps.

Since the early 1990’s, GoodClothes made some efforts to learn more about its customers and identify their buying preferences. In the early 1990’s, management launched the Passport Loyalty Program (PLP). Such programs work similarly to airlines’ frequent flyer programs. In stores, the principle is that the more you buy, the more discounts and gifts you get. PLP offered 5% discount to customers who spend more than AED 5000 annually. Still this effort and the effort to obtain more useful information about customers were ineffective.

Besides pleasing members of the program, PLP system had little effect on management’s ability to receive business intelligence. To manage data, company used DBMS. The in-house software developed over DBMS did not allow GoodClothes managers to drill into the company’s rich transaction details. They could not learn how many or what kinds of items were sold to which customers at which of the 11 stores. Not surprisingly, by the mid 1990’s management decided simply let the program die.

In 2016, top management launched a major growth initiative, including plans to open new stores at the rate of 5 stores each year. GoodClothes executives decided to revive PLP, but they knew that they could not execute the growth program without an effective way to analyze customer information. What good is a program such as PLP if management cannot get useful information from it? The executives knew they had to find more about the chain’s better customers to help with the growth. They decided to embark on a Cross Platform Business Function Tools (CPBFT).

So GoodClothes launched a CRM (as part of CPBFT) initiative and revitalized a failing frequent-shopper loyalty program to reconnect to its regulars, get useful information from employees and store it in a place for useful insights and reconnect with partners. Now, most merchandising, marketing and promotional efforts are directed squarely at GoodClothes best customers. The result has been fewer fashion errors in GoodClothes stores and more activity at the cash register.

"We weren’t talking directly to [our core customer] anymore, and by not doing that, we lost focus," said Ahmad, director of direct marketing for GoodClothes, in Ajman. "Had we had the CPBFT at the time, we never would have strayed."

A growing number of retailers and companies across many industry segments are using CPBFT technology to not only get in touch—or in GoodClothes case, back in touch—with their best customers but also to drive increased sales. Through initiatives such as loyalty clubs—which reward customers meeting certain purchasing criteria with discounts, special gift offers or personalized one-on-one service—experts say companies such as GoodClothes are trying to boost the buying frequencies of their best customers.

In GoodClothes case, the strategy appears to be working. Since it went live 16 months ago with only CRM package (as a part of CPBFT), the company has increased the number of customers eligible for its PLP from 30,000 to 260,000, and that group now accounts for more than 58 percent of GoodClothes total sales, up from around 8 percent in the 1990s. And all this volume has pumped up GoodClothes financial performance: Revenues soared 45 percent to $155 million in fiscal 2016, then climbed 65 percent to $186 million in the first nine months of fiscal 2017.

Using CRM and RDBMS (as the customer data warehouse), GoodClothes is able to segment its customer base to find its best clients; identify buying trends among them to create cross-selling opportunities; and launch direct marketing campaigns, some via e-mail.

GoodClothes started its customer database with the 30,000 members of the original Passport program. Since August 2017, the retailer has tripled the size of the data warehouse to 1.7 million customers, including those in the expanded PLP. GoodClothes has begun collecting customer information from multiple channels, not just in-store sales. Last May, GoodClothes began selling products online at www.GoodClothes.com. Transaction data from these new touch points is also fed into RDBMS, so GoodClothes has a complete view of its best customers regardless of where they shop.

Using that customer warehouse, GoodClothes has run 10 targeted promotional campaigns designed to increase the buying frequency of its best customers as well as incite customers close to PLP status and new prospects to shop more. These clients and prospects are mailed glossy, 10-to-24-page catalogs that showcase new GoodClothes fashions each month, along with coupons offering 50 percent off any item as long as customers spend AED 350.

But GoodClothes hasn’t been using the CRM and customer loyalty programs data just to improve marketing. The company also uses the systems to help determine where to locate new stores and which merchandise to stock in which locations based on purchasing patterns in each emirate.

Bottom line, Ahmad said, GoodClothes merchandise and marketing are now a better fit for the company’s best customers. "Our numbers show that were talking to the right customer at the right time. And the fact that we know a little more about her has helped us across all departments," he said.

But other problems are gearing at GoodClothes. The companies who supply clothes to GoodClothes are increasing costs. This pressurizes GoodClothes to also increase the cost. If this happens, GoodClothes consumers might shift to other brands. GoodClothes need to define the strategy for “switching costs”. GoodClothes are also worried about threats from other similar products available. “We do not want to fall in the same trap again”, said Maryam, merchandise manager at GoodClothes.

