Retail's IT Pacesetters

Spotlighting IT executives who lead the pack in retail

Who are the "up-and-comers" in retail IT today? To find out, RIS gathered a list of candidates by speaking with retailers, analysts, our own editorial staff and advisory board and even some consumer goods executives. We were not seeking those executives who are already at the very top of their corporate structures, but instead were seeking executives in the director to CIO title range who are expected to move further up as their careers continue.

What we wanted were retailers that others identify as "pacesetters" from the perspectives of their vision and use of IT in retail, and their leadership qualities. What we found is a grouping of retail executives who are setting the pace for IT in their own organizations, and, if not already doing so, can be expected to set the pace more broadly for retail as a whole in the future. As you read on, you'll find some known quantities, but also some new faces. We believe all our retail IT pacesetters are well worth watching

John Bagen, Director, Merchandising Strategy and Infrastructure Albertson's Inc.

Number two U.S. supermarket chain Albertson's has over 2,000 stores in 31 states, is #35 on the Fortune 500, and has $35 billion in annual sales. John Bagen recently spearheaded the grocer's selection of Trigo as its enterprise data repository, and his efforts are now focused on retail revenue management.

One retail consultant describes Bagen this way, "He has the foresight to catch the big waves and build the internal business case for the high-reward technology strategy." Bagen himself describes the importance of IT like this: "Information technology plays a leading role in driving results. The scale, pace and complexity of retail operations necessitate leveraging technology as a strategic component in building sustainable competitive advantage. Albertson's has made the strategic commitment to deploy leading-edge technology integrated with transformational business processes in order to support our growth plans."

Victoria Cantrell, Senior Vice President & Chief Information Officer, Giorgio Armani Corporation U.S.

Giorgio Armani Corporation U.S. is the American branch of the $1.4 billion Italian fashion manufacturer and retailer. CIO Vicki Cantrell, who came to the company from Gucci, is very highly respected. As one analyst puts it, "She has transformed the way the company regards and uses IT, and has provided competitive business intelligence throughout the company, so that all associates have knowledge that brings real business value."

Cantrell describes the importance of IT in retail as follows: "Understanding the business — and your business strategies — is the first requisite in determining how best to utilize information technology. Retail is a data-intensive business. One of the best uses of information technology is to always enhance the capability for controlled, realistic analysis as it pertains to your market segment. In this climate, having the tools to analyze the business in a non-standard way, or in an actionable timeframe, will enable us to react to the trends, whether they are new or trends caused by external economic factors."

Bruce Ash, Vice President Information Systems, Dollar General

With 6,000-plus discount stores in 27 states Dollar General is perfect for the shopper looking to spend a buck. Shortly after joining the company in 1999, Bruce Ash championed the adoption of EDI-INT, significantly increasing operational efficiencies and slashing costs. Today, Dollar is pushing ahead with tools from IPNet Solutions Inc. Recent accomplishments (part of a three-year plan to use technology to improve turnover and streamline inventory levels) include new cash registers and flatbed scanners for all stores, and a satellite-based communications network linking stores with the corporate data center. To date, store-level SKU, perpetual inventory and automated replenishment in all seven distribution centers and more than 550 stores have paid off in lower inventories and improved in-stock position.

"We view technology as a key enabler of business processes and growth," says Ash. "We work diligently to align business and IT strategy, making necessary investments to facilitate inventory management and supply-chain initiatives. Our goal is to have systems that help differentiate us and give us a marketplace advantage."

Ric Francis, CIO, Safeway Stores Plc.

No relation to the U.S. Safeway chain, Safeway Pic is one of the UK's top grocery chains with 480 upscale supermarkets and convenience stores, $14 billion in revenue and 92,000 employees. Via a variety of innovative IT initiatives led by CIO Ric Francis — including deployment of a retail revenue management system powered by KhiMetrics — Safeway has increased its merchandising effectiveness and consistently met its financial goals.

"Technology will continue to be increasingly important for the retail industry," says Francis. Customer service is incredibly important at Safeway, and as such, it is a priority to enhance the customer shopping experience at our stores. Technology has a major role to play in making shopping easier, more interactive and ultimately more enjoyable. We have recently introduced electronic shelf-edge labeling and chip-and-pin readers, and we are also currently trying self-service checkouts. Technology is also fundamental in enabling us to have the best possible product availability."

Bill Franks, Executive Vice President & Chief Information Officer, Saks Inc.

