SPINNAKER SOFTWARE: Trust Arch for Competitive Edge

As the often-unnoticed partner behind some of Southern Africa’s most successful retail and FMCG businesses, Spinnaker Software is helping clients to thrive and optimise in a quickly changing market that requires a nimble approach combined with a steadfast understanding of the market, delighting customers and driving loyalty. Acting often as an outsourced Point of Sale (POS) and technology department for important companies, Spinnaker Software – through its Arch Retail Systems brand – has created a thriving South African powerhouse that is experiencing growth while looking at new markets for its tried and tested product range.

Across Southern Africa, 2020 and 2021 threw up major hurdles in the commerce landscape and companies were forced to adapt to survive. With many opening digital offerings, and some of the key essential retailers compelled to operate like never before, a solid back-office solution helped to underpin success.

According to research from Deloitte, ‘many retailers were praised for their delivery and online shopping services’ during periods of lockdown in South Africa. ‘Players who have invested early in online capabilities will be ahead of competitors and will capture these opportunities post the recovery phase’ the global professional services company added.  

Marketing Executive Officer for Arch Retail Systems, David Geldenhuys, tells Enterprise Africa that the company has stood behind its clients in tough times and continues to innovate to provide solutions in what is now a mercurial market.

“The company’s business is about understanding and supporting the retailer’s specific challenges, and shoppers’ needs,” he begins. “Rich in functionality, the integrated retail management solution increases operational efficiency, profitability, and, ultimately, cash flow. The Arch suite of products ensures that the retailer has easy access to accurate business intelligence to run the operation and make strategic business decisions.

“Arch Retail was the first solution developed for in-store management. As new challenges in retail emerged, additional Arch solutions were developed to address these. Two examples of this are the birth of Arch Enterprise (AE) and Arch eStore (AeS).”

AE addresses a problem arising from a growing number of smaller multi-store operations where management control becomes tough. The software centralises important functions, allowing for more effective and timely decision making. AeS, an ecommerce platform, was developed before the pandemic caught hold and was designed to help clients drive online sales.

“The advent of Covid, has resulted in a sharp increase in demand for AeS, with a number of these implemented and showing meaningful growth in business through this alternative channel,” says Geldenhuys. “Solid growth has been recorded where Arch clients are using AeS, most notably at Ultra Liquors, a national liquor group in South Africa (60+ stores).”

The entire Arch product range is developed inhouse and implemented around the needs of clients – there is not a one-size-fits-all approach here. A complete and integrated approach to software development has been adopted, and clients running Arch gain an advantage.

“The company slogan, ‘Arch for the Edge in retail’, says it all,” smiles Geldenhuys. “The business philosophy has always been that we are not product vendors, but rather business partners of our retail clients, where we are only successful, once they are.

“The Edge is offered to retail by applying an understanding of challenges within retail and using new technologies and market knowledge to create business processes, mitigating such challenges.”

DELIVERING MARKET EDGE

The Spinnaker Software of today is a far cry from the company that was established in 1997 as a small family-run business. Then, with just six people, the ambitious group could not have realised the heights to which Spinnaker would rise. This group came from the cash register industry and, utilising their knowledge of retail, quickly identified failings in the offerings from POS providers. The first Arch Software product was released in 1999.

A quarter century after its founding, the company now boasts a thriving workforce of more than 270 people and an industry-leading product range. Offices are spread across South Africa (Cape Town, Gqeberha, Durban, Bloemfontein, Johannesburg) and further into Southern Africa with sites in Botswana and Namibia (fully fledged branch). Moreover, a service presence has been established in support of clients in Zimbabwe, Angola, Zambia, Mozambique, DRC, Malawi and Tanzania. The number of stores operational on the Arch suite of products is more than 1,800, comprising 17,000+ Arch points.

Popularity of the Arch Software range has boomed over the years thanks to proven success inside some big-name operations. The various products allow clients to effectively execute on inventory and margin plans, improve control and understanding of operations, serve the customer better, and improve profitability and cash flow.

OVERCOMING CHALLENGES

In early 2020, as the pandemic caused major disruption, companies were forced to revise strategy. Whether that meant shifting to a more digital approach or changing the model entirely, it was tough, and no one was spared.

Spinnaker Software placed the safety of its team at the forefront of its decision-making process and acted quickly to move to a remote working model where possible. Clients – retailers who remained open as essential service providers – were appreciative of the speed with which the company acted, ensuring no interruption of service delivery for customers.

“The areas most affected were the branch technical personnel rendering an in-store service, and the sales/marketing force personally meeting prospective clients in their operations, assessing the needs to be addressed,” admits Geldenhuys. “In the case of sales, virtual presentations have been optimised to still get that feeling of ‘personally meeting’, whereas technical backup in the store was still provided within strict Covid protocols. The User Assistance Desk, an important cog in service delivery, has always been a remote operation and was least affected.”

Where the company was impacted outside of its control was in the decision-making process of clients and potential clients. Most businesses found future planning through the majority of 2020 and 2021 to be a very difficult task, and justifying big spend on new technology and software was sometimes an idea put on hold. For Spinnaker, this created challenges.

