The summer fashions in retail industry-specific packaged applications hit the runway this week at the Retail Collaborative Supply Chain conference in New Orleans.
Niche players such as Richter Systems, Retek Information Systems, and recently acquired PeopleSoft division Intrepid Systems rolled out new releases of their software products designed to make it easier for retailers to manage their inventory and supply channels.
Meanwhile, enterprise resource planning (ERP) powerhouses such as PeopleSoft and SAP were on hand to showcase their latest offerings for the shopping world. SAP and PeopleSoft in the past year have launched retail-specific versions of their back office management software systems, hoping to crack open the $3 billion market.
Until recently the retail market was all but closed to those selling prefabricated applications, as companies such as Wal-Mart built their own proprietary systems. Richter, Retek and Intrepid found pockets in large corporations to play in but with sales hovering in the $20 million range, none were large enough to take on full-scale, enterprise-wide implementations for customers the size of a Wal-Mart or Kmart.
But retail is now quickly becoming a fierce battleground for vendors up and down the chain as ERP vendors to supply chain management and planning software vendors such as Manugistics and i2 Technologies eye retail as the next big revenue pool.
In fact, the trend drove PeopleSoft to ante up nearly $58 million to buy longtime partner Intrepid. PeopleSoft's plan is to meld its core human resource, supply chain management, and financial systems into Intrepid's merchandise management and decision support modules. The result is a comprehensive package of applications covering most the needs of the retail industry, PeopleSoft executives hope.
For its money, PeopleSoft will get Intrepid's expertise, customer list, and product line of which a new version was released this week in New Orleans. Intrepid's Evolution 4 was rebuilt with PeopleTools, PeopleSoft's development environment. It is designed to easily integrate with PeopleSoft's human resource, financial, and supply chain management applications.
Richter, based in New York, is releasing Merchandiser 5.0. It includes support for multiple currencies and languages, a value-added reporting system, improved support for transferring inventory between numerous stores and sites, and an improved graphical interface.
Retek, a Minneapolis-based division of HNC Software, is brightening up its software system with a little Brooks Brothers style. Retek codeveloped with Brooks Brothers Retek Store Operations-RF. It is a software system that uses handheld radio frequency devices to link store employees to corporate databases. It is meant to allow stores to more easily manage inventory by doing back office work on the store floor while still being visible to customers wandering the racks.
Up until now, if a Brooks Brothers or other retailer wanted such functionality, it would be on its own to spend the research and development money to build such a system. But analysts said the business is changing as big software vendors such as SAP and PeopleSoft push further into the industry and spend the money to give users the functionality they want.
"Many retailers historically have established competitive advantage by developing their own software," said Dennis Byron, analyst at International Data Corporation in Framingham, Massachusetts. "The thing pushing them to packaged applications now is the supply chain effort driven by manufacturers who want to hook everything up to their system from point of production to point of sale."
Tom Friedman, editor of Retail Systems Alert in Newton, Massachusetts, agreed, adding that retailers now also are turning to packaged applications because they actually have choices. He explained that the push by packaged application vendors such as PeopleSoft and SAP into the retail industry stamps retail as a viable market for which other players can develop products.
"Now you have SAP with a retail-specific group, PeopleSoft with a retail-specific group,'' Friedman said. "We have JDA, which always had a retail specific product that is becoming more of an enterprise product."
JDA two weeks ago took over Comshare's merchandise management and decision support application package to bolster its offering. And German giant SAP began its push into the U.S. retail market a year ago after several years of selling products to European retailers. So far, SAP's U.S. customer base is limited with Sara Lee's hosiery division, Reebok, and VF Corporation, which makes Wrangler and Lee brand jeans, leading the way.
But analysts say all the players have a good shot at taking on some of the $3 billion market, which has barely been penetrated by anyone. And it will likely be by buying up niche players such as Richer and Retek, Friedman said.
"They are all going to be bought up. They can't make it on their own," Friedman said. "How do you compete with PeopleSoft?"