2005 RIS Pacesetters: The Fantastic 15

In the summer action movie "Fantastic Four," a GROUP of astronauts gain superpowers after exposure to cosmic radiation and use those powers for the betterment of society. Like the superheroes, the 2005 pacesetters rely on their special strengths — innovation, leadership, creativity and teamwork — to achieve new levels of success, even against such formidable foes as fierce competition, capital constraints and falling margins.

These 15 industry leaders were selected as being among the top performers in their field from a nomination list of more than 50 IT-savvy retail executives. Many of this year's pacesetters have created a successful strategy out of an innovative idea or capitalized on unique opportunities that continue to fuel their own success in IT and the success of their companies. Some names are well-known in the industry, but for the most part these are up-and-coming executives who are likely to be retail's next generation of CIOs.

What these rising stars have in common is that, like the "Fantastic Four," they've learned to leverage their special strengths to bring innovative, leading-edge IT projects to fruition and follow through to assure long-term success for their organizations.

Ed DeMartino vice president, CIO

The Children's Place

The Children's Place operates more than 750 clothing stores throughout the U.S. and Canada, and its store count is shooting up by approximately 30 percent each year. In 2004 the company purchased Disney's retail operations.

Following the company's acquisition, Ed DeMartino, vice president and CIO, along with his team at The Children's Place, integrated the more than 300-store Disney chain onto all of The Children's Place IT systems, including merchandising, planning and allocation.

DeMartino is currently heading a number of IT initiatives, one of which is implementing ProfitLogic's Markdown Optimization solution, which addresses its merchants' pricing need to gain better in-season visibility by leveraging analytics and consumer demand insights. "One of the potential wins near-term will be the rollout of zone pricing, which will serve as a great complement to our micro-merchandising capability," says DeMartino.

The retailer also is implementing purchase order management — the first phase of its supply chain logistics initiative. There are several other phases to the effort, which include product visibility, vendor collaboration and processing.

"This will provide us with much more visibility through the entire life of the product from design concept all the way to store delivery," says DeMartino. "We believe the long-term benefits are many, including increased visibility, efficiency and getting the right product at the right time, which should ultimately lead to enhanced profitability." In addition, DeMartino believes this initiative will increase the retailer's ability to manage smaller, dynamic groups of inventory, a feature that goes hand-in-hand with executing its micro-merchandising strategies.

"Our main strategy in IT has been to implement solutions which have the best ROI in support of the company's long range vision," says DeMartino. "We also have surrounded ourselves with highly motivated and talented individuals to support that vision."

Ann McCool senior director, sales channel systems, RadioShack

Ann McCool, senior director of sales channel systems at RadioShack, currently is leading the implementation of labor scheduling and time and attendance technologies. "Using traffic and tickets, store schedules will be optimized based on the customer patterns, resulting in associates being scheduled to meet customer needs rather than employee convenience," explains McCool.

The retailer also is in the process of implementing Web-based reporting of store KPIs. Data, including sales per hour, dollar per ticket and cellular conversions, will connect store employees to headquarters, helping to monitor performance.

In addition, RadioShack is upgrading its POS operating system. The retailer is converting the current POS application and operating system from SCO Unix to Windows, enabling the integration of the Web with POS applications and simplifying maintenance and support of the hardware.

"The last two years have been focused successfully around updating and improving our supply chain applications," says McCool. "This year several of our major IT priorities center on development and deployment of applications and reporting tools that enhance store operations procedures in support of the RadioShack growth strategy." These applications enable the retailer to focus on payroll management, address weaknesses in the store, and simplify and improve store processes.

"Through early results we are seeing improvement in same-store sales, the overall customer experience and in employee satisfaction," says McCool. The retailer also has measured a positive financial impact by eliminating half its in-store servers, from 10,400 to 5,200 with the POS upgrade. The savings translates to a 50 percent reduction in the amount of store server hardware that RadioShack owns and supports.

