CIO

For Better or For Worse

Brick-and-mortar stores are cosying up to grooms with in-store scanner guns for zapping gifts into registries as smart retailers are taking advantage of new technologies to make a lucrative sector even more profitable.

On the 10th of this month, at a historic mansion in Doylestown, Pa., William Dauber and Kimberly Shea will do what 2.4 million people do every year in the United States - get married. But well before that hallowed moment, their engagement has already transformed them into something else: the dream target for practically every retailer in the country. The American bridal industry is estimated to have revenues of between US$30 billion and US$50 billion, with the average twenty-something couple spending US$28,000 on the event itself. The gift registry part of the industry - where the lucky couple lists what presents their guests are expected to buy for them - is estimated to be about US$17 billion. Take all those marriage-minded twenty somethings and all that shopping, and the only next logical step was for the bridal space to go online. And it's not only the wedding space that has taken the registry idea online - lots of other gift and special occasion retailers are there too.

From an IT point of view, any gift registry is a relatively complex set of database and supply chain interactions. The database has to present a secure environment to the person who's registering. That information is then displayed to those who are buying the gifts. As a specific gift is selected, it is removed from the list before anyone else orders the same thing. Meanwhile, the database has to interact with the company's inventory lists, showing what's in stock and, in the best of all possible worlds, alerting buyers and registrants when things are on back-order.

For the bridal space, timing is an especially big deal. It's usually a narrow window between wedding announcement and wedding date, and the what's-still-available list has to be up-to-date and match between the online and the old-line stores. That narrow window is probably what attracts today's instant-gratification generation: 50 percent of engaged couples have either planned or already registered for their wedding gifts online, according to an April 2000 study by The NPD Group, a Port Washington, N.Y.-based market research company.

Web portals such as ModernBride.com, Theknot.com, WeddingChannel.com and WeddingNetwork.com let couples do everything from register online to find a ring, gown, tux or honeymoon spot. The newly emergent online portion of the gift registry business already accounts for US$1.7 billion, estimates Cambridge, Mass.-based Forrester Research.

Brick-and-mortar stores are cosying up to grooms with in-store scanner guns for zapping gifts into registries as smart retailers are taking advantage of new technologies to make a lucrative sector even more profitable.

Finding the Right Partner

Carrie Johnson, an online retail analyst for Forrester, understands the appeal of registering online. "It's a big draw for people. Usually you have to go to multiple stores and consolidate what you do, which can be very painful, especially in dragging the groom to the mall," she says, having recently dragged her own groom through a mall or two. The about-to-wed Shea and Dauber agree. "We wanted to make sure there was Internet access [for the stores]," says Shea, a 37-year-old financial analyst. With friends and family scattered around the country, she says, "today it's almost a must."

Two of the stores Shea and Dauber registered with are Bloomingdale's and Macy's. Which makes Steve Stockett, senior vice president of systems development for Federated Systems Group, a division of Federated Department Stores, very happy. Federated owns Bloomie's and Macy's, and according to Stockett, bridal registry has been important to Federated for a long time. "It is and always has been a significant part of our business model," he says. "A lot of the functionality that we have developed [in our enterprise-wide systems] has been because of the bridal registry, but Retailing by Kiosk virtually none of it is just limited to the bridal registry." That has included in-store kiosks instead of being a discrete part of the business, the registry at Federated is integrated into the company's overall B2C - and bricks-and-mortar - business functions.

Federated, with corporate offices in Cincinnati and New York City, is one of the nation's leading department store retailers, with annual sales of more than US$18.4 billion. With a long history - roots go back to the 19th century - Federated has several advantages in place over e-tailers: name recognition, consumer trust and a delivery system in place. As much as 50 percent of the company's delivery, or "send," business was driven by its decades-old registry business. "It's that send system that's the guts of the bridal registry," says Stockett. "Even if you're not the bride, there's a good chance you don't want to carry home a 12-piece china setting - you'd rather have it sent."

In 1996, Federated began rolling out an application that transformed its legacy gift-registry system into a nationwide one with a common database and the ability to scan and upload information into a shared database. In doing so, the company ran head on into the problem that dogs all older companies morphing to the Internet, says Forrester's Johnson. "The problem with working with any retailer in this type of situation is they've got legacy systems that are sort of slow and may not be updated as quickly as people who use the Web are accustomed to," she says.

In 1999, Federated tied the knot with WeddingChannel.com as its online bridal partner. It was a classically symbiotic business relationship. The department store knew it could offer brand recognition, as well as demonstrated merchandising and fulfillment skills. Wedding-Channel.com could help it quickly establish an online presence and could also handle the presentation ware or front door of the website. Federated was so convinced that Wedding-Channel was the one that it bought an equity stake in the online company.

"When we started this project, it was real important that we maintained common services and that we developed a real-time, online solution as opposed to a data-transfer on a nightly basis solution," says Robert Dickey, Federated's vice president of direct-to-consumer systems. Federated developed middleware that allowed Wedding Channel to manage the presentation layer of the application, while the retailer was able to continue to maintain and manage the interactions with its databases. "Core registry data - customer, occasion date, registry detail items - resides on a DB2/OS390 platform and is accessed and updated via XML services from the Web applications," says Dickey. "This same data platform supports our in-store registration process, but the services to add and update data are culled from a custom developed visual basic presentation application that runs on desktop PCs and kiosks."

