Epicor's agreement to acquire NSB Retail continues the trend toward consolidation in midmarket retail software. However, the deal does not involve purely complementary product sets, because there is overlap in key products.
On 17 December 2007, Epicor Software and NSB Retail Systems jointly announced that they have agreed on terms for the acquisition of NSB by Epicor for approximately £160 million (about $320 million). Epicor is an Irvine, California-based provider of enterprise business software — such as CRM, ERP, supply chain management and professional services automation software — to midmarket companies and divisions in the retail, manufacturing, distribution, hospitality and service industries. NSB, a vendor of software for retailers of apparel, footwear and other "specialty" merchandise, is headquartered in Canada and registered in the U.K. The deal is expected to close in February 2008.
This acquisition continues the trend toward consolidation in the midtier retail software marketplace, as vendors seek to offer a one-stop shop for all their core retail business application solutions. Both Epicor’s and NSB’s solution sets are constructed on the Microsoft .NET platform, and the combination of their complementary products will give Epicor the potential to offer an integrated, end-to-end retail product suite in the fragmented specialty retail segment. Although both Epicor and NSB have some international operations, the presence of both companies is strongest in the North American market.
The challenge for the combined entity will be to rationalize the heavy overlap in key products that support crucial retail business processes, including point of sale (POS), merchandising and CRM:
In recent years, both vendors have acquired POS solutions, which are now integrated with their respective retail product sets. Given the similar transactional functionality of these POS offerings, the main differences boil down to the ability of Epicor's POS offering to handle central configuration and cross-channel enterprise selling — although NSB's payment switch is a definite gain for Epicor.
There is also considerable overlap in merchandising systems. Sales audit, merchandise and assortment planning are the only significant areas that NSB has and Epicor does not. If Epicor is to represent itself as an integrated ERP provider for retailers, it will need to have a single rationalized, integrated merchandise planning and execution suite.
Retailers: Seek clarity from Epicor on its road map for individual products, including any development work in progress, product suite integration, migration plans and global strategy.
Customers of Epicor, NSB or their resellers: Stick with your current POS and merchandising system, because there is no compelling need to switch for at least the next 18 months. Seek assurances on services and support for your installed solutions for at least the next 24 months.
Retailers considering Epicor or NSB: Try to hold off on investing in Epicor's or NSB's POS or merchandising suites until Epicor communicates its overall strategic product road map; however, if an investment must be made immediately or in the near term:
For POS — If your organization is a midsize or smaller Tier 1 North American specialty retailer, favor the Epicor POS product over the NSB one; if your organization is a larger Tier 1 North American department or apparel retailer, consider the NSB technology.
For merchandising — Favor the NSB offering over Epicor's if your organization is a midsize or larger North American apparel retailer that requires planning functionality.
"Gartner Business Process Solution Maps for POS for Midsize Retailers: Start With the Customer Service Basics" — POS technology provides key front-end point-of-service applications that can help midsize retailers gain a competitive edge. By Mim Burt
"Oracle Retail Merchandising Standard Edition Is Not Just for the Midsize Retailer" — Retailers whose businesses can work with industry-standard core merchandising capabilities should carefully consider Oracle's Retail Merchandising Standard Edition. By Hung LeHong
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