When it comes to the use of standard software vs in-house development, a war has been raging for a long time in the retail sector. Regarding this topic, Xalution Advisory Board Chair Wolfgang Lux explains his position in a recent article published in the “Lebenmittelzeitung.” He predicts that in-house developments are losing importance.
The era of the in-house development is coming to an end. Which does not mean that introducing standard software into Enterprise Resource Planning (ERP)/ Merchandise Management is a model for guaranteed success. Failures by renowned companies prove it– from Metro Project “P75“ to the discontinuation of the SAP retail implementation at LIDL in 2018.
All this notwithstanding, studies by the EHI Retail Institute as recent as 2019 show that the façade of in-house developers is crumbling. In times of digitization with cross-channel processes and high demands on time-to-market, there is no place for complicated personal compositions that only a few experts can manage. Especially in competition with the pure-play online retail industry, which doesn’t need to grapple with old burdens, brick-and-mortar retail will lose increasingly more territory if it insists on keeping its old processes. The other thing is that these systems are very individual in precisely those places where they produce no sustainable competitive advantage, but simply „have always worked that way. “
There is a lot going on right now, particularly in the food retailing and fashion industries. After Edeka, Aldi Süd is now also systematically standardizing its application map, largely on an SAP basis. That was unimaginable just a few years ago.
What about the fashion sector?
Compared to the food retailing sector, fashion retailers are even more under pressure. They must often implement large ERP projects while being in a critical business situation. But that’s the only way they can have a chance to compete with flexible, burden-free online shops. “We’re seeing a growing number of ERP projects in the fashion retail industry, especially in the implementation of Microsoft Dynamics 365, “says Tobias Endl, CEO of xalution in Nuremberg, a strategy and implementation partner for ERP solutions in the textile industry. A fast implementation is needed because the constant growth in online orders up to 30 percent of fashion sales is challenging brick-and-mortar retailers.