The marriage between Federated and WeddingChannel has gone so smoothly that the brick-and-mortar stores' wedding advisers encourage brides to register at WeddingChannel.com first. "It's more efficient for us and the bride," says Stockett, "and there's more functionality there for her to manage the wedding." Even if a couple does sit down with one of Federated's wedding advisers, the adviser acts as a human interface with WeddingChannel.com, handling the online registration and showing the couple some of the site's functions.

"It's been a good marriage of two companies that had a compatible business model and a technical view of how the world should work," says Stockett.

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Playing the Field

WeddingChannel.com CIO Greg Franchina says that getting Federated and his company to work together is definitely reminiscent of planning a wedding. "The actual production process has been coordinating a joint effort between those organisations," he says. The two companies had to integrate their IT teams "so that we were hitting schedules on time in a coordinated manner. Their expectation was that we would deliver information on this date, in this format - in this way, it would interact with it that way.... We were making sure we were able to circumvent the idiosyncrasies of one partner's systems to interact with our system."

WeddingChannel.com started in 1997 in Pasadena, Calif., and quickly became one of the Internet's leading bridal resource sites. The company generates revenue through commissions from gift registry purchases off retailers' bridal registries, commissions from sales of other bridal goods such as wedding accessories and invitations, and sponsorship revenue from companies hoping to reach WeddingChannel.com customers. In 2000, roughly a year after partnering with Federated, WeddingChannel.com merged with the online wedding gift registry Della.com, which brought with it a bridal party of a number of other retailers.

While WeddingChannel.com is most deeply involved with Federated, it has other partners such as Tiffany & Co., Crate & Barrel and Neiman Marcus, all with varying degrees of integration. WeddingChannel lets the other company determine what level of interaction it wants to have with the website. "The organisation we interact with has to determine why they want an interaction with us and how deep do they want that relationship to be," says Franchina. "That then drives the process for having that relationship, planning it out, effecting it."

An Open Marriage

Click on a Bloomingdale's or Macy's link on WeddingChannel.com and the presentation is seamless. However, click on Williams-Sonoma, the San Francisco-based home-centered specialty retailer, and a new browser window opens.

Shelley Nandkeoylar, vice president of Williams-Sonoma's e-commerce division, readily admits that partnering up with WeddingChannel was a reaction to the pressures to get Williams-Sonoma more widely known online. "It was the heady days of dotcom, a year and a half ago," he says. "We felt that, OK, this is a piece of business that we don't have a lot of experience in, and here's somebody who is focusing into this area. Maybe we can learn something from them and jointly partner to grow." With that attitude, the company has made WeddingChannel.com a very thin client or channel for itself.

Williams-Sonoma, which started in 1956 as a single store and exploded with a catalog business in 1971, launched its own website in June 1999, but it wasn't until its relaunch in January 2000 that it had full gift registry capability. In order to avoid the synchronisation problems from having multiple databases, the Williams-Sonoma team took the database that already existed at the retail point and put a front end on it that lets customers access it from the Web. Having a single database interface sounds easier than it was. "It took us a year and a half to figure it all out before we implemented it," Nandkeoylar says.

However, the system can suffer from some lag time in updating the database. "Because stores upload every night," says Nandkeoylar, "occasionally there could be a delay of six to 12 hours before your registry is updated between the time the purchase may be made in the store and what is being viewed online." (By contrast, the Federated system of stores is wired to do continuous, real-time updates of its database.) Maybe We're Just Not Right for Each Other Even retailers that aren't sold on the Internet think Web registries are good for business. Target Corp., which operates the Target discount store chain, as well as Mervyn's and Marshall Field's, has taken a "prove it to me" attitude toward Internet retailing, and the Minneapolis-based company has been criticised for not putting more of its wares on the Web. That's because Gerald Storch, the company's vice chairman, whose responsibilities include technology services and catalog and e-commerce businesses, first wants to be convinced it's worth Target's while.

"We'll only use the Web where there's a significant value added," said Storch, speaking in March at the Milken Institute's global economic conference in Los Angeles. For Storch, one place where that value is proven is in the bridal registry, which enhances the relationship potential with Target's customers, or guests as the company terms them.

Through the bridal registry - named Club Wedd - Target is holding a dialogue with its customer. "I'm talking to her about stuff. I don't care if she buys it online. The ability to communicate is what matters," Storch said. "I want her to know my brand and love my brand."

Taking the marriage business high-tech has had its ups and downs. Federated's Stockett reports that the real-time updating capability of his new databases was so popular that the stores now offer it via kiosks on the sales floor. However, although the number and kind of wedding websites are growing, users report mixed results. An informal survey of newlywed CIO staff produced a range of reactions to Internet bridal registries, with most of the feedback leaning toward aggravation.

However, it's the wave of the wedding future. Getting married is a frustrating maze of conventions, rituals and details. "There's a couple of wedding sites that almost every single bride knows - WeddingChannel.com and Theknot.com," says Kimberly Shea. "If you don't have any idea what to do, you go to those and they guide you." And that's got to be worth something.