Another worry for GoodClothes is increasing costs from supply chain. The order received at GoodClothes is not matching with the order delivered. Upon enquiring, “We found that the suppliers are not receiving the correct order”, said Sana, SCM Manager at GoodClothes. “The orders we deliver is what we get from the companies, we are not at fault”, complains Harry, Manager at ABC cargo. ABC cargo was recently added into GoodClothes to pick up material from Jebel Ali GoodClothes warehouse. Khalid, Manager at GoodClothes warehouse is worries as the order he receives also does not match with either GoodClothes order list and ABC cargo list. “I am worried too, and needs to look into matter. After all, it’s me who is blamed for no reason”.

“We are giving suggestions for improvement, management listens, notes our points, but nothing happens”, says an agitated anonymous employee at GoodClothes. “It’s we who talk to consumers, getting feedbacks, feeding into system and expecting a response. We are not getting any response, are we at fault?”, claims Zeena, salesperson at one of the stores at GoodClothes.

Hearing to this news, GoodClothes just unveiled news that under its new chief executive officer, Shelley, the company has been implementing new initiatives setting up for success. Due to a letter from the company to its shareholders that surfaced, the company has moved forward and shown progress in these plans.

The letter shows that Shelley has been able to implement a new strategy that will drive the company’s growth and profits. Under her leadership, the company has launched a comprehensive review of its operations. Additionally, Shelley highlighted operating improvement opportunities and focus areas for GoodClothes. These focus areas include more consistent growth, accelerating margins, and fortifying relationship with both new and existing customers. The company also has realigned their marketing and digital commerce functions. A direct result of this action shows approximately 14 million dollars of expected annualized cost savings. These are all actions from Shelley’s focus on financial, operating, and strategic plans.

Also, the company recently announced four additional initiatives in May and making changes to the Board of Directors. These initiatives include improving GoodClothes supply chain, non-merchandise procurement and marketing. Ultimately, the goal of these initiatives is to save the company money. The estimated amount of annual cost savings from these three areas is estimated at 50-70 million dollars. Aside from the initiatives, the company also stated that board member changes are essential to the brand’s growth. GoodClothes hired Bonnie Brooks and William Simon to their Board of Directors because of their relevant skill sets for the job. Allowing for these changes proves GoodClothes is moving forward with its new business plan. Finally, Shelley wants to focus on IT and its implementation at strategic decision making, “We need KM, DSS and ES to be implemented, and that too quickly”, said Shelley smilingly.

GoodClothes also plans to be an Omni-channel specialty retailer of sophisticated clothing with casual-to-dressy clothing, accessories, and intimates. Expanding and growing the company only means more growth and exposure for these three house brands as well. The company also plans to expand its e-commerce site that also sells their individual clothing. Although the company is still in motion with its new strategy, only time will tell if its efforts are successful.

Question

Identify the issues GoodClothes are facing from supplier side. Do you agree at this point of time, GoodClothes need an SIS (Strategic Information System) to resolve the issues from strategic perspective? Can SIS be also used along with CRM to decide on locations of new stores. What information would you need for this type of decision making?

Answer 1

Answer :

GoodClothes, headquartered in Dubai, is a prosperous retailer with professionally crafted casual wear and accessories. In the seven emirates, the company operates ten stores and in Al Ain one store. GoodClothes supplier companies are increasing their costs. good clothes are also forced to raise prices. GoodClothes consumers could switch to other brands if this happens. GoodClothes must describe the 'cost-shifting' strategy. The order received by GoodClothes doesn't match the order received. The order received by GoodClothes does not match the order delivered. The right order is not received by suppliers are the major challenge for the organization.

Strategic management is the technique by which the organization can plan its future operations strategies; ie other words, the SIS is an information management system and a policy decision-making facilitator. The word "strategic" implies the long-term existence and the broad degree to which the exercise can support the organization. This helps to establish partnerships between suppliers and clients.It can be used to lock suppliers and customers or to construct switching costs (which makes switching to competitors more difficult for suppliers or customers ).Customer relationship management is a system hatch that aims at improving customer relations, finding new customers and retrieving old customers. This system can be incorporated with software that enables customer information processing, coordination, and management. It can be integrated into the new stores' strategic information system.

Your position in your shop should be such that it still draws a lot of traffic. Have a personal feeling of this place and see how people respond to the environment. Your position should suit your unique style and image. When you are a retailer, you want a conventional company. Build a mission statement and keep looking back at it while you expand your business. Your original entrepreneurial vision and grassroots mentality are so important to retain. That is the reason why you have started your business first. This is what keeps you competitive. You must reach the communities before opening to create awareness about brands and word of mouth.