To lure Europeans travelling within EU boundaries where shopping duty free no longer provided a benefit, the company turned to an impulse-driven range of tax free luxury products including sunglasses, watches, jewellery, travel accessories and souvenirs. According to the retailers most recent Annual Report, the new model is paying off with revenues now in excess of 407M in 2005/6.
Enabling World Duty Free to more profitably manage its business from head office to store shelf is JDA Portfolio solutions including Portfolio Merchandise Operations and Portfolio Planning and Forecasting applications.
Platform for a Single Version of the Truth
With its shops trading 365 days a year and many sites open 24 hours a day, accurate stock management is essential for World Duty Free. The retailer relies on Portfolio Merchandise Management (PMM) to address this requirement and cope with the varying product ranges demanded by a mixed clientele across a diversified enterprise. According to Jon Paton, World Duty Frees Head of Merchandising and Supply Planning, PMM enables the retailer to refine the mix of outlet types and brands to match the demand and flow of travellers passing through each of the airport terminals where their stores are located.
We replaced an outdated central merchandising system with PMM. PMM gives us a single version of the truth and full data integrity throughout our business, stated Paton.
Targeting Merchandise to the Demand and Flow of Travellers
Also benefiting the retailer is Advanced Planning by Arthur. Before implementing JDAs best of breed solution, planning was largely a manual, labour-intensive process that required analysis of flight patterns and passenger movements. As a result, World Duty Frees strategic planner was snowed under.
With JDAs Arthur software, Paton describes a completely revamped and improved process. The planning process starts with a shops financial plan, based on the expected number of passengers, the demographic profile and projected spend. A weekly departmental sales forecast generated at store level is matched to this model, allowing a team of merchandisers to create forecasts of future demand and then create fixed stock plans to satisfy both supply and demand.
We typically hold a maximum of eight weeks of stock throughout our supply chain, so its important to identify trends quickly and accurately to avoid over or under stocks, continued Paton. Arthur is able to automate much of the modelling to highlight potential problem areas and the entire system has helped to reduce out of stocks. The system also analyses the previous four weeks performance on a moving basis to create a weighted average and help smooth out anomalies and seasonal fluctuations.
For more effective store operations, World Duty Free is utilising Portfolio Store Portal, Space Planning by Intactix and most recently, Efficient Item Assortment by Intactix.
Store Portal has benefited us immensely by allowing our store staff instant access to PMM via the Intranet, so they too can see what stock is available, and if necessary, order more, remarked Paton. And with Space Planning and EIA, we are able to avoid ordering ten items when theres only space for eight on the shelf.
Paton provided additional benefits of the EIA implementation. EIA provides us the ability to analyse sales data and create profiles for each airport so that we can more easily identify best-selling ranges, and advise on how to deal with seasonal fluctuations, like the need for more sunglasses and sun-cream in the summer. Space Planning also gives us valuable hints about changing the facings and positioning of ranges to maximise profit, remarked Paton.