In a move to cut IT spending and better integrate store operations, Best Buy Co. Inc. is reducing the number of application servers in each store in favor of regional server hubs using web and satellite technology, senior vice president of operations Bob Willett told attendees this week at the Retail Systems 2005 Conference & Exposition.
Best Buy, which will make the shift over the next two years, expects to cut overall IT costs by 40% while providing for a more effective integration platform designed to better support a customer-serving strategy, Willett said. “We have to fundamentally shift the way we operate to be more customer-focused,” he said in his keynote address at Retail Systems.
The server hubs will use private network connections in addition to web and satellite connections, said Willett, who elaborated on the hub plans in an interview with Internet Retailer following his keynote. The hubs will support a centrally integrated platform for multiple store operations, including space planning, demand forecasting, merchandising and labor planning, he said.
Willett warned his Retail Systems audience that such integrated systems are becoming more important as the mushrooming of shopping options for consumers is putting more pressure on retailers to perform. “The balance of power is in the hands of consumers,” he said, adding merchants need efficient, integrated systems to make fast decisions about merchandising, inventory management and other operations. “Today, we have no time to make complex decisions, but the relative complexity is higher.”
Best Buy is also pushing ahead with web-based supply chain collaboration, to realize better data synchronization and shared demand forecasts with its trading partners, Willett said, adding that Best Buy is closely watching the supply chain developments of UK-based Tesco plc, a multi-category retailer recognized as being in the forefront of web-based retail systems.