By, Nancy Klosek | DEALER SCOPE
Quantum Retail Technology has aimed high with the initial version of its Q retail business management software, which targets tier-one dealers with a billion dollars in revenue.
The company is also working on a scaled-down version, scheduled for release in about 18 months. Because the solution is not within reach of most independent dealers, Quantum is talking with buying groups, whose small-to-medium sized members have the aggregate buying power that makes acquiring the software more cost effective.
“There are some obvious names that pop out of a hat, both in CE and in the fast-moving consumer goods space,” said Chris Allan , Quantum’s co-founder and chief strategy officer. “Those are areas we’re looking at, because these members all have the same problems. When you look at how they scale across the small businesses they support, it’s a proposition that could work for everybody.”
Quantum, founded six years ago by personnel from retailers and existing software companies, devised Q after studying 200 of the top retailers in the world “so we could understand the constraints and problems that weren’t being solved by technologies already in the market,” said Allan.
The need to help retailers of all sizes with inventory optimization, replenishment, allocation, forecasting, ordering, and assortment and range planning have become all the more acute in the last year.
“What we’re now seeing is that the market is asking questions that retailers aren’t in a great position to answer. The rate of change in consumer behavior is significantly high—it’s almost a consumer revolution,” Allan said. “People are changing their habits overnight and retailers, with their heavily embedded, long-standing processes, are having to struggle to keep up with that rate of change. That’s what we’re trying to address.”
Quantum has molded a management solution, Allan said, that is flexible enough to work for businesses as diverse as the 210-store Guitar Center chain—the company Quantum serves that is closest in nature to the CE space—and Marks & Spencer, a hybrid retailer in the U.K. that sells both perishable goods and clothing. “What that speaks to is that the engine we built, and the capabilities we have to support retailers in this problem of inventory management, are broad,” Allan said.
Why is Q so pricey now? “A lot of the things we do require a lot of data, and that doesn’t come free,” said Allan. “Even if we gave the software away, there would be a cost to the business for pulling that data together. What we’re working on at the moment is how we can make that cheaper. As we experiment, and address more of those roadblocks, it will enable us to scale down further.”
For Guitar Center, the goal set for Q was to take a big chunk of inventory out of the stores while increasing overall customer service. “We were able to increase service levels across the board and take 10 percent out of their inventories—obviously, a significant cost savings, which added to their revenue,” Allan said. The company’s three-and-a-half-year partnership with Quantum also coincided with a 50-store expansion.
Before Guitar Center used Q, in-house forecasting was a major challenge since management had to keep track of more than 7,000 SKUs. Those products ranged from keyboards and amplifiers to iPods and Apple laptops, representing a mix of high- and low-ticket items with varied and volatile lifecycles.
“Those are all factors our system takes into account and helps to automate,” Allan said. “With it, we can understand the way every product is behaving at every location, and use that information to help dealers make good decisions. You tell it what you want it to do and to achieve, from a merchandising or a financial perspective, and it will pull those levers of inventory, placement and timing on your behalf.”
Q’s pricing structure does not include a large, up-front licensing fee, but rather a smaller annual fee. “We tried to lower the barrier of entry there, but it also keeps us on the hook to deliver on our results,” Allan said. “If it’s not working for them, retailers can turn it off.”
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