"With ROI validation and our advanced project methodology we know that our IT resources and dollars are in support of the company priorities," says McCool. "Within the IT environment we talk regularly with our neighboring retailers, utilize outside partners to validate best of breed solutions; and we review standards such as the ARTS data model and IX Retail schemas for implementation opportunities that reduce development/integration time and effort."

Robert Fort, director of IT Virgin Entertainment Group

Robert Fort, director of IT, and his team at Virgin Entertainment Group recently implemented a near real-time data warehouse/business intelligence solution that provides stores and home office personnel with updated sales-related KPI, customer traffic and SKU-level purchasing pattern information every 15 minutes.

The first phase of the project, which included capturing customer traffic and line-item level POS transactional data, was completed in November 2004. The inventory phase of the project is scheduled for completion in October 2005, to be followed by labor and market trend data captures. Other projects will be initiated and/or completed before November 2005, including chain-wide rollout of a new POS, portal-based task management, a new Digital Listening Station kiosk application, digital signage pilot, data center relocation and VoIP rollout.

"The impact of our data warehouse implementation on store performance has been positive, dramatic and immediate," says Fort. "Assuming 20 percent of the gross margin lift in the 18 weeks following implementation was attributable to the warehouse's near real-time reporting, the first phase development and hardware costs have already been recouped."

Beyond that, Virgin has begun changing the culture of the company away from one that used to just review results, to one that is now actively engaged in influencing its results. Future projects are aimed at extending that philosophy, as well as improving the customer experience, store efficiencies and operational costs.

"Our goal is to directly empower the person who can affect the results," says Fort. "For example, internally — putting near real-time data in the hands of our store managers, merchandisers and sales associates, even before the executives had it, has led to a dramatic improvement in store performance. Externally — our belief is that empowering the Virgin customer will lead to improved satisfaction, and ultimately sales."

Charles Dean, vice president, business relationship and technology office, CVS Pharmacy

Charles Dean, vice president of business relationships and technology office, and his team recently implemented a number of important projects, including a Pharmacy Service Initiative (PSI) which brought workflow and standard process to the pharmacy, Automated Doctor Faxing and VIPER loss prevention application suite. CVS also implemented DeXma -- a new distribution center application and Assisted Inventory Management (AIM).

"Overall, our initiatives target hard business results," explains Dean. "PSI drove a significant improvement in customer service metrics and Automated Doctor Fax improved communications with doctors while saving more than 500,000 hours in pharmacy labor. VIPER continues to enable CVS to deliver industry leading shrink numbers, while DeXma allows us to service the same number of stores with a reduced distribution center footprint and significantly less labor." AIM continues to drive in-stock performance while balancing inventory investment.

"The initiatives we are working on will further allow us to optimize our store labor investments, improve customer service, and streamline company-wide processes," says Dean.

He attributes the retailer's recent success to strong governance. "Our business community is heavily involved in the prioritization and investment decisions in the initiatives we work on," explains Dean. "As a key enabler to business strategy, we continuously look for opportunities to remove technology as an obstacle and work closely with the business to ensure we exploit the capabilities we have, as well as push our technology and partners to deliver business results."

George Medairy, director, corporate IT, Sheetz

Sheetz, which operates more than 300 combination convenience stores and gas stations, plans to open 25 new stores in 2005, which keeps the IT staff pretty busy. A number of important initiatives are being led by George Medairy, director of corporate IT at Sheetz.

In the past quarter, the retailer implemented Slim32, a lease management application from Accruent, in addition to automating lease payments. Sheetz also deployed an automated solution for its Construction Warehouse (parts and equipment inventory) utilizing Lawson financials, Retek WMS, MCC Remote Worker software and some custom software programming. "The system utilizes remote work orders and provides inventory, auto replenishment and integrated purchasing for this part of our business," says Medairy.

The retailer is preparing to implement new microwave-broadband communications between its distribution center and corporate office. It also is testing broadband satellite communications for its Security Operations Center (SOC) and several stores to improve video and voice communications for store-level security.

