Task Answer the question below in an academically rigorous manner, using business report style, with claims supported by referring to relevant literature. The assignment will need to be a mix of your own intellectual property (interpretation and analysis) and evidence drawn from published material to support your arguments, or the case you are building. You may make appropriate assumptions about the case as required, but please note them in your report.
The luxury clothing retailer Excellence, recently spent millions on IT for its futuristic “exicenter” store in New York, but the flashy technology has turned into a high-priced disaster. The company needed to generate annual sales of $US 75 million from the store by 2017 (three times the sales of the old store on the same site) to make a profit on its new high-tech investment. When Excellence opened its $US 40 million New York flagship store, hotshot architect Romy Woolhaas promised a radically new shopping experience. And he kept that promise, though not quite according to plan. Customers in fact were soon enduring hordes of tourists, neglected technology and the occasional thrill of getting stuck in experimental dressing rooms. A few of the problems associated with the new store were:
1. Fickle fitting rooms – Doors that turn from clear to opaque confuse shoppers and frequently fail to open on cue.
2. Failed RFID – Touch screens meant to spring to life when items are placed in the RFID “closets” are often just blank.
3. Pointless PDAs – Sales staff let the handheld devices gather dust and instead check the stockroom for inventory.
4. Neglected network – A lag between sales and inventory systems makes the wireless network almost irrelevant.
This was not exactly the vision the high-end boutique retailer had when it introduced its first exicenter store in London in 2011. The 22,000 square foot London store was to be the first of four exicenter stores around the world that would combine cutting-edge architecture and latest technology to revolutionise the luxury shopping experience. Excellence poured roughly 25% of the store’s budget into IT, including a wireless network to link every item to an Oracle inventory database in real time using radio frequency identification (RFID) tags on the clothes. The staff would roam the floor armed with PDAs to check whether items were in stock, and customers could do the same through touch screens in the dressing rooms. Each store manager was an experienced retailer and was given responsibility for their overall exicenter implementation, including the building and IT systems. The store managers were supported by the architects and builders and by their in-house IT staff, for whom the exicenter project was a new and exciting opportunity. Although it proved difficult to integrate the different components of the project and the IT testing schedule was minimised to meet a revised schedule, the project was eventually finalised.
But most of the flashy technology today sits idle, abandoned by employees who never quite embraced computing chic and who are now too overwhelmed by large crowds to assist shoppers with handhelds. On top of that, many gadgets, such as automated dressing room doors and touch screens, are either malfunctioning or ignored. Packed with experimental technology, the clear-glass dressing-room doors were designed to open and close automatically at the tap of a foot pedal, then turn opaque when a second pedal sent an electric current through the glass. Inside, an RFID-aware rack would recognise a customer’s selections and display them on a touch screen linked to the inventory system.
In practice, the process was hardly that smooth. Many shoppers never quite understood the pedals and disrobed in full view, thinking the door had turned opaque. That is no longer a problem, since staff members usually leave the glass opaque, but often the doors get stuck. Some of the dressing rooms are only available to VIP customers during peak traffic times. With the smart dressing rooms and handhelds out of action, the wireless network in the store is nearly irrelevant, despite its considerable expense. As Excellence’s debt reportedly climbed to around $US 1 billion in late 2011, the company shelved plans for the fourth exicenter store in San Francisco. A third store opened in Tokyo to great acclaim, albeit with different architects in a different market. Though that store incorporates similar cutting-edge concepts, architect Racquel Prestidge emphasised that avant-garde retail plays well only in Japan. “This building is clearly a building for Tokyo”, she told the New York Times. “It couldn’t be somewhere else”.
The multi-million dollar technology is starting to look more like technology for technology’s sake rather than an enhancement of the shopping experience, and the store’s failings have prompted Excellence to re-evaluate its exicenter strategy.
Prepare a business report for Excellence’s senior management team. The aims of this report is to:
1. identify the likely causes of the problems experienced by the exicenter project,
2. show how these problems could have been prevented by use of relevant concepts and frameworks covered in Topics 1-6 of this course, and
3. provide recommendations as to how Excellence should manage its IT initiatives in the future.