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07/25/2006

Industry News for the week of July 25, 2006

HOTLINE


Jo-Ann Stores Increases Productivity by Adding Mobile Capability
Jo-Ann Stores deploys Symbol Technologies' Mobility Services Platform at 278 of its high-volume stores. The platform includes mobile computers and Wi-Fi network infrastructures designed to provide Jo-Ann employees with access to information in real-time and improve customer services as well as productivity.

As a result of the implementation, Jo-Ann reports increased productivity at fabric cutting stations, check-out stations and in many craft merchandise areas. The mobility facilitated by the combination of data capture and real-time computing in the Symbol MC3000 computer allows Jo-Ann Stores to remain on the sales floor while they process and complete special-order requests, check prices, stock inventory and enact immediate price.

"Jo-Ann's entire customer service model sets us apart from our competitors," says Alan Rosskamm, chairman and chief executive officer of Jo-Ann Stores. "We take extra steps to ensure that visitors to our stores are inspired and provided with the most comprehensive craft and fabric offerings in the industry. Symbol's cost-effective mobile systems put valuable information and convenience in the hands of each store associate enabling us to more efficiently manage our business."

The Symbol system currently serves 164 Jo-Ann Superstores and 114 top-selling traditional stores. The retailer plans to install the same solution in newly constructed stores and eventually upgrade all remaining stores.


TECH TACTICS

Self-Checkout Slashes Sales of Impulse Items
Shoppers are 45.4 percent less likely to purchase impulse items when they use self-checkout, according to IHL Consulting Group's market study, "2006 North American Self-Checkout Systems." In 2005, consumers spent $110.9 billion on self-checkout transactions, up 35 percent from the previous year. However, sales of impulse items, including gum and mints, chocolates and other candy, soda and water, and magazines, have dropped significantly.

"Retailers are being forced to rethink their merchandising at the front end as they deploy self-checkout systems," says Greg Buzek, president of IHL. "The impulse displays have not caught up with this new technology." One way some retailers are combating the problem is by attempting to appeal to consumers' other senses, says Buzek. "Retailers such as Meijer and Kroger are offering items such as rotisserie chickens and fresh-baked breads (in the checkout area) to rely more on the sense of smell to drive sales rather than simply visuals when trapped in a staffed lane."

Lowe's Aims to Increase Profit
Lowe's implements Acorn Systems' Profitability and Analysis solution. The system provides a platform for corporate performance management and includes functionality in activity based costing. Acorn's application is designed to provide visibility into the profitability of individual stores and products.

Danier Leather Improves In-Stocks
Danier Leather deploys Retalon allocation expert software system. The analytic system is expected to help Danier Leather improve its in-stock position and reduce time spent on transferring merchandise between stores. The software automatically determines the viability of an inter-store merchandise transfer, allowing one store to eliminate overstocks while another decreases out-of-stocks.



NEW TECHNOLOGIES

StoreNext Releases Category Analyzer
StoreNext Retail Technologies releases a new addition of the Category Analyzer application to its online suite of connected service offerings. The application enables independent grocers to process critical sales and profitability information. The graphical layout of the Analyzer allows item movement and reporting comparisons as well as tracking and capture of in-store movement, costs and retail data.

ADT Anti-Theft Protects Retailers
ADT Security services unveils the Sensormatic anti-theft system designed to help protect stores with smaller exits measuring between three feet and six feet in width. This system is mounted directly on a store's entry or exit door and comes as either a single or double door unit, measuring three feet and six feet in length, respectively. The combined system is called the Ultra Max 3020L and is constructed using acousto-magnetic technology.

SUPPLIER SCENE

BCBG Max Azria Group Selects E-Commerce Partner
BCBG Max Azria Group signs a multiyear agreement with GSI Commerce under which GSI Commerce will provide a full-service e-commerce solution for its BCBG Max Azria and BCBGirls brands. With an expected launch in the first quarter of 2007, the BCBG Max Azria and BCBGirls Web stores will feature a range of products including women's ready-to-wear, evening dresses, suits, separates, denim, eyewear, swimwear, footwear, handbags and small leather goods.

OGIO Drives Global Trade Efficiency
Bag designer OGIO implements TradeCard Platform from TradeCard, to generate new process efficiencies that will eliminate paper-based and manual processes, automate transactions from order to payment and leverage online financial services to support the company's growth. TradeCard's SourceView will provide event tracking functionality to control the movement of goods in the supply chain and enable visibility to eliminate PO delivery surprises.

ALLIANCES

Intermec and Symbol Settle Intellectual Property Dispute
Intermec and Symbol Technologies reach an agreement settling all outstanding intellectual property disputes between the two companies. Under the agreement, Intermec and Symbol will cross-license certain patents and enter into a four-year covenant not to sue with any respect to remaining patents. Both parties have released patent infringement damage claims that may have existed on the settlement date or may arise before the covenants expire. The specific terms of these settlements are confidential.


CommercialWare Announces Microsoft Compatibility
CommercialWare software solutions are now compatible with the Microsoft Windows XP operating system and utilize Microsoft SQL server, achieving Gold Certification status through Microsoft's Gold Certified Partner Program. By investing in the Gold Certification, CommercialWare, a subsidiary of MICROS, expands its market for its suite of applications, and also extends the quality of service it can provide to customers.
MONEY MATTERS

Safeway 2Q Profit Increases
Safeway announces an increase in second-quarter profit aided by strong sales of gasoline and a benefit related to a tax refund. Profit rose to $246.2 million, or 55 cents per share, in the quarter ending June 17, from $134 million, or 30 cents per share, a year earlier. The latest quarter included a $58.5 million, or 13 cents per share, reduction in income tax expense.