Other projects include enhancing its loss investigation process and video surveillance for the SOC. The retailer also has an ongoing RFID test within one of its stores, at its distribution center and in conjunction with one of its manufacturers. Sheetz also is expanding its WebSphere portal process and is preparing to launch an employee portal for all employees as a precursor to cafeteria-style benefits planning.

Debbyn Milligan director of operations management technology the Home Depot

"We are focusing on multiple initiatives that provide tremendous value and long-term gain," says Debbyn Milligan, director of operations, management technology at The Home Depot. Specifically, Milligan's area of operations is streamlining communications to the company's more than 325,000 associates via dashboard reporting, mobile connectivity, task management and portal integration.

"IT initiatives are an integral part of the company business, not independently focused or managed," says Milligan. "There is leadership collaboration, business ownership and prioritization that focuses on putting our efforts into the best project ROI with increased execution that then transforms our strategy of staying true to "Improving Everything We Touch" by enhancing our core, extending our business and expanding the market." Specifically, the DIY retailer is taking task out of its stores and increasing labor productivity by significantly reinvesting in technology that simplifies information to be quickly and accurately accessible.

Collaboration has contributed to the retailer's success. "Our business leadership drives the requirements and embraces enabling technology in all the areas cross-functionally," says Milligan. "We've developed a multi-year strategy to implement standardized systems and build a robust IT infrastructure that aids and increases execution by focusing upon return on investment and speed of implementation."

Bob O'Hern, vp of information systems Ritz Camera Center

"Our largest project is the selection and implementation of a new POS system," explains Bob O'Hern, vice president of information systems, Ritz Camera Center. "We currently run on a 12-year-old legacy system of software and hardware that is no longer able to support the needs of our business."

During the pilot phase of its new POS, Ritz Camera has seen improved employee productivity and far greater visibility into customer transaction history in the store. "In the near term we will be adding functions that will provide much more flexible pricing, promotion and discount capabilities, better labor budgeting and scheduling, and improved efficiency of many back office and inventory related activities," says O'Hern.

The system also will be a platform for the retailer to communicate with the stores on a real-time basis and extend the reach of its corporate-based, company-wide databases out into the hands of each sales associate in the 1,300 stores.

"At Ritz Camera and Boater's World we have never implemented technology for the sake of technology," says O'Hern. "If we have systems or business processes that are working and supporting the business effectively, we will leave them alone."

Bill Parry, vp of logistics Giant Eagle

Giant Eagle has recently implemented two important, innovative technology systems within its logistics — GC-3 application from G-Log and an outbound systems management program from TMW. "The main objective of both of these projects is to allow us to more effectively manage information in order to reduce operational costs and eliminate unnecessary activities," says Bill Parry, vice president of logistics for Giant Eagle. The Web-based GC-3 system application provides the grocer with visibility of purchase orders throughout the fulfillment process, from order creation to delivery to the distribution centers or DSD, and system notifications are setup/delivered on an exceptions basis.

"Technology systems have allowed us to proactively anticipate heavier periods in our freight business, such as those around the larger seasonal holidays," says Parry. "In addition, we are able to share information with our supplier partners related to their performance, which allows our partners to play a strategic role in working to achieve or improve our logistics goals." On the outbound side the grocer has reduced idle time to less than 12 percent (from 40 percent), has experienced a significant positive impact on safety and training programs, reduced out of route miles and installed labor standards.

Future projects will focus on managing the product flow and eliminating touches in support of Giant Eagle's ongoing goal to identify and eliminate unnecessary operational costs.

"We believe that first you need to have an established and clear strategic plan and then the appropriate technology in place to support the plan," says Parry. "Technology is not a substitute for having a strategic plan — it is an enabler."

Anne Hodkin, director of IT, Holt Renfrew

At Holt Renfrew, Anne Hodkin, director of IT, has spearheaded a network infrastructure project and developed a POS system that facilitates strong customer relationships. As the first retailer in North America to introduce biometrics for sign-on, the company provides staff with technology that gives it ownership of all transactions. The retailer applied this technology to its workforce management system with a time and attendance application. In just three months, the retailer has seen a positive impact in its ability to transform workforce processes to better serve customers and employees. Expanding on this success, Hodkin and her team are rolling out employee self-serve scheduling to empower staff members to manage their availability. Partnering with business department vice presidents, the retailer has implemented Web-based time and attendance using biometrics.