One of the best-known names in retailing, Saks Incorporated is a leading operator of department store chains, including Parisian Carson Pirie Scott and Boston Store. Bill Franks leads all IT initiatives at Saks from his corporate CIO position while working with the individual business units to ensure success for the entire company.

Known as the key driver and enabler for the use of technology to improve bottom-line business results within Saks, Franks is highly regarded by analysts and peers. During Saks' 2002 Year-End earnings call on March 5, 2003, both Brad Martin, chairman, and Steve Sadove, vice chairman, credited technology for the company's gross-margin improvements, pointing specifically to price optimization from Spotlight Solutions for delivering "substantial margin improvement." One analyst says of Franks, "I think Bill is probably a genius. He took a very complex Saks environment and made it sing. He is loved by his staff and is a real heavy hitter in the industry."

Andy Laudato, CIO, Pier 1 Imports

Texas-based Pier 1 Imports is North America's largest specialty retailer of unique fashion-forward, decorative home furnishings, gifts and related items. The company sells more than 5,000 items imported from 50 countries in its 1,000 stores in North America, and it also has operations in the United Kingdom.

At a company with strong appeal to 30-something consumers, the 30-something CIO Andy Laudato is, according to one analyst, "probably the most technically adept CIO . . . a business visionary, a gifted team motivator, and an accomplished leader at a young age. He's going places!" Said another industry expert, "Laudato is a progressive CIO who really understands technology leadership. His implementation of a CRM program at Pier 1 has resulted in a significant cost saving for the organization."

Linda Dillman, Senior Vice President & CIO Information Systems Division, Wal-Mart Stores Inc.

Linda Dillman, who joined Wal-Mart in 1991, began in applications development for Wal-Mart in-store systems, Sam's Club, Wal-Mart specialty divisions, retail link and data warehousing. She moved up to vice president of Wal-Mart's international systems, where she was in charge of development and implementation of Wal-Mart systems. Today, she's responsible for overseeing the entire Information Systems Division (ISD) of the company worldwide. In addition to her other responsibilities, she's leading Wal-Mart's efforts in RFID, which one analyst calls "arguably the most important retail technology for the next ten years."

In her position at Wal-Mart, Dillman affects the global retail IT industry with any major corporate pronouncement, such as the demand that all suppliers use RFID tags on pallets and cases by January 1, 2005. "IT brings real value to any business, especially retail, when it supports innovation in the business," Dillman says. "Our role must be to identify where an improvement in the business process can have an impact on our customer's shopping experience, then find technology (or someone who can create it) to enable that change."

Brad Friedman, Vice President of Information Technology Burlington Coat Factory

Burlington Coat Factory Warehouse Corporation operates over 330 stores that sell brand-name outerwear at discounted prices. In 2001, under Brad Friedman's guidance and with help from Wincor Nixdorf, the retailer began overhauling its POS application, installing Metrologics barcode scanners, Epson printers, and IVI Checkmate debit terminals. The company has also deployed modular Beetle units that run on Linux, as it migrated systems to Linux servers, and implemented Java-based systems with a POS package from 360 Commerce.

"Information technology has transformed over the years from data processor to integrator and a business facilitator," says Friedman. IT's challenge, especially in the retail environment, is to manage and control IT to ensure business value is created and the benefits realized in an effective and fiscally responsible manner through informed decision making and implementation. In retail it comes down to improving the overall customer experience coupled with increasing our market share."

Patty Morrison, CIO, Office Depot

Office Depot, which ranks #166 in the Fortune 500, sells everything from paper clips and office furnishings to computer hardware at 1,000 stores worldwide. CIO Patty Morrison has been a vital help to this retailer achieving its mission of using technology to drive its entire business strategy. As one analyst puts it, "Patty gets it . . . she understands the value of technology adoption to the business." Another analyst characterizes her as "very sharp and an excellent business collaborator."

Morrison describes the importance of IT this way: "IT in retailing is the strategic enabler for fanatical customer service. Office Depot's customers depend on us to help them find product information and make purchases seamlessly through whatever channel serves them best — online, in a store or through a call center. Technology also enables us to gain insights into our customers for personalized offers and services that will make them successful in their own business endeavors."

Roger Underwood, Senior Vice President Information Systems, The Finish Line Inc.

Known for its signature "shoe wall," a typical Finish Line store carries an extensive variety of men's, women's and kid's athletic and casual shoes. With 450 mall locations in 43 states, the Finish Line is sprinting ahead of its competition by having bigger stores offering more apparel, footwear and accessories than the standard Nike/Adidas/Reebok shoe lines.

