Hopes Hinge on Retail Systems Makeover

With a renewed focus on its home turf, The Store of Hawaii turns its attention to upgrades to its IT infrastructure.

In Hawaii, the term Ohana describes the family and its tight bond and cooperative spirit. Hilo Hattie, popular Hawaiian retailer, has adopted the expression into its company culture as well as the shopping experience it strives to provide for its customers.

Its a value of which the company is extremely proud, says CFO Kenneth Uemura. Even when we hire people, we first make sure they can fit into Ohana. Ohana is so ingrained in the company culture that it is even invoked in discussion of the companys new retail systems initiative, which includes the implementation of a new merchandising system and impending selection of a new POS solution. The implementation involves everyone using the system in any way a true team effort, says Uemura.

Focus on growth from within

The Ohana spirit has sustained Hilo Hattie considered to be the largest Hawaiian retailer and manufacturer of Hawaiian, resort and casual fashions during its 43-year history, says Uemura.

Named after the late actress and entertainer of the same name, Hilo Hattie provides a one-stop shopping experience for tourists and other Hawaii enthusiasts. Its candies, music, gift items and colorful Hawaiian fashions draw more than 2 million visitors annually to its 12 stores (eight island and four continental U.S.), earning it a reputation as the Store of Hawaii.

And recently, the companys focus on its Hawaiian roots has sharpened. While Hilo Hatties venture to the mainland in 1998 (to Orange, CA) has been fruitful, other mainland expansion efforts (such as in Orlando, Las Vegas and San Diego) have not fared as well.

Cold weather in some locations, for instance, put the chill on the sale of Hawaiian T-shirts. The retail downturn sparked by 9/11 also hurt the company. As a result, some stores were eliminated in a partial mainland pullback orchestrated by Uemura and the rest of the new Hilo Hattie management team that took over in 2001.

Today, ambitious new plans indicate that the surfs up for Hilo Hattie, with growth initiatives centered on Hawaii. The company announced in late February that it is planning a new flagship store, a 29,000-square-foot location in the heart of Waikiki.

With Ohana on the tip of his tongue, Uemura says: All recent expansion I would characterize as internal. Efforts during the past two years have focused on reinvesting in IT infrastructure. We realized right off the bat that our support system, including our software, was outdated.

To accommodate growth projects such as the new flagship store (scheduled to open during the summer of 2007), Hilo Hattie sought a replacement for its existing R12 core merchandising system, an older system from STS Systems, which has some support and upgrade issues, says Lisa Carpenter, technical support manager of IS.

Its basically a green screen-type system. There wasnt a lot of flexibility for our buyers. It wasnt a relational database. And with new people coming on board, it was pretty tough for them to learn, she says.

As a mid-sized retailer in the middle of the Pacific (Hilo Hatties gross annual sales total approximately $80 million), the intensive selection process to replace the merchandising system involved its own unique set of challenges, says Hilo Hatties IT director, Robert Slike.

We put out an RFP and evaluated almost 30 different systems, says Slike. It was surprising how many [vendors] dropped out [of the process] on their own. Some felt they were too large for us. Others, because were a specific type of retailer, said: No, we cant support that. And some felt Hawaii was just too far away.

Ultimately, Hilo Hattie chose a vendor from the mainland, but one relatively close-by, selecting the merchandising, inventory, planning and analytics solution from San Diego, CA-based GERS Retail Systems during the first half of 2005. Following an aggressive implementation schedule, go-live is anticipated for this June.

Hilo Hattie installed a new server at its corporate office in Honolulu during 2005 to accommodate the new merchandising solution while still integrating with existing front-end and back-end platforms. It selected IBMs eServer pSeries 550 from Retail Store Systems, part of the Torex Retail Group based in Cumberland, RI.

As part of Hilo Hatties technology overhaul, it is evaluating POS systems to interface with the GERS merchandising system. The POS selection process, which began in November, is expected to conclude this summer, Carpenter says. The new POS system is expected to feature line busting and other wireless capabilities.

Better integration with warehouse

Slike and Carpenter note that the older merchandising system required digging out data, writing reports and correcting errors, and that the more accurate and accessible GERS system will reduce manual processes to improve productivity as well as integrate well with its Hawaii-based DC to flow items through to stores faster.

Regarding assortment, the mix varies significantly among Hilo Hattie stores, particularly with mainland vs. island locations. Although there are cross-store basics, such as some Aloha shirts, the company depends on store managers to stock each store based on individual store sales data. The merchandising system will give the company the information it needs to do that better, says Uemura.

According to Slike, the sophistication of the new GERS system was particularly relevant with the new flagship on its way. The new outlet in Waikiki is expected to generate far more traffic than the current flagship, which requires a 10-minute shuttle ride from the main shopping and entertainment district.

Hilo Hattie says GERS integration with state-of-the-art technology at the new flagship store will offer a different type of appeal for consumers: The latest in audio-visual, retail signage and communication systems, such as plasma screens and interactive kiosks which also should drive sales.

The content of these systems will be in the hands of the marketing associates, who will be able to gauge the sales results of individual advertisements, almost in real time, Slike says. He expects the media, such as footage of surfers riding the waves, to capture customer attention. Were trying to bring Hawaii to them, he concludes.
Not to mention the spirit of Ohana.

Michael D. Cole is a free-lance writer covering the retail, textile and apparel industries.