Other projects include implementation of a data warehouse with exception-based reporting, POS upgrade to improve privacy standards and Blackberry technology to help mobile workers stay connected.

The retailer is investigating Voice over IP and other emerging technologies to further improve service and productivity. "With timely, effective and relevant information staff members are more empowered and accountable for their own productivity and performance," says Hodkin. "Blackberries keep staff connected, especially in the buying markets around the world. Workforce management will optimize staff availability for customer service while considering staff preferences."

Larry Smith, senior vp planning and replenishment West Marine

As senior vice president of planning and replenishment for West Marine, Larry Smith has spearheaded a collaborative supply chain initiative with more than 200 suppliers that has substantially improved sales and in-stocks, while lowering logistics costs.

Smith and his team recently implemented a "multi-echelon" or aggregate ordering solution in supply chain forecasting and replenishment, based on the separate JDA store and warehouse replenishment systems.

Currently, Smith is implementing a next-generation product information management system incorporating Web-enabled workflows based on IBM's Websphere Product Center. Later this year, the retailer will implement a vendor portal network providing real-time information exchange between West Marine and its CPFR partners.

"These related implementations have significantly improved supplier fulfillment as well as supplier and retailer supply chain costs," says Smith. "The multi-echelon solution establishes a standard of retailer-driven CPFR automated forecasting. Order forecast accuracy is in the 85 percent to 95 percent range, and more than 70 suppliers are loading the order forecast data directly to their MRP systems, creating a direct link between retailer and supplier supply chain forecasting systems."

Smith expects that the product information management initiative currently taking place will provide expanded accurate data, increased speed to multi-channel markets, and leveraged information beyond the capabilities of the global registry.

"Our approach to collaborative commerce has been significantly influenced by the work of the VICS CPFR Committee, on which I serve," says Smith. "Since we faced a fragmented supplier base, our chosen model in solving the bull-whip effect has been an accurate retailer-led forecast. Our chief IT strategies have been around creating concentric computing solutions and migrating to Web-based solutions that significantly streamline development and upgrades."

John O'Hare, it director The Paradies Shops

The Paradies Shops has been an airport retailer for more than 40 years, but until two years ago the company had not used technology to enhance its business processes. After becoming director of IT, John O'Hare developed a plan to install the GERS Retail system running off the IBM S80 platform and integrated Microsoft Business Solutions accounting software with the GERS merchandising and warehouse systems.

O'Hare and his IT staff of only three other people rolled out more than 800 IBM SurePOS registers with Triversity POS software to all locations, along with Symbol UPC scanning capability. This POS rollout covered 362 stores across the country. A T-1 and DSL network was then set up between each of the locations and the host system.

"We completed the rollout in record time and we now poll and update every register every night and have the capability to report next day's sales by 4:00 a.m. the following morning," says O'Hare.

The retailer recently completed the distribution of more than 225 Blackberries to staff members. "Paradies also has recently installed Datavantage's XBR Loss Prevention software application, which should have a positive impact on reducing shrinkage," says O'Hare. The retailer is in the final stage of implementing the GERS Retail Analyst software application that will allow the company to get even more detailed exception reporting on sales.

Tom Dillon, vice president merchandising systems Follett Higher Education Group

Tom Dillon, vice president of merchandising systems, Follett Higher Education Group, is responsible for overseeing how Follett manages its more than 250,000 style and color combinations to create optimal, individualized assortments for 700 college bookstores nationwide.

To prepare for the future, Dillon managed implementation of new merchandising and POS systems. With his team, he also implemented a data warehouse, loss prevention and catalog/call center systems. To improve operations, the team integrated e-commerce and merchandising systems for order fulfillment at stores and the catalog warehouse.

Dillon is leading current development for a custom .NET store application to manage textbook operations, integrated with merchandising, financial, wholesale, POS and e-commerce systems. He also is managing implementation of financial planning, assortment planning and item planning systems.

