After selling its products through mom-and-pop retailers, Ashley Furniture Industries made the strategic decision ten years ago to open its own brick-and-mortar stores. Since then, the company has grown into the top-selling furniture store brand in the world and the number one retailer of furniture and bedding in the United States.
To support the shift to running its own retail stores, Ashley Furniture built its own retail management system. But by 2011, the system, which had been in use for 11 years, was beginning to show its age and struggled to keep up with the company’s rapid growth.
At the same time, Ashley Furniture was starting to expand globally, and needed to localize many of its systems’ capabilities—including the homegrown retail management system.
Choosing Microsoft Dynamics
Rather than undertake the task of localizing its retail management system, leadership at Ashley Furniture began looking at commercial systems that could support global growth, considering both Tier-1 enterprise resource planning (ERP) systems and smaller, localized solutions.
|As we grow from a $4 billion a year company to a $10 billion a year company, Microsoft Dynamics for Retail will be there, helping us open stores at the rate we need while supporting our shift to omni-channel retail—something that no other furniture company is doing today and that will help us differentiate from the competition.|
| Bob White|
Executive Vice President and CIO
Ashley Furniture Industries
“We began looking at regional solutions,” says Bob White, Executive Vice President and CIO of Ashley Furniture. “But we realized that supporting numerous separate local applications would create problems for IT. What we really needed was a single solution that could support multi-currency, multi-language, and the unique financial requirements for each country.”
With these requirements in mind, Ashley Furniture then considered Oracle Retail. But after reviewing the solution for five months, it became clear to Ashley Furniture that the Oracle solution posed several challenges. These included its high cost, Ashley’s lack of access to the system’s source code, and a perceived lack of commitment to the retail space from Oracle itself.
On the other hand, Ashley Furniture understood that Microsoft Dynamics for Retail could support its broader retail management needs—without the challenges posed by Oracle.
In addition, Microsoft Dynamics for Retail had one critical attribute that made it stand out among the competition. Says White, “The most important factor for us in choosing Microsoft Dynamics for Retail over Oracle Retail was the immense investment Microsoft was pouring into its product on a continuous basis. We appreciate Microsoft’s commitment to both the product and the industry, and know that the solution will continue to grow with us and get better over time.”
Initial Rollout and Future Plans
While initially working with a Microsoft partner to drive its rollout of Microsoft Dynamics for Retail to two of its retail operations in China, Ashley Furniture has since engagedMicrosoft Services to help with one of its much larger initiatives.
“We’re looking at growing from a four billion dollar a year business to a ten billion dollar a year business by 2022,” says White. “To grow fast and smart, we need an infrastructure in place that can support us. This meant completely replacing our existing retail management system with Microsoft Dynamics for Retail.”
In addition to replacing its existing system, the company also had two business challenges it sought to address: speeding the in-store checkout process (which could take from 30 to 45 minutes) for customers, and appealing to a broader demographic. To achieve the latter, the company pursued an omni-channel retail solution that was, as White puts it, “Compelling, engaging, and personalized to the tastes of anyone from the age of twenty to eighty.”
Jeff Paynter, Vice President of Omni-Channel Retail Systems for Ashley Furniture, points to the capabilities of the solution’s latest release. He says, “With Microsoft Dynamics AX 2012 R3, we can leverage the commerce runtime API layer to open up the architecture. In this way, we can create a shopping cart in one channel and then migrate it to whatever channel the customer happens to be using at that moment.”
By taking advantage of the solution’s API, Ashley Furniture also understood it could connect the solution to its back-end systems, including those for warehouse management, supply chain management, and transportation. By doing this, the company could then provide pricing, availability, and delivery information directly to its customers or sales staff working the showroom floor.
Up Close with an Omni-Channel Retail Solution
Slated to go live in 2015, Microsoft Dynamics for Retail will function as the business logic and single repository of customer and sales information behind the company’s many sales channels—new and old.
|Being able to work directly with Microsoft Services—and, as a result, have a direct line to the solution product team for —is critical. It allows us to pull in experts as we need them and weigh options so we can quickly make decisions on how to build this solution.|
| Jeff Paynter|
Vice President of Omni-Channel Retail Systems
With the new solution, a potential customer will be able search for the particular piece of furniture she wants on the Ashley Furniture HomeStore website by using a range of criteria. After the customer finds the piece—for example, a sectional sofa—the site presents a package of related items to fit a room, as well as related promotional items, such as coupons. The customer can then either add items to a shopping cart or to a wish list after undergoing a short registration process, which includes the ability to opt into email or text notifications for upcoming specials and promotions. If that same customer decides she wants to try out the furniture before buying, she can visit the nearby Ashley Future HomeStore.
