Like most major retailers, hagebau recognized that it needed to provide customers with a better digital experience to complement its brick-and-mortar operations. That led the company, in 2018, to create a standalone digital commerce unit known as hagebau connect, which is based in Hamburg. Spearheaded by the new unit, hagebau made rapid progress in developing its digital capabilities, which are part of its ultimate vision of providing its customers with a seamless omnichannel experience. But there were growing pains.
For home improvement retailers, the range of omnichannel use cases is about as diverse as the products they carry; think, for example, a one kilogram hammer versus a 1500 kg garden shed. In some cases, a customer may order online for in-store pickup; in others, a customer may order a non-inventoried product in store for drop-ship delivery. And that’s just to name a few. For such transactions to be “seamless”—a quality most omnichannel retailers aspire to—customers get the same high-quality experience regardless of the channel path. By early 2020, a little more than a year into hagebau’s digital journey, it was clear to hagebau that this was not the case.
As the Head of platform of hagebau connect, Jörn Hartig and the leadership team had observed that the steady growth of digital activity seemed to exacerbate what had been a simmering issue with customer satisfaction. Much of the problem, he explains, could be traced to the inability to know where an order is in the process. “We could see that some customers were getting frustrated because we couldn’t give them prompt answers about their orders, whether they were purchases or returns,” Hartig explains. “The fact that we were running several different order management systems had the effect of creating blind spots, especially for ‘hybrid’ transactions when multiple channels were involved.”
While hagebau recognized the problem, it was seen, in the scheme of things, as a relatively manageable one that didn’t imminently threaten the company’s growth and digital ambitions. But that view drastically changed when the pandemic took hold in the early months of 2020, and home improvement buying surged—much of it, for obvious reasons, online. Faced with the restrictions of the pandemic, people weren’t just spending more time at home. To an unprecedented degree, they were also opening up their wallets to make their homebound experience more palatable. As hagebau’s sales grew rapidly, its order management issues intensified.
Introduced a transparent order management system (OMS) to 100% of retail outlets in Germany
Through improved experience, now consistently ranked in the top 2 home improvement retailers in customer satisfaction ratings
As hagebau’s Head of ERP and a key stakeholder in the order management project, Karsten Rypholz knew it was time to act, and there was little time to lose. “We recognized that the fragmentation of our order management systems and processes were the root cause of the problem,” says Rypholz. “It was clear that we needed a transparent view across all our channels—even up to our suppliers—and that an integrated, enterprise-grade OMS was the optimal way to achieve it.”
In vetting the company’s options, the hagebau team recognized that the pool of scalable, mature enterprise-level OMS candidates was relatively small. Given the magnitude, tight timeframe and high stakes involved, Rypholz explains, the real linchpin issue in the decision was trust. “In an agile project like this, we don’t have time for escalation,” he says. “We wanted a partner that had a strong track record for deploying an enterprise-grade OMS solution, and we found that combination in GSOT and the IBM Sterling Order Management solution.”
As part of its due diligence in the selection process, hagebau’s vendor selection team had GSOT—an IBM Business Partner specializing in rapid IBM Sterling® Order Management implementations—put together a proof-of-concept (POC) solution. In addition to demonstrating the effectiveness of GSOT’s methodologies and deployment tools, hagebau saw the POC as an opportunity to define use cases, pinpoint process issues and lay out the changes that would need to be made to fix them. Further, to maximize the efficiency of the project, hagebau also specified that GSOT design the POC such that it could serve as a cornerstone for the full-blown OMS.
Living up to its billing, GSOT delivered the POC in less than six weeks, in the process showcasing the ease of integration facilitated by Sterling’s flexible API connectors. On the strength of this performance, hagebau gave GSOT the green light for the full-scale project. Delivery specialists from IBM Sterling Lab Services were brought on to provide project management and governance services.
While speed was an important consideration in hagebau’s delivery strategy, so was future proofing. To accomplish both, notes Rypholz, hagebau and GSOT followed a best-practice led approach for the Sterling solution, extending the solution when necessary to support any bespoke processes within the solution extensibility framework.
Today, the IBM Sterling solution is deployed across hagebau’s nearly 350 hagebaumarkt stores in Germany and 45 in Austria. In addition to classic buy online, pick up in store (BOPIS) transactions, the solution also enables hagebau customers to buy online, ship to store; buy in store, ship to home; and buy online, return/exchange in store.
To Matthias Schumacher, Head of Operations of hagebau connect, the fact that the solution also provides hagebau with more flexible fulfillment options—especially the ability to fulfill orders from specific stores—has benefits that go beyond operational efficiency. “With our ship-from-store capabilities, we now have the capacity to minimize delivery distances,” he explains. “It’s a great example of how an integrated OMS can improve the sustainability impact of our supply chain logistics activities.”
In the big strategic picture, the most important benefit of the new OMS solution is a measurable increase in customer satisfaction resulting from a smoother, simpler and more convenient experience, whether it’s shopping or returns. Because the system provides a transparent view of orders across all the key touch points—including stores, warehouses and suppliers—the order “blind spots” that frustrated omnichannel customers have largely disappeared. That, says Schumacher, means in-store and call center associates can resolve a customer’s issue faster. “Even as we continue to see our digital and omnichannel business volumes grow, we’re seeing faster resolution and higher satisfaction ratings from our omnichannel customers. Where we were once near the bottom in satisfaction rankings [among German retailers], now we’re consistently among the top one or two.”
Faster resolution of order problems isn’t the only reason satisfaction is on the rise. With a more transparent view into supplier inventories, hagebau associates are also better able to identify “red flags” that could impact orders and head them off before they impact the customer. That capability makes a particularly big difference in the bulkier, drop-shipped orders—pools, garden sheds and the like—that were more prone to cause issues before.
Having adapted to the ultimate stress test of the pandemic, hagebau sees its scalable, integrated OMS as a solid foundation for its continued omnichannel growth. “We recognize that our success begins and ends with the satisfaction of our customers,” comments Schumacher. “With GSOT and IBM as our trusted partners, we’re now able to deliver the seamless omnichannel experience that our customers are demanding.”
With 2022 revenues of EUR 7.7 billion, hagebau (link resides outside of ibm.com) is one of Germany’s largest DIY retailers. The company, whose name stands for “trading company for building materials,” operates roughly 1,500 locations across seven European countries, specializing in building materials, wood, tiles and garden equipment.
Based in the UK and India, GSOT (link resides outside of ibm.com) is an IBM Business Partner specializing in implementing rapid on-time, on-budget omnichannel order management projects and work in partnership with client teams to deliver best-practice led results for their customers.
To learn more about the IBM solutions featured in this story, please contact your IBM representative or IBM Business Partner.
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