IT vital to high-street e-commerce boost

Feature

IT vital to high-street e-commerce boost

Kingfisher plans to grow its online sales from £40m to £1.5bn in five years. Bill Goodwin finds out how

Paul Worthington is a man with two jobs, though sometimes, he says, it feels like three. Currently systems controller at Woolworths, Worthington is about take over as chief technical officer of e-Kingfisher, the new business unit that will drive the e-commerce strategies of Woolworths, B&Q, Superdrug and a host of other less well-known Kingfisher brands.

E-Kingfisher has been created with one immediate goal in mind: to expand Kingfisher's online sales, through the Internet, interactive TV and wireless application protocol (Wap), from £40m a year to £1.5bn by 2004. This 40-fold increase will mean that e-commerce will grow to account for 10% of group sales.

As chief technology officer, Worthington's most important task is to make sure that the retailers in the Kingfisher group have the IT in place to realise these ambitious plans. To help him, Worthington will have between 15 and 20 central IT staff at his disposal alongside the IT expertise within the individual retailers.

The hope is that Kingfisher will be able to enjoy the best of both the dotcom and bricks-and-mortar worlds. By pooling their resources, the Kingfisher brands will be able to move with all the speed and agility of an Internet start-up. And unlike Internet start-ups their brands will be sufficiently well-known to attract customers without the need for enormous investments in marketing.

Kingfisher's e-commerce strategy has so far been something of a mixed bag and Worthington would like to see much more integration. But the emphasis, he says, will not be standardisation for its own sake but on the business benefits it will bring. "Synergy and commonality and being very clear about the business imperative is the spin I would like to put on it."

Kingfisher set the wheels in April when it announced plans to roll out Tivoli systems management software across all of its retail outlets. Tivoli Enterprise will be installed in more than 2,000 stores next year. It will be used for point of sale roll-outs, enterprise resource planning system implementations, and to manage PCs and servers. Tivoli will make it much easier for Kingfisher to manage its varied portfolio of IT systems.

The next stage in the plan is a major investment to improve the online services of Comet, Woolworths, B&Q and Superdrug. Their IT systems already use similar hardware and software. Kingfisher is just about to finalise an outsourcing deal that will bring their e-commerce operations together under the same roof.

"It's based on Sun platforms, Cisco hardware and Oracle databases at the backend," says Worthington. "We want to have the equipment that is right to support the business now but we can move with our suppliers as the business grows and add new boxes."

One of the critical features of the new e-commerce centre is its scalability. Each project must move into profit within three or four years, says Worthington. That means it is counterproductive to fit boxes that are not needed right now. But having the ability to fit new boxes very quickly will enable Kingfisher to respond to growing demand from the Internet and other e-channels.

There is another benefit in hosting the Web sites on a single platform. It will allow Kingfisher to allocate computing capacity just where it is needed. If demand for products from B&Q is greatest in the summer and demand from Woolies is greatest at Christmas, it makes sense to shift IT resources between them.

Comet's e-commerce systems began earlier and are more advanced than the others. Kingfisher's long-term plan is to move Comet onto the same hardware platforms, but that can't be done overnight. "We have an aspiration that we want the businesses all in the same place," says Worthington. "But we might take a route in the short term that allows Comet to move forward in a technical way. Then at a later date we might move to a common platform."

Ultimately, Kingfisher plans to develop what it calls a home portal. This will be a one-stop shop that will allow customers to order goods stocked by any of the Kingfisher retailers. The site may even offer goods that aren't available in any of the high-street stores, such as furniture.

Big question

One big question still to be resolved is how e-Kingfisher will use IT further down the delivery chain. Woolworths is installing an SAP system to link its Web site and interactive television channels back into its financial and stock management systems. B&Q also has a SAP system but Kingfisher will have to resort to other methods to ingrate the new channels with the back-office systems in Superdrug.

The biggest challenge, though, says Worthington, is this: how to run a bricks-andmortar company at the speed of a dotcom. "Everything has to be done at e-speed. But everything has to be done well. That's a real tension," he says. "The issues are to do with your culture, how quickly you can get answers, making sure that issues are resolved quickly and making the management structure as flat you can make it."

Despite the challenges ahead, Worthington has no doubts that all of these projects will make a profit within four years. "We don't want to play at it. We are not here for the experience. It is a key part of our business moving forward. We will do it in a business focussed manor and we are confident our aspirations are achievable."

Group-wide plans for Kingfisher

Kingfisher is exploring the idea of creating a home portal that will allow customers to order products from its retail, DIY and general merchandise stores from a single site. The site could eventually be extended to supply goods such as furniture which are not available in the high-street stores.

WorldWide Retail Exchange

Kingfisher is one of the founding members of the Worldwide Retail Exchange which links retailers with suppliers. Kingfisher believes the exchange will reduce supply chain costs.

Order Fulfilment

Kingfisher plans to create a central distribution centre to cover all its brands. It plans to use a single warehouse based in Yeovil to supply customers across the UK. B&Q may deliver from stores initially, but the higher cost and disruption to stores rule this out as a longer term strategy. It will use commercial delivery services, rather than invest in its own fleets.

Business case

  • Current e-commerce sales for the group are worth £40m.

  • Kingfisher aims to earn about £1.5bn by 2005 from e-commerce

  • All new projects have to show a profit within three or four years

    Kingfisher's e-commerce plans brand by brand

    B&Q
    B&Q was the first Kingfisher retailer to create an information only Web site in 1996. Kingfisher plans to expand the site to offer most of B&Q's 40,000 products currently available from B&Q catalogue business for sale online. In the longer term the site will sell between 60,000 and 70,000 lines - more than the B&Q stores.

    Screwfix
    Screwfix, retailer to the building trade, began selling online in April last year. The site now accounts for 10% of turnover and is expected to reach 15% of turnover within a year. It will be re-launched by the end of the year as building trade portal, with targeted content and information.

    Comet
    Comet began selling online in June last year. It used its existing home delivery service to get the site up and running quickly. Comet plans to expand the range of goods on offer and improve back-office integration to handle significantly greater volumes.

    A Comet shopping service will begin on interactive TV by the Summer and a Wap service is planned to provide customers with the location of their nearest store and other information.

    Woolworths
    Woolworths will re-launch its Web site this year. It will feature 30,000 products, twice the product range of Woolworths' largest stores. A real-time stock management system will allow customers to check whether stock is available. Trials of a WAP service, offering chart products, online are planned within the next two years.

    Superdrug
    About to launch a health portal offering a large range of health products and a limited online pharmacy. Kingfisher estimates the portal will generate sales of £60m by 2004/5.


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    This was first published in July 2000

     

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