Roger Underwood took over his current position as senior vice president of information systems for Finish Line in 2000. Since that time, he has gained a reputation as a sharp-thinking vice president with a dedicated commitment to using technology in innovative ways to support corporate growth and enhance customer service. Underwood reports directly to Finish Line CIO Don Courtney.

Larry Smith, Senior Vice President, Planning and Replenishment, West Marine

The number one boating-supplies retailer in the U.S., West Marine, has 250 stores in 38 states and a business that's definitely shipshape. With Larry Smith at the helm, West Marine has streamlined operations at the distribution center level and increased overall supply-chain visibility to more than 400 trading partners.

"In order to improve supply-chain performance and customer service," says Smith, "as well as achieve a sustainable competitive advantage, we've expanded efforts to collaboratively manage inventory and promotional demand information. By implementing integrated supply-chain management solutions from JDA Software, along with custom processes, we have been able to achieve this goal with our 200 top vendors, who supply 90 percent of the items we carry."

Bill Homa, Sr. Vice President & Chief Information Officer Hannaford Bros. Co.

From a fruit-and-vegetable stand that began operating in 1883, Hannaford Bros. has become an upscale operation with 120 stores in the Northeast. CIO Bill Homa is always looking for ways to use technology creatively. In February, under Homa's leadership, the company solidified its image as a technology trailblazer by completing the first grocery transaction in the U.S. using a Linux-based point-of-sale (POS) system.

All Hannaford stores use high-speed T1 lines to connect to IBM and Compaq network servers running on Microsoft SQL Server 2000. For POS, the company uses Wincor Nixdorf Beetles, with Retalix Storeline Java POS software, and Red Hat Linux 7.2. Solutions from Symbol, NCR, Hypercom, Epson and Powervar complete the system, with IBM's Tivoli for remote systems management and Websphere MQ for connectivity. "Retailers are just coming to grips with the strategic importance of information technology," says Homa, "Grocery retailers, once known as laggards in strategic technology deployment, are leading the way in several key areas."

Stefano Gaggion, CIO Retail Brand Alliance

Retail Brand Alliance (RBA) has a portfolio of store brands — including Casual Corner, Brooks Brothers and Petite Sophisticate — that sell apparel at over 1,000 locations. CIO Stefano Gaggion focuses on excellent customer service and maximum customer revenue. His strategy? A single source for customer transaction data that recognizes a customer no matter how he or she touches the business. The database gathers data from numerous sources, including POS.

Last year RBA selected an all-Java enterprise application for POS from ADS Retail. Gaggion says the company will grow its business "by utilizing multi-channels, which integrate information between retail locations, direct marketing and wholesale customers. Key information will be shared via a Web-browser solution." He adds that data, "such as demographics, product preferences and size tendencies will be gathered about the customers and shared with our partners, stores and wholesale customers to drive sales and profitability."

Dave Waxburg, Director of Business Intelligence, CSK Auto Corp.

CSK Auto Corp. has 13,000 employees and sales of $1.5 billion at 1,100 stores in 20 states. Locations typically offer a store-specific mix of 13,000 to 18,000 SKUs. The company also operates a highly efficient network of 39 strategically located depots to provide approximately 75 percent of stores with an additional 65,000 SKUs on a same-day delivery basis. Through its extensive online vendor network, CSK makes as many as 250,000 additional SKUs available on a same-day delivery basis to approximately 75 percent of its stores. Up to 1,000,000 additional SKUs are available on a next-day delivery basis to substantially all of its stores.

Obviously, technology plays a key role in this distribution scenario, and Dave Waxburg displays an expert understanding of the value of IT for retail — both now and for the future. "As important as IT has become for retailers, I believe in the next decade we will see an exponential reliance upon technology for strategic differentiation," Waxburg explains. "Retailers will have the ability to handle each entity within its value chain on an individual basis. In addition, IT will be able to increase customer value through new and improved automation of various processes, utilizing new technologies like RFID, kiosks and self-checkout."

James Garoutsos, Director, Store Systems and Architecture, Eckerd Drugs

A subsidiary of JC Penney Corp., Eckerd Drugs has 2,700 stores in 21 states, primarily in the Southwest, Northeast and Southeast, and it offers books, cosmetics, photo processing and accessories in addition to prescription and over-the-counter drugs. James Garoutsos is known within the organization for his strong grasp of technology and how it can be transformed into business solutions. He has helped build the infrastructure for Eckerd's retail systems from host to store.