Future plans for merging the physical and digital domains include an Ashley Furniture app, which will draw on the customer’s account information and wish lists to direct customers to specific pieces within the retail stores, or use proximity awareness to push out coupons for nearby items. Customers might even use the app to scan QR-codes on individual pieces of furniture to bring up related information such its dimensions or how to care for the product.
Of course, for customers that don’t download the app, a salesperson can still help with the buying process. And by using a tablet that draws on information from the underlying system, the salesperson can view the customer’s wish list and take her to view the product.
Because the retail system is connected to the company’s warehouse management, logistics, and transportation systems, the salesperson could even inform the customer when the product would be delivered should she buy it right then—information that would also be available to the customer via other channels, including the web.
Armed with a credit-card reader and a financial transaction application, the salesperson would also be able to close the deal on the spot, without having to go look up information at a computer terminal or collect printouts.
If the customer is still not convinced—for example, if she needs to go measure a room or consult about the big-ticket purchase with her spouse—the salesperson can email a confirmation code to her, enabling her to click the link later that day, or that week, to complete the purchase.
Replacing its legacy retail management system with Microsoft Dynamics for Retail, Ashley Furniture aims to grow its annual revenue to U.S.$10 billion by 2022, shorten its in-store sales cycle to only a matter of minutes, and make its brand appeal to a wider demographic. Helping the company reach these goals, Paynter points to the benefits of the company’s relationship with Microsoft Services. “We have a non-standard business model,” he says. “Not only do we have our retail stores, but we also have licensees. On top of this, there are many other intricacies to the way we do business. Being able to work directly with Microsoft Services—and as a result, have a direct line to the solution product team —is critical. It allows us to pull in experts as we need them and weigh options so we can quickly make decisions on how to build this solution.”
Enable Multi-Billion Dollar Growth
|Customer buying habits will change. But by having an open architecture, we can plug our business capabilities into whatever new customer touch points might come in the future.|
| Jeff Paynter|
Vice President of Omni-Channel Retail Systems
Supporting such considerable growth in revenue, Ashley Furniture sees Microsoft Dynamics for Retail helping in two major ways. First, the solution will give the company the scalable platform it needs to support expansion from around 500 retail locations to potentially thousands in the coming years. Second, the solution is flexible, enabling the company to support new sales channels, such as those enabled by mobile apps.
Says White, “As we grow from a four billion dollar a year company to a ten billion dollar a year company, Microsoft Dynamics for Retail will be there, helping us open stores at the rate we need while supporting our shift to omni-channel retail—something that no other furniture company is doing today, helping us differentiate from the competition.”
Speed In-Store Sales Cycle
By using a single retail system, Ashley Furniture also aims to dramatically shorten the in-store checkout process for customers.
Says Paynter, “Furniture is a big-ticket item, and the checkout process today takes as long as 45 minutes as the salesperson manually enters the SKUs, which they have to copy down from signs or merchandise as they work with customers. With the new mobile POS system our goal is to cut that time down to 5 or 6 minutes by allowing the salesperson to build the shopping cart in real time while the customer walks through the store, and then simply do a final review and check the customer out at the end.”
Expand Customer Base
Although it generally attracts an older demographic, Ashley Furniture believes that by providing customers with a buying experience that can map to their own, unique shopping styles, the company can then attract a wider range of customer types. Of these new customers, Ashley Furniture is most excited by the prospect of targeting digitally connected consumers by providing the option to shop via smartphone, tablet, or home computer and then growing the relationship from there, turning younger buyers into long-time customers.
Support Continued Change
A major key to enabling omni-channel retail is the Microsoft Dynamics for Retail open API. But as Paynter notes, this open API doesn’t just mean the company can support the new sales channels of today, it also gives the company the confidence that it can support new channels that may arise in the future. He says, “Customer buying habits will change. But by having an open architecture, we can plug our business capabilities into whatever new customer touch points might come in the future.”
Meet Bob White
Working for Ashley Furniture for more than seven years, Bob White notes that the company has strived to put its destiny in its own hands. Although this originally meant investing in its own brick-and-mortar retail stores, it now means being able to further shape the future of the company through technology. Most recently, White has engaged Microsoft Services to help the company do just that. “We’re a manufacturer, not a software shop,” he says, “While Microsoft Services is providing architecture, system configuration, defining customizations, and even building a lot of those customizations for us, they are ultimately providing us with a strategy that will get us to self-sufficiency in the end.”
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Document published January 2014