Little Automation

By Larry Dignan  |  Posted 2004-02-09 Print this article Print

For special-order furniture, customers fill out a paper form that includes their fabric selection. Then a salesperson has to call Restoration Hardwares furniture-manufacturing unit, Michaels Furniture in Sacramento, Calif., to see whats in stock. Little if anything is automated, according to sales representatives at the Manhattan store. Restoration Hardware and its technology suppliers declined to comment, but regulatory filings and industry executives familiar with the retailer paint the picture of a company that hasnt undertaken a significant technology project for about two years. Outdated systems cant predict demand well, these parties say, which became apparent during the holidays.
Since 1995, the company has primarily relied for its software and services on STS Systems, now a part of the United Kingdom-based NSB Group. NSB, which counts Nieman Marcus, Staples and Saks Fifth Avenue as customers, provides Restoration Hardware with systems for warehouse management, point-of-sale transactions and merchandise replenishment. Restoration Hardware also uses Lawson Software for its financial reporting and Hyperion for aggregating and analyzing sales data. Those implementations were finished in 1999 and 2000, respectively.
In its regulatory filings, Restoration Hardware last discussed its technology investments in its 1999 annual report, calling its systems an "important factor" in allowing it to grow and "maintain a competitive industry position." At the time, Restoration Hardware noted it polled its stores nightly to aggregate sales, inventory and pricing information, and that trend data was used to tweak merchandise assortment. It also touted a 1999 system, which ensured "smooth warehouse operations in a multi-warehouse environment." Restoration Hardware operates three warehouses in California and one in Baltimore. Restoration Hardware, however, doesnt employ common tools such as Internet-connected point-of-sales systems and demand forecasting. Today, NSB is on release 4.0 of its warehouse-management system, which includes such capabilities as real-time task tracking and XML-enabled processing of advance shipping notices. According to sources close to the company, Restoration Hardware is still running version 2.0 of system—even though upgrades are included in the fees it pays annually to NSB. Restoration hasnt actually deployed any upgrades for its warehouse system since 1999. Restoration Hardwares tools to replenish merchandise are also outdated systems bought from STS in the mid-1990s. These "green-screen" merchandising tools treat the acquisition of products, their distribution and allocation to a store and replenishment of the inventory as separate events in different systems. More-recent tools integrate those processes. Next Page: Comparison to competition.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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