How Buffalo Exchange Manages 200K SKUs

Rapper Macklamore may have made it cool for the masses to go thrifting and "pop some tags," but this is "business-as-usual" for Buffalo Exchange, a company that has created a successful enterprise by featuring high-end one-of-a-kind vintage clothing and a knowledgeable sales team. By implementing a retail management platform, it is now blending innovation into its vintage-inspired chain with real-time insight into its inventory chain-wide.

The Tucson-based company started in 1974 by Kerstin and Spencer Block as a 450-square-foot store that bought, sold, traded and took vintage fashion clothing on consignment. At a time when resale shopping carried a stigma, the Blocks were determined to reverse this trend. Between Kerstin's two loves of fashion and finding a good bargain, the couple grew the company into a 47-store, two-franchise chain across 17 states.

The brand, which generated $81.6 million in revenue (as of December 2012), features vintage clothing from the 1930s to the 1980s, thanks to customers who bring in their fashionable high-end apparel for resale, all sold in clean, fun stores with a boutique atmosphere. Consignment customers receive payment once their merchandise is sold, and at that time, have the option of receiving cash or trade credit for their used clothes. In addition to the vintage clothing, about 20 percent of the stores' merchandise is new.

The chain manages more than 200,000 SKUs, but struggled with how to see what merchandise sold best in which locations, as well as how to calculate margins. Meanwhile, each piece of merchandise has its own unique SKU, which is impossible to manage without an automated system. "We can sell between 4,000 and 5,000 SKUs a week. When you multiply that times 48 stores for 52 weeks a year, it shows the depth of what we are managing, purely from a replenishment standpoint," said Rebecca Block, the chain's vice president, and Kerstin and Spencer's daughter. "Internally, nothing talked together, or accommodated our SKUs. Instead, we would create new unique SKUs, replicate the number in our mainframe, and flood the operating system that was supported by DSL or T1 lines."

Buffalo Exchange tried to modernize its processes before. With most enterprise point-of-sale (POS) systems in the marketplace designed to manage traditional sales, they couldn't satisfy Buffalo Exchange's needs. Yet, the chain was determined to automate and distinguish its merchandise trades and cash purchases, and manage its unique inventory identifiers. The company was ready for an automated retail management platform that could pull customer information as they made a trade or purchase and store it in a centralized database. It also wanted daily reports on sales compared to trade, as well as automated updates of total cost of goods.

Buffalo Exchange was able to address its needs by adopting Celerant's Command Control platform. The vendor and retailer worked together to customize the platform to address its specific needs, and in 2012, the chain launched a new POS system capable of supporting and accounting for all of its desired buy, sell and trade transactions. A centralized database is integrated within reporting tools, and also within the chain's existing accounting software. The chain also uses the software's backend functionality, including its human capital management modules such as time clock functionality.

"I can look anytime, in real time to see sales for any given day, review a customer's purchase or trade history, and even determine if any customers are flagged as problematic, connected to questionable or stolen high-value merchandise," Block said.

Looking ahead, the chain plans to open new stores in Pittsburgh and throughout Florida, as well as launch an e-commerce operation. With plans to launch this spring, the site will curate and sell vintage clothing. Simultaneously, the chain will augment the site with a sell-by-mail program. Customers use a self-addressed, stamped bag to ship consignment merchandise to be evaluated. "Our POS terminal will conduct the process, and we will respond with a note revealing the value based on a cash or trade rate," she said. "Shoppers will alert us to whether they would like us to send a trade card or check."

As for POS-specific upgrades, Buffalo Exchange is evaluating new hardware, specifically equipment that is fashion-industry hardened to withstand store debris, such as lint and dust that can clog fans. Upgrades could launch as soon as 2017.

Editor's Note: Be sure to check out all of the 2015 Top Innovators, and nominate a manufacturer, brand or retailer to be a 2016 Top Innovator!
This ad will auto-close in 10 seconds