Chatting with TradeStone Software @ NRF BIG Retail Shows - Part 2

Part 1 of this series introduced the conundrum that retailers (especially those in the areas of fashion and apparel) encounter in the realms of design, sourcing, ordering, and delivery of private label and branded goods. The article also introduced TradeStone Software and its merchandise lifecycle management (MLM) solutions that enable a number of the world's most successful retailers to bring innovative and profitable private-label products to market at ever higher speeds.

TradeStone’s Current Snapshot

My relationship with TradeStone dates back to the early 2000s, almost back to the company’s inception in a more than half-empty rented office space. At that time the company had only a couple of early-adopter global sourcing and order management retail customers and about dozen employees (many of whom came from former RockPort Trade Systems, Sue Welch’s earlier venture before founding TradeStone). In 2006, I produced a multipart research note on TradeStone entitled “Collaborative Sourcing Solution Vendor Leaves No Stone Unturned” and at that time the company had about a dozen customers and was just laying out its “product lifecycle management (PLM) for Retail” blueprint.

Fast forward to today, and TradeStone remains headquartered in Gloucester, Massachusetts (albeit occupying a much larger and fully occupied office space in the same building), and has about 100 employees and additional offices in Atlanta, New York City, Bangalore, Hong Kong, and London. The company now has over 30 marquee retail customers and it has achieved four years of double digit compound annual growth rate (CAGR) and profitability.

New customers the company signed in indisputably difficult 2009 demonstrate the breadth and reach of the TradeStone MLM Suite [evaluate this product]. The new customers included:

  • Belk, a US$4 billion regional department store in the US

  • Mr. Price Group, a US$1 billion specialty retailer operating 5 banners in South Africa

  • Groupe Dynamite, a US$350 million fast fashion retailer in Canada

  • Le Chateau, a US$175 million fast fashion retailer in Canada

  • The Gap, a US$15 billion apparel retailer, operating worldwide

  • Myer, a $1 billion high-end department store in Australia

TradeStone also signed numerous new deals with existing customers, many of whom were in the US$ seven-figure range. Just a few of the clients expanding their footprint with TradeStone included: Macy’s department store, Lowe’s do-it-yourself (DIY) home improvement retail stores, Kohl’s department store (mass merchant) in the US, Urban Outfitters specialty apparel retail stores, American Eagle Outfitters apparel retail stores, Auchan global food supermarkets, and Boots pharmacy stores.

In 2009, TradeStone added a few new alliances to its partner roster, starting with the National Retail Federation’s (NRF's) Association for Retail Technology Standards (ARTS), whereby TradeStone led the creation of and currently co-chairs the PLM for Retail Standards Committee. Other new partnerships included the following: Tradestream, an international trade management business, Cognizant, a major provider of information technology, consulting, and business process outsourcing (BPO) services, and Alix Partners, a global consulting firm that specializes in improving corporate financial and operational performance, executing corporate turnarounds, and providing litigation, consulting, and forensic accounting services.

New Product Offerings

At the end of 2009, TradeStone expanded its PLM for Retail offering (a component of the Tradestone MLM Suite, as explained in Part 1) with the delivery of the Creative Design module. This optional module enables retailers and their partners to collaborate more efficiently on the product design process. Using a single solution for managing color, component/material and artwork libraries, defining color palettes, specifying product construction details, tracking samples, and building technical specifications, retailers can inspire their brands, develop quality merchandise, reduce cycle times, and improve margins.

Besides software offerings, TradeStone also unveiled its Regulatory Compliance Services to help its clients cope with ever-increasing regulatory requirements, such as the US Customs and Border Protection’s (CBP) Importer Security Filing (ISF) or more commonly called the “10+2” rule, the Consumer Product Safety Improvement Act (CPSIA), and The Lacey Act.

At the NRF 2010 retail conference, TradeStone co-presented with its longstanding customer Urban Outfitters. In addition to the latest retail trends in global sourcing and what's in store for 2010, the attendees of the presentation learned more about how delaying merchandising decisions until the last possible minute can help get the right product in the right place at the right time and why adopting a holistic approach to design, sourcing, production, order and delivery of merchandise can increase speed to market and improve supply chain visibility (as discussed in Part 1).

Early 2010 also marked the launch of the redesigned corporate Web site and the launch of TradeStone’s message and tagline “Inspire a Brand.” The company no longer uses the “Stepping stones” or “Radical retailing” slogans from the past, but does continue to push the benefits of a “unified buying” process that its MLM suite enables.

Aggressively Hiring

TradeStone headcount grew about 25 percent in 2009, with plans for a further 20-30 percent increase in 2010. Notable new hires and internal promotions included:

  • Chirag Patel, President of the Americas

  • Brian Marsden, President the Europe, Middle East & Africa (EMEA) region

  • Tim O’Brien, Chief Financial Officer (CFO)

  • Paula Levy, Senior Vice President (SVP) of North American Sales

  • Tony Wood, VP of Marketing

  • Bernie Brennan as a Board Member

At its booth at the NRF 2010 show, the company made visible a hiring billboard and its Website career page is still replete with vacancies.

A Word From a True Entrepreneur

In answer to my question how her company managed to grow and prosper amid the economic carnage, especially in the vulnerable retail sector, Sue Welch, TradeStone’s CEO and founder said the following:
“We believe that TradeStone was so successful in 2009 for two reasons: functionality and infrastructure. As you know, Wall Street has been hounding retailers to discuss what they’re doing around cycle time reductions and global sourcing--two areas where we have deep domain expertise and proven results with some of the largest retailers in the world. The ROI for our technology had board level visibility from both a margin improvement and market expansion perspective.

From a functionality play, our PLM, Global Sourcing, and Order Management functionality supported retailers as they looked to expand their private label design and development and sourcing initiatives. And as an added bonus, they could implement in chunks, while building out their merchandise platform. During the year, retailers such as Macy’s, American Eagle Outfitters, and Urban Outfitters spoke to Wall Street analysts during their earnings calls about TradeStone and the value we were delivering relative to helping them speed innovative products to market, reduce markdowns, increase sales, and expand margins.

Relative to infrastructure, TradeStone’s approach to layer and leverage a retailer’s current technology while putting in place a merchandise lifecycle management (MLM) backbone that unified design, sourcing, order, supplier management, and logistics was well received by chief information officers (CIOs). These same CIOs were also looking to retire old legacy systems and were receptive to working with us to develop a footprint with one technology that could be expanded to become system of record for master item data management, purchase order, and supplier profiles.”

On the down side, TradeStone is still a relatively small up-and-coming company, and the competition is not really to be sneezed at. Many potential competitors are more established and visible companies, such as Parametric Technology Corporation (PTC) or New Generation Computing (NGC). For the competitive landscape, see TEC’s Fashion PLM Evaluation Center.

Still, TradeStone has received accolades even from its potential co-opetitors, such as Oracle and SAP. Namely, in my private conversations during the recent NRF BIG Retail Show 2010 in New York City in mid January, both giants have admitted to me that they wished they had some of TradeStone’s capabilities. Sue Welch is adamant that its company is not for sale at this stage, and I guess SAP and Oracle will just have to wait and partner, or develop these features themselves (and good luck to them with that feat).

Therefore, dear readers, what are your views, comments, opinions, etc., about TradeStone’s value proposition and about the MLM software market in general? We would also be interested in your experiences with this nascent software category (if you are an existing user) or with your current (possibly ineffective) practices, and your general interest to evaluate pricing solutions as prospective customers.
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