Direct and Quick Access to Clear KPIs With TARGIT
Message A/S, Denmark's premier fashion apparel store, has navigated itself through major structural changes and significant financial crises, all while increasing company growth. For the self-taught CEO, much of that is attributed to TARGIT Decision Suite's business intelligence and analytics for retail, an indispensable part of everyday management.
The fashion business is constantly in flux. If you don't change with it, your business is done for. At Message, CEO Carsten Lauritsen had hundreds of spinning plates to oversee to keep the organization on the right track and keep customers satisfied. Trends, talent, and intuition are still central components in the creative process, but according to Lauritsen, the key to good decisions and success in the fashion business is a constant flow of reliable statistics and systematic analysis of sales data.
"Most people would be surprised if they knew how big the difference is between facts and gut instinct in a company like ours," says Lauritsen. "As a CEO, my biggest responsibility is to find the right combination of facts and the designer's gut feeling of where fashion is heading."
Market Conditions
Today, Message has more than 100 full-time employees and produces ten fashion collections a year. That translates to nearly 20,000 products sold at 22 Message stores, numerous franchise partners, and 600 stores carrying Message products.
The company's brands are designed at headquarters in Denmark, produced in Asia, Eastern Europe, and Turkey, and distributed and sold in Scandinavia, Germany, the Netherlands, Belgium, and Luxembourg.
It's a logistical puzzle to coordinate all aspects of the process and to ensure that the right quantity of clothing reaches stores at the right time. To Lauritsen, it's a big challenge to find time to guide the business on daily tasks while still focusing on creating and implementing an overall strategy.
Lauritsen overcomes these challenges with the help of the TARGIT Decision Suite, which gives him direct and quick access to clear key performance indicators (KPIs). The advantages of using TARGIT's business intelligence and analytics solution spread from the top down through all parts of the organization.
"The fact that we have a very precise informational foundation for making decisions gives us a solid performance improvement throughout our company," Lauritsen explained. "In my opinion, TARGIT offers a solution that makes us sharper [in the issues that challenge us most]."
Results
Lauritsen estimates that the intelligent and close control of inventory, turnover, and production delivered improvements on the company's bottom line of about 20 to 30 percent.
"Just as important: we can keep stock levels 30 to 40 percent lower than before because of the tools TARGIT gives us. It's a tremendous improvement in efficiency."
The TARGIT solution allows Message to generate daily statistics on their inventories and individual products' turnover rates on a wholesale level, as well as in individual stores. On a daily basis, management gets statistics on the 10, 20, and 30 most popular styles. This gives Lauritsen a comprehensive view of what styles are hot and which ones aren't in just a few clicks, and he can adjust production and distribution accordingly.
"We're able to react very quickly, and we can adjust production runs in progress according to how the stock situation develops. This gives us a very direct hands-on control in our everyday processes."
In particular, the transparency that TARGIT offers is a significant advantage for an executive making organizational and strategic decisions.
"TARGIT makes it possible for me to run an efficient horizontal organization. I don't need to ask the employees to prepare material for me if I need to look into a problem. Previously, we had employees preparing statistics manually. It could take weeks to prepare a statistic that we now receive automatically. Now, I have the necessary facts at hand, I can get the problem solved, and carry on. This gives me great confidence in our decision-making. The precision and the frequency of the information ensures no statistics catch me off-guard."
Black is the New Black
The automatic stream of information and organization of data is a key reason why Message has been able to grow remarkably on turnover, in their markets, and through their distribution network without increasing the number of employees at headquarters.
During the global financial crisis, Message increased its turnover (profit) by 31 percent from 2008 to 2012. Gross profit grew 56 percent in that same timeframe, from $6.5 million to $10 million.
"The markets have changed a lot since the financial crisis. It has become more competitive, and consumers act differently – they focus largely on value for their money. Tight hands-on control is more important than ever," Lauritsen said. "Besides, there is quite a large growth potential in our existing markets and brands."
But even though the numbers for this five-year period look good, they also cover two difficult years of crisis that had major consequences for Message, and that demanded thoughtful and important decisions to get through.
Demand for fashion apparel was weak in 2009, and Message was forced to take over the operation of several franchise locations. At the same time, the challenging market situation meant Message had to sacrifice some prime international opportunities and end a number of brands to protect the bottom line. From 2009 to 2010, the turnover dropped 10 percent while the bottom line ran a deficit of $1.8 million. The following year, Message was back in black, and ended 2012 with a record high $2.2 million profit.
"I can assert that TARGIT's software, especially in the retail part of our business, was used very frequently when the financial crisis was at its worst," said Lauritsen. "It helped us quickly identify where the problems were and, at the same time, develop potential solutions for getting past them. For instance, when we had to make cuts, it was much easier and faster to make calculations with TARGIT on our activities, and this made us able to decide which to carry on with and which to stop. The numbers simply popped up and spoke for themselves. TARGIT contributed tremendously to certainty in the necessary and essential decisions."
