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Getting Smarter With Technology

The convenience store industry is finally catching on — technology is a necessity to remain successful in today’s marketplace — as evidenced by this year’s NACStech conference, which drew its strongest attendance figures since 2001, and was the National Association of Convenience Stores’ (NACS) second-largest technology event to date, according to the association.

“There are so many new products and upgrades to older products,” said Ron Sissel, manager of retail automation at Kwik Trip Inc., headquartered in La Crosse, Wis., and operating 350 stores. “It’s hard to keep up with the changes.”

But that is exactly what retailers are trying to do — keep up. "Everyone wants to make sure they have all the advantages everyone else does," said Patti Safford, director of MIS at Ricker Oil Co., with more than 30 stores, based in Anderson, Ind.

Business intelligence is the topic on everyone's minds, as retailers try to determine how to take the data they're collecting via technology like scanning and make that data actionable to improve their businesses. Vendors are assisting with the process by offering business intelligence (BI) systems that go beyond just collecting data to gathering, storing and analyzing it to help in decision-making. These systems can encompass everything from loss prevention to inventory management.

"Business intelligence seems to be the new buzzword and now that a lot of companies invested in the right technology and have collected a lot of scan data, they need to figure out how they are going to use it," said Safford. "With the big-box retailers and all of our competitors, we have to make good decisions, and having business intelligence with live data is key."

When asked what they hope to accomplish with their technology investments in 2005, 70 percent of retailers reported wanting to reduce theft and shrink, according to the 2005 Convenience Store News Technology Study (see Page 39).

"A lot of people are focusing on loss prevention and several more companies are promoting it right now," said Sissel. "Retailers want a more detailed analysis of how a store is actually performing, and it can save a lot of money."

In order for companies to cash in on the advantages of new technologies, they need to have the right infrastructure in place. Both Ricker Oil and Spectrum Stores, based in West Point, Ga., are in the process of completing their wide-area networks (WAN) to pave the way for new programs.

"Once companies finally put their WAN in place they can do so much more, like implement a loyalty program, which I think we will see a lot more of in the next year or two," said Denise Spradley, director of IT at Spectrum Stores, which operates approximately 100 stores.

And Ricker is looking to the WAN to assist the company with a variety of projects, such as electronic invoicing with vendors. "I think the WAN will be the most influential technology we have once we complete it," said Safford.

Kwik Trip's Priorities

Kwik Trip decided to increase its focus on loss prevention a year ago when the company hired a loss prevention manager, and the company is now in the process of implementing a program to pull transactional data from the stores to identify problem areas.

"Brett Gooden, our loss- prevention person, has done marvelous things," said Sissel. "He reduced our drive-offs by making the stores more aware and giving them a procedure and method to track drive-offs. Also, if a store has a large cash overshortage, he goes in and checks the accounting to see what they are doing and how we can eliminate the problem."

Furthermore, the company plans to implement a program later this year to help identify exceptions at the register that may need further investigation, such as no-sales, voids and even overrides on age verification.

"We are not trying to look specifically for dishonest employees," said Sissel. "We just want to identify standards and make sure people are living up to them, and that will eliminate problems."

BI systems are also a current focus at the company. Kwik Trip is currently installing Professional Datasolutions Inc.'s (PDI) FocalPoint and Pinnacle's Transaction Manager to provide a better look at what the stores are selling and help to analyze the information.

PDI's FocalPoint forecasts item sales, analyzes data, gives up-to-date historic trends and shows what each store is selling. "FocalPoint is helping us with financial reporting as well as providing market-basket analysis, like what is selling with what," explained Sissel. "It will allow us to drill down so we can see specific information — if there is a cash overshortage problem, we can find the store and the cashier. We currently work on what we call a weekly flash report, which provides our district leaders with the status of their stores. With FocalPoint, they can see a report on a daily basis and judge it against history for more timely information."

The company's headquarters will also be pulling transaction data from stores in real time using Pinnacle's software. The program is currently up and running in six stores.

"We have automated replenishment, so if we sell one item, we ship one item," noted Sissel. "We pull daily item-movement reports from the stores to see what they sold in order to generate their next order, but sometimes the communication fails. Now we are implementing Pinnacle Transaction Manager. We pull all the transactional information as it happens and can track item movement from all the transactions at the registers."

The program pulls the information every minute and so far it has been working out well in the six stores, Sissel reported. "We are surprised at how quickly it works," he said. "We had the program at one store shut down for a week before we realized it, and when we turned it back on, the system took only 13 minutes to replicate the transactions from the entire week."

Another major undertaking still underway is a new labor-scheduling program for the stores from Park City Group. The company currently has 50 stores installed right now, and the program pulls item sales in 15-minute increments, such as coffee and foodservice, and generates a schedule from this information.

"We are trying to have our employees there at the best time to help our customers but still make it convenient for them," explained Sissel. "The store manager sets the skill levels for each employee and enters the times they are available to work. The program bases the schedule on customer count and product sales and the more qualified and available a person is, the more they will get scheduled."

Disaster Recovery

In addition to completing the installation of its WAN with FusionPoint, Spectrum Stores is focusing its loss-prevention efforts on protecting its data, creating a disaster recovery hot site located a two-hour drive away from its corporate office.

In the past, the company had used backup tapes to store information and now is using backup servers. "The site is only two hours away, but it is on a different electrical grid and telephone LATA," said Spradley. "Disaster recovery hot sites are something people are beginning to do a lot more."

She also explained that the more technology a company installs, the more information needs to be protected. "When I first started with the company, we had two servers, and now we have 18," she said. "Our corporate office burned down a few years ago, and since I've been here we have had a flood and major hardware failure. Now if something happens, we have duplicate information stored in another location."

Spectrum is also completing the rollout of PDI's Store Assistant. The stores use Verifone's POS systems and PDI back office, and the Store Assistant program equips each store with one Percon Falcon portable data terminal for merchandise receiving, auditing and inventory.

"We started the main project rollout two years ago and we just completed the final install," said Spradley. The system facilitates item receiving by scanning in merchandise and it also performs store audits and item verification.

"It also has a portable printer with it that is battery-operated, and store employees can print shelf labels so they don't have to price each piece of merchandise," explained Spradley.

Connecting the Loop

At Ricker Oil, the company is working on a variety of projects in hopes of connecting everything together and streamlining all of its processes, according to Safford.

All of the stores currently have DSL lines and the company is completing its WAN so it can move on to bigger and better things, like electronic invoicing with vendors.

"We received our first item file for our pricebook and are in conversations with several vendors to move forward with electronic invoicing," said Safford. "We feel it's a difficult process to depend on the managers to correctly receive all of the information, and it's labor-intensive. This way, we can get to line-item inventory and eventually to computer-assisted ordering."

Also, combining BI and loss prevention, the company is utilizing PerformanceRetail's Insite Retail Intelligence Suite to provide visibility of how products, stores and cashiers perform.

"We are in pilot with five stores right now," noted Safford. "The suite will give us marketing information and loss-prevention information, all using real-time data, which is huge. A lot of people have reports, but not a lot can say they are pulling real-time data where they can schedule alerts about an event so they can react to it more quickly."

Right now the system is pulling transactional data and event data including no sales and voids, and each cashier gets a scorecard to give managers more information and an easier way to keep track of what is going on in his store, Safford explained. PerformanceRetail is currently hosting the data on its server, but eventually, Ricker plans to take it over down the road.

The company would also like to eventually tie in the loss-prevention program with its video systems by ImageVault, which interface with the POS. n
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