An articulate communicator, Garoutsos interacts well with staff from both the business and technology sides of the company. Asked to explain his view of the value and use of information technology in retailing, Garoutsos responded by saying, "Information technology's importance to the retail industry stems from its potential ability to improve two areas, workflow and the timely dissemination of information. The former allows retail to operate at maximum efficiency, which is not optional in today's environment; the latter provides greater vision to management as they attempt to foresee future trends and capitalize upon them."

Dean Iwata, Director of Retail Business Development Recreational Equipment Inc.

Recreational Equipment Inc. (REI) is one of the nation's largest consumer co-ops with 60 stores also open to the public providing sports gear, clothes and footwear. For its trailblazing use of technology, REI has proved to be a mountain-topper, winning in the "Best in E-commerce Innovation" category at the 2003 Retail Systems Achievement Awards last month in Chicago. Dean Iwata is playing a key role in shaping REI's vision and use of technology, encouraging the implementation of electronic applications — such as an employee relationship management tool from Workbrain.

Iwata is also helping maintain a consistent customer experience throughout all stores by seeing that retail management receives the information, processes and tools it needs for maximum productivity. "Infor-mation technology plays an important role in nearly all of our key retail initiatives," says Iwata. "These initiatives focus on the delivery of a high quality, consistent customer and employee experience. One current initiative focuses on leveraging IT to better staff our stores to meet customer traffic patterns. It will also reduce the time managers spend on scheduling administration, giving managers more time to focus on higher value interactions with staff."

Mark Laughlin, Executive Vice President & CIO, Guitar Center Inc.

Selling guitars, amps, drums, keyboards and professional audio equipment, Guitar Center is number one in its market. Mark Laughlin joined the company more than 12 years ago and has been instrumental in building a high-tech infrastructure, including multiple JDA Portfolio applications that support the company's astronomical growth. When Laughlin came aboard, the retailer had only 10 stores and $60 million in sales. Today, the company boasts more than 100 locations and over $1.1 billion in sales.

Asked what he considers to be today's key technology, Laughlin says, "Across the board it is software. Microsoft, IBM, Oracle, Tomax and JDA. Robust, stable code out-of-the-box is essential. Software maintenance, professional services and internal staffing remain a budgetary nightmare Unstable code has become the grim reaper of project deadlines. Not to mention the software industry's reputation for over-promising and under-delivering." Laughlin adds that the true killer app is "the network," and stresses the importance of "getting the infrastructure in place to Web-enable the enterprise."

Michael Relich, Vice President, Information Technology & CIO, The Wet Seal Inc.

With oodles of trendy mall-rat appeal, The Wet Seal, Inc. sells apparel and accessories in 624 stores across the U.S. When Michael Relich took over as CIO, the retailer was powering its POS systems with standard dial-up modem connections. Under Relich, the company is implementing DSL-based VPN technology from SonicWALL.

As the deployment began, Relich noted that it would provide stores with "a secure, always-on Internet connection, reducing our average transaction times and allowing for new store-based applications to improve efficiencies." Relich says his goal is "to provide a manageable, cost-effective DSL-based VPN solution to our stores to increase customer service." The benefits of the system's secure, constant connectivity include a 75 percent increase in speed of credit card transactions and a 100 percent success rate in polling sales at the end of each business day.

Michael Williams Vice President of Information Systems O'Reilly Automotive Inc.

The nation's largest specialty retailer of automotive tools, supplies and equipment, O'Reilly Automotive has over 1,000 stores. Seeking to improve business processes and enhance customer service, Mike Williams helped the company implement demand planning and replenishment tools from Evant, which has enabled the company to reduce its distribution center inventories by $66 million and decrease store inventories by approximately $20 million. The retailer has also increased inventory turns, improved buyer productivity and reduced labor costs. O'Reilly's inventory management personnel are now able to manage an estimated 90,000 SKUs.

Williams acknowledges the challenges of the retail business in 2003, and appreciates the potential of IT. "These are without question very challenging and exciting times for retail technology," he says. "On one hand you have to keep your eye on meeting current business objectives, and on the other, you have to keep your eye on, and implement, the tremendous amount of emerging technology that will allow you to remain competitive." And he has this to say about the importance of business relationships: "Collaboration with your trading partners and even your competition is critical to defining standards and best practices."