"New merchandising, POS and LP systems have enabled Follett to achieve record sales, while cutting shrink in half within the first two years of operation," says Dillon. "Increased accuracy of sales and on-hand information, with improved accessibility via the data warehouse, has allowed vastly improved merchandising decisions, and replenishment processes have increased turns as well as in-stocks, improving overall customer service levels." The retailer's future projects are expected to dramatically improve sell-through, reduce publisher returns and markdowns, decrease inventory, further increase sales and margin, and trim labor costs.

"When implementing packages, IT must work collaboratively with users in defining enhancements, but then must respect the business owners' judgment when categorizing modification requests as mandatory versus nice to have," says Dillon.

Mark Holifield, evp supply chain management Office Depot

Office Depot is completing its last few months of a multiyear IT initiative named Magellan. This program includes employment of a broad footprint of the Retek suite of merchandising applications and AC Nielsen store design and space planning software.

During the past two years, the retailer has implemented demand forecasting, merchandise financial planning, assortment optimization, merchandising data warehouse, foundation data, plannogramming and store design software. Office Depot is in the process of executing advanced inventory planning and further releases of merchandise planning related applications.

"We are very pleased that, in conjunction with the software applications, we also have implemented key supporting processes that are improving our merchandising and supply chain performance," says Mark Holifield, executive vice president, supply chain management. "For example, we have implemented new and more robust processes for merchandising, financial planning, assortment planning and plannogramming. We also have trained our merchants effectively in using the tools and processes. A side benefit of the Magellan program is that we have learned a lot about managing large-scale projects to successful completion."

Jeffrey Allison, EVP planning and allocation JCPenney

Over the last four years, Jeffrey Allison, executive vice president, planning and allocation, and his team at JCPenney have implemented a unique suite of fully integrated merchandising applications. The applications include merchandise and financial planning, store planning, assortment planning (co-developed with ProfitLogic), fashion allocation (co-developed with ProfitLogic), NCR Teradata's DCM basic replenishment, markdown optimization (co-developed with ProfitLogic) and purchase order management. Current efforts are focused on lifecycle price management and follow-up releases of the core applications. Future implementations will include space planning and demand chain optimization.

JCPenney has successfully implemented integrated, math-based planning, buying and allocation tools across all merchandising processes. "This focus on merchandise optimization has helped drive impressive results during the company's transition to centralization, including four straight years of comp store sales growth, improved unit turns, increased speed to market, a more than 700 basis point improvement in gross margin and 98 percent in-stocks on advertised items," says Allison. "Continued improvement is expected as the merchandising teams build experience in merchandising optimization applications."

Since the inception of JCPenney's centralization efforts in 2000, four fundamental philosophies have guided the development and implementation of the company's merchandise optimization applications. "First, keep the customer first," explains Allison. "Second, build a vision that differentiates the business. Third, gain management alignment and communicate broadly. Last, empower end-users to drive application design and rollout."

Neil Maizen, vice president of strategy and technology, Canadian Tire Dealers' Association

Neil Maizen, vice president of strategy and technology at Canadian Tire Dealers' Association, along with his team, recently implemented a new wide-area IP network, connecting all the stores together and to Canadian Tire Corporation. The retailer is in the process of implementing new POS hardware and an updated version of POS software throughout its stores, replacing more than 5,400 lanes in more than 460 locations. Looking forward, Canadian Tire is looking to implement more customer-facing and customer-empowering solutions, and tools to help associates better serve their customers.

"Our performance is driven by the ability of our dealers to drive their individual businesses," says Maizen. "A stronger communications infrastructure helps us deliver information they need to make business decisions, and makes it easier and more efficient for them to collaborate with Canadian Tire Corporation." Maizen expects the new POS to open avenues to greater customer service and interaction that were not available to the company before — paths that can grow transaction volumes, and allow the retailer to introduce new products, services and value propositions. "Our ability to deliver enhanced customer service will be one of the ways we differentiate ourselves in the marketplace and will support our comp store growth objectives."

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