Multichannel Growth
When UGG Australia began evaluating how shoppers wanted to engage with its brand, the footwear company — best known for its popular sheepskin boots — decided to augment its wholesale channel and digital presence with freestanding brick-and-mortar stores.
“Retail [freestanding stores] allows Deckers to showcase the UGG product in ways that many of our partners may be unable [to do],” said Yul Vanek, VP information technology for Deckers Outdoor, the Goleta, Calif.-based parent of UGG, Teva and other banners.
Realizing the IT platform that served its wholesale direct-to-consumer business was not efficient enough to support a network of stores, UGG implemented a retail platform to manage all store-level transaction operations. But stores were just the beginning. With the advent of 24/7 retail, UGG shoppers now often seek information before making a purchase, and will jump online or pick up their mobile device before making a decision.
“Consumers want to interact with a brand like UGG on their terms, not anyone else’s,” Vanek said. “It is our responsibility to ensure that a premium brand experience is delivered consistently, and with ease across all potential touchpoints.”
The company started opening freestanding stores in 2008, and by 2010 was opening five to 10 locations annually. It picked up the pace in subsequent years, and also added units in Asia and Europe. (UGG currently operates 77 stores, including 22 outlet locations.)
It quickly became evident that a wholesale operating platform, supported by ad-hoc queries, manual spreadsheets, a homegrown e-commerce platform, basic point-of-sale capabilities and fulfillment driven by Oracle EBS (Redwood Shores, Calif.-based Oracle’s E-Business Suite), was not scalable enough to support this new business endeavor — especially as Deckers expanded the geographic reach of UGG and considered retail for its other footwear brands.
Since UGG is a global operation, the company needed a proven, centralized solution that provided operational consistency, and that could be applied across country borders without many customizations or replications. It also needed to deliver a low total cost of ownership.
The company chose the Oracle Retail platform, leveraging its merchandising, point of sale, planning and central office solutions, among others. Using a single centralized instance, the company integrates customer and transaction data, which is shared across planning, pricing and the RMS system. The integrated solution helps the brand manage its global operations, “and it sets the stage for the company to quickly deploy additional capabilities globally rather than support regional solutions on siloed platforms,” Vanek explained.
UGG went live with planning functionality during the first quarter of 2012, followed by store-level merchandising during the second and third quarters. By the third quarter, all stores across North America and Europe, the Middle East and Africa (EMEA) operating region were live on the complete functionality of the Oracle Retail platform. China and Japan will join these ranks early this year.
During the Black Friday holiday weekend, the platform delivered strong results, including “less inventory stock outs, a double-digit increase on conversion rates, and healthy sales across our full-price and outlet stores compared with the same shopping period last year,” according to Dave Powers, president, global direct to consumer, Deckers.
While the platform is still in its early stages of usage, UGG is already planning how it will play a role in the transformation of its business. The company is on the fast track, striving to hit 200 stores, and $600 million in revenue, by 2015. Simultaneously, the brand plans to begin blending its physical and digital channels to create a formal omni-channel operation. The platform will act as a framework for this endeavor.
Deckers plans to merge its online operation with the Oracle Retail suite by the middle of 2013 — a move that will support a seamless omni-channel experience.