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How Oracle Is Helping Retailers Sell More Stuff (Q&A)

Blurring the lines between buying in the store and buying online.

Shutterstock/Anatoliy Lukich

The software giant Oracle is best known for its database software and its powerful suite of applications aimed at large companies: There’s enterprise resource planning — ERP is the business of tracking the process of making and selling products — and human capital management, or HCR, the business of tracking, paying and promoting people.

But in recent years Oracle has gone deeper into a few of its “vertical industries” by building or buying technology aimed at a specific line of business. One of those is retail. Hinting at Oracle’s belief that in-store and online retailing will be important to its future, about 18 months ago it spent $5.3 billion to acquire Micros, a supplier of hardware and software aimed at the retail and hotel business. It was Oracle’s largest acquisition since it bought Sun Microsystems in 2010.

So with memories of the 2015 holiday season still fresh, Re/code caught up with Mike Webster, Oracle’s senior VP and head of its retail and hospitality business. Webster runs Oracle’s retail strategy, sales, service and support operations, and has been around the retail industry for 28 years.

Re/code: When I think of Oracle I think of manufacturing and distribution. I don’t think of it in retail. What does Oracle do there?

Webster: We’re glad you think of Oracle in the context that you mentioned. We focus on seven industry segments where we wanted to build specific capabilities and expertise, and retail is one of them. We sell all the ERP software, and database and middleware. But we also have a comprehensive set of products related to merchandising, retail planning, supply chain, commerce, point-of-sale and analytics specific to retail. And we’re increasingly offering all of these on the Oracle cloud.

 Oracle retail head Mike Webster
Oracle retail head Mike Webster
Via Oracle

Who are some of your customers?

Two that come to mind are, which runs on our retail e-commerce engine, and the Adidas footwear stores, which use our point-of-sale system when you check out of a store.

I’m curious what you think of an argument put forth by Netsuite CEO Zach Nelson that the future of ERP is simply commerce. Obviously Oracle participates in both. But I wonder what you think of Nelson’s assessment?

We aim to give our customers the best of both worlds. We give them a robust set of horizontal products that they can count on to run their businesses day in and day out. … I don’t think of it as an “either-or choice” … but I wouldn’t want to mix how I manage my employees with how I manage my customer transactions. … Will there be greater integration between these things? Sure. Do we think they’re all going to end up in one single solution? Not in the near-term.

I tend to think of Oracle as something used by really large companies, but I’m curious if pivoting to the cloud has changed your customer profile a bit. Can you reach smaller companies?

With the cloud we’re able to address a broader set of customers who lack the IT staff that we couldn’t reach before. We have some of the biggest retail names in the world, but we also have some great mid-market retailers, like the handbag company Elaine Turner, and Lids, the company known for baseball caps. They’re getting access to the same Oracle tools that they didn’t have the IT resources to use before.

So, generally speaking, what did your clients see during the holiday season?

The way we think about the holiday season is that it was a good season by the numbers. We saw sales grow about 8 percent from Black Friday through Christmas. We saw that acceleration in the stores and online. I think in the U.S. we’ve become a bit of a procrastination nation. Roughly 10 percent of customers were completing their shopping by mid-December. I think the season got off to a late start, and there was a lot of anxiety among retailers through the season, but it turned out to be a strong holiday. I think the role that technology and cloud enabled that is interesting. The seasons are getting compressed and you can argue that it got compressed this year because of warmer weather or by time pressures on consumers. There’s lots of different opinions on that. But I think that our broader capabilities to help our customers deliver commerce anywhere to their customers help them successfully manage the compressed spike we saw.

Was there anything surprising that you didn’t expect?

One thing that gets lost in the popular narrative is the continued relevance of stores. A lot of people still shop in stores and a lot of transactions get concluded there.

The long-term narrative about retail sales is that online stores are replacing the physical stores. But in recent years we’ve seen the lines between them get really blurry. How are your customers managing that transition?

I’d agree that the lines are getting blurry. The retailers that are succeeding are the ones that are making the customer journey a lot more seamless regardless of where they begin or end. There is still a lot of traffic in a store but about 60 percent of those transactions that end in a store are influenced via a digital channel. You’re just as likely to buy something in a store that you discovered online as you are to buy something online that you first saw in a store. We think that process is becoming seamless, and it’s something that we like to call converged commerce, which is breaking down the barriers that prevent a customer from having a consistent experience whether online or in the store. … The cloud is instrumental in stitching all of that together before you get to the store and also when you’re in the store itself.

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