“We did see this, specifically with the smaller operations, where owners were either opening a first store or expanding on an existing operation. Uncertainty in the market, directly related to Covid, influenced store owners to be more cautious and have a ‘let’s wait and see’ attitude. A number of implementations were either postponed or even cancelled, which had a big impact on the growth projections of Spinnaker in 2020 and 2021. In terms of existing Arch stores, relatively few stores closed doors as they were trading under the essential service/products dispensation. The hard lockdown forced upon liquor stores had a more pronounced impact on these Arch clients. Spinnaker has, in the spirit of true business partners, supported these stores with special dispensations on their monthly user assistance fees,” explains Geldenhuys.

But now, in 2022, with most now looking beyond Covid-19 and planning returns to normal operations, Spinnaker is ready to push Arch Software even further, utilising its local industry leading position as an advantage as it appreciates the needs of clients in Africa.

“Spinnaker remains upbeat for the future, despite the hardships of 2020/21 and continue to develop and improve the solutions offering to the market, both in South Africa and Southern Africa,” says Geldenhuys. “The fact that Spinnaker primarily partners with FMCG operations in the food and beverage industry, where essential products are offered to the market, gives it a strategic advantage (proved during hard lockdown). It is also important to note that Arch is developed through an in-depth understanding of the harsh African retail landscape and the challenges it poses. From an exchange rate point of view, Arch also has an advantage relative to expensive imported solutions from elsewhere in the world.”      

AFRICAN OFFERING

Already successful across a number of sub-Saharan African nations, Spinnaker recently made further progress in Angola where it is supporting clients through new legislation and taxation requirements. This display of strength shows the adaptability of Arch Software and how elements can be tweaked and managed to reach successful outcomes.

“In Angola Arch is the solution of choice in the Intermarket Group. Solution proposals are in process with a number of other groups in Angola. Value Added Tax (VAT) was recently introduced by the General Tax Administration (AGT). In response to the legislative requirements Spinnaker successfully completed the Angolan Compliance Project to ensure Angolan stores running on the Arch suite of products are compliant and in line with the requirements of the AGT. This means that Arch is now an accredited Angolan POS service provider,” details Geldenhuys.

He adds further that the company is also proud of a recent project in Zimbabwe where, similarly, the software had to be updated to ensure fiscal compliance.

“We had to ensure Arch is multi-currency fiscal compliant according to the Statutory Instrument (SI) 185 of 2020. The regulation compels sellers of various goods and services to display, quote and offer prices in both Zimbabwean dollar and foreign currency at the ruling exchange rate.”

FUTURE PROOF

Automation and an ever-increasing appetite for technology and digitisation within a retail experience is coming from both consumers and operators. According to a report from management consultancy Redflank, 59% of companies are now either researching or implementing strategies that include Fourth Industrial Revolution elements. Arch Software is well positioned to assist in this futureproofing of businesses.

“The modern trend in retail” says Geldenhuys “is to automate and integrate the full procure-to-payment process, seamlessly connecting procurement and invoicing operations. In line with this, Spinnaker developed Arch eReplenish (AeR). OK Foods, franchise division of Shoprite is the largest corporate group running on Arch (500+ stores). The AeR solution was recently implemented in the OK Foods Group. The Arch B2B platform allows the operation to communicate purchase transactions such as purchase orders, shipment notifications and invoices electronically to DCs and direct suppliers, all via one platform.”

Automating in this way reduces administrative burdens and allows supply chain managers to focus on core tasks. Alongside AeS and other Arch products, retailers are afforded an industry leading solution, developed in Africa, allowing for streamlining of much of the traditionally challenging back-office functions.

Spinnaker Software is also busy with other developments that will assist both the growth of the company and the growth of its clients. Expansion into new industry sectors, and regular investigation of opportunities in new geographies, will continue. For Geldenhuys, now is a very exciting time.

“Loyalty programs are fast gaining traction worldwide as a means to encourage and retain repeat customers. Arch Loyalty was developed as an integrated solution at POS, where monetary rewards are accumulated for the benefit of the shopper. On the other hand, the retailer builds a loyal client base and also collates valuable data on shopper buying behaviour and product preference, which can be used in targeted digital marketing campaigns.

“Spinnaker’s strategy is to be a dominant player in the FMCG retail/wholesale market. It is a matter of focussing on what you’re good at. Spinnaker will continue to grow into other retail verticals such DIY and Cosmetics. The basic functional requirements in such markets are, to an extent, universal where only specific functional requirements need to be developed. Another exciting initiative is the development of Arch Fuel as an integrated solution for managing the forecourt and convenience store off one platform (an integrated solution is already offered, but in partnership with a software assurance partner).”

25 years into this South African success story, are we about to see the next chapter move international? South Africa remains core, Africa provides major opportunity, but there are certainly global ambitions.

“The African business will remain the primary focus, but potential beyond Africa is currently looked at. Reaction to the Arch offering by role players in selected European countries, as well as Australia, has been very favourable. It is a matter of teaming up with the right partner(s) in these countries,” suggests Geldenhuys.

With a presence that is perhaps often unnoticed by the end consumer, the work of this brilliant and innovative organisation is certainly noted by clients who, without doubt, realise improved business operations as a result of partnering with Spinnaker.