RadioShack Reports a Net Loss
RadioShack incurs a net loss of $3 million or $0.02 per diluted share for the quarter ending June 30, 2006 versus net income of $52 million or $0.33 per diluted share for the quarter ended June 30, 2005. Earnings results were reportedly adversely affected by lower sales of wireless in RadioShack company-operated stores. Costs in connection with the company's turnaround plan and related restructuring activities reduce the company's pre-tax earnings by $21 million. Those costs include: lease terminations, store liquidation activities, inventory reserves and fixed asset write-downs

EXECUTIVE INTELLIGENCE

How a Retailer Can Effectively Launch a Traffic Measurement Program
by Bill Martin, co-founder, ShopperTrak

In ever increasing numbers, retailers are collecting and analyzing customer traffic data -- information on the number of shoppers that enter a retail store by day of the week and time of day. They are doing so because traffic data provides the only clear measurement of the sales opportunity that a retailer has created for their individual stores to convert to actual sales.

However, despite the clear benefit of traffic data, experience has demonstrated that incorporating this valuable metric into the decision making process of an organization requires careful planning and a systematic approach in order to insure success.

The following is a summary "How To" guide for retailers who are contemplating the introduction of traffic counting to their organization and, perhaps, a troubleshooting template for retailers who have partially introduced traffic to their organizations, but have found acceptance stalled.

Step One: Involve the Entire Organization Early
Traffic data, properly used, will have an impact in virtually every facet of your organization. Senior management will use the data to evaluate the overall attractiveness of their offering to the consumer; store operations will use it to assist in labor allocation and evaluation of labor quality; marketing will gain insight into the effectiveness of their campaigns in attracting prospects to stores. HR may eventually want to use conversion rate as a performance metric. And IT will have to be involved throughout in the processing of the information.

Once everyone is involved, move to…

Step Two: Set Management Expectations Immediately
You may think explaining to your management team that "Traffic is a Metric, not an Answer" is an exercise in the obvious, but experience shows that is not the case. Traffic data unearths questions that may not have been previously asked in your organization. However, the answers to these questions require careful consideration and evaluation of the data over some period of time.

This last point cannot be overemphasized. Snap decrees to improve conversion rate by 10% across the board based on one week's data are a good way to build resentment toward the new system and, in the absence of plans tailored to each region, district and store on how to accomplish this goal, unlikely to produce the desired result.

Step Three: Design and Mange a Comprehensive Pilot Program
An ill-designed and poorly managed pilot will almost always result in inconclusive results; which, in turn, leads to management disappointment and uncertainty. While all the elements of a successful pilot cannot be captured in a brief article such as this, they certainly include the following key components:

1. Build in Data Quality Controls—Pilots are, by definition, a test environment where errors and missteps are inevitable. Be sure to build constant checking and evaluation of the accuracy of the traffic, sales, transaction and labor data into the design of your pilot.

2. Set Reasonable Goals—"Show me the ROI," is the baseline mantra of every pilot program. While it is absolutely imperative to clearly establish the value of investing in traffic measurement, it is unreasonable to expect, during a two month test using a small subset of stores, that labor hours can be redirected and marketing dollars reallocated to conclusively clear a pre-set hurdle rate. Having said that, the pilot must still:

3. Prove the Value—Your pilot should generate the new insights into and original questions about your business touched on above. You should choose a set of stores that represent a microcosm of your organization. You should build in store comparison scenarios, "mini-tests," such as a direct mail program during the pilot period, and ancillary inquiries (a popular one being, "Does the conversion rate improve when the manager is on duty?").

Step Four: Build Organizational Education into Your Budget
Change can be threatening. If you don't explain the benefits of adding traffic information to the evaluation of store performance, regional, district and store managers will, at best, not utilize the information to its full effectiveness and, at worst, will look for every opportunity to question the accuracy and usefulness of the information.

The field needs to know both that senior management will not use conversion rate as an indiscriminate "performance club," but rather as a tool to determine opportunities for performance improvement. With that reassurance, associates will be open to further education on how to read and interpret reports and how to turn that information into effective management change.

Step Five: Choose a Traffic-Counting Vendor Carefully
As with any enterprise-wide technology change, the prudent retailer should decide on a vendor based on their technical expertise; availability of service and support; customer references; assistance with implementation and analyses; and industry reputation. For instance, there are a variety of types of traffic counting devices, but they vary widely in accuracy and reliability. Choose a technology that works with store doorway design, likely traffic patterns and different store locations (e.g. in-mall vs. freestanding).

Management of traffic data is a service provided by a handful of traffic counting firms. Such a service takes some of the burden off your internal IT resources and can make startups go faster due to availability of existing systems and reports.

Check the vendor's history of innovation. Are they committed to traffic counting and to the retail business, or is counting a sideline to them? How long have they been in business? What do people in business media and in trade associations have to say about them?

The addition of traffic data can add true insight to retail management. If you follow these guidelines, the likelihood that these insights will become part of the fabric of your organization increases dramatically.