Of Course, Retail Computer Systems Do Inventory Control
But the Newest One Do a Lot More Than That
By Cheryl Ursin
By Cheryl Ursin
"You have got to have foresight," said Jeff Sukowski, manager and wine buyer at Sal's Beverage World, a two-store operation based in Elmhurst, IL. "You shouldn't start in a business without the anticipation of growth."
That's why, when Sal Liotta, owner, looked for a computer system for his stores, he searched for one that could handle, not the business he was doing at the time, but the business he hoped to be doing in the future.
And that's why, when the stores' wine club grew much more quickly than Liotta and Sukowski realized it would, the computer system was flexible enough to allow the stores to adapt. Currently, the 1,200 members of the club receive discounts on wine-club purchases, figured automatically by the stores' computer system. The system also gives sales prices on featured items to the 6,000 preferred customers who receive special mailers from the stores.
Like many savvy retail operations in both licensed and control states, Sal's Beverage World is constantly on the lookout for the next new thing -- and how it might help business. Next in the works at Sal's is the ability to scan in orders from vendors, rather than keying them in manually.
Likewise, the most savvy computer companies are constantly watching developments in retailing and tailoring their systems to help further retailers' goals.
"The staples like inventory control remain important," said Jim McMillan, sales manager of Innovative Computer Systems, a company that specializes in computer systems for liquor retailers, "but they're being overshadowed now by the retailer's need to provide additional service and marketing to their customers."
Frequent-shopper cards, which identify customers, give them discounts when they present their cards at check-out and allow retailers to track their purchasing history, have been around now for years.
But, now, retailers are asking more of them.
Retailers are looking for innovative benefits to offer their cardholders. "Club cards were originally designed to provide discounting," noted Innovative's McMillan, "but from our perspective, discounting just became another [customer] expectation."
ABC Fine Wines & Spirits, the 150-store chain headquartered in Orlando, FL, has continually improved and modified how its Advantage Buying Cards (ABC cards) work -- and has leaned heavily on its computer systems to keep up.
Originally, when customers used their cards to make purchases, they were awarded points. When they reached 1,000 points, they were mailed a gift certificate to use with their next purchase.
But, from a marketing standpoint, the cards weren't working as well as they might. "It took most people quite a while to get those points," said Bob Gibson, the chain's director of marketing. "It was a very, very expensive process to administer and only a few people were taking advantage of it. The bottom line was: most of our customers preferred getting an instant discount."
So, that's what ABC cardholders got. In the stores, there are always about 75 items on special for members only. Cardholders also receive coupons, which the stores' computer systems can automatically process. The one for July gives them $10 off any wine and spirit purchase of $100 or more.
Another cardholder benefit the computer system handles: Cardholders get 10% off their purchase of any regularly priced wine, up to six bottles, on Mondays and Thursdays.
Supermarkets Lead
Perhaps the best way to see what is coming in the future for beverage alcohol operations is to look at what is happening in larger retail industries. One prime example, which has always been on the forefront of computerization, is the supermarket industry. Raley's, the 18th largest supermarket chain in the country, operating 149 stores in California and Nevada, has several different resources when it comes to analyzing its data and generating reports, including online access to Nielsen and IRI and a business intelligence system. Basically, business intelligence software takes the raw data Raley's has collected with the operations of its other computer systems, such as its p-o-s system, and makes it easily useable. The system Raley's uses, from a company called MicroStrategy, which focuses on large business enterprises, allows Raley's users to make queries and to develop customized reports. According to MicroStrategy, use of their business intelligence application led to improved gross margins of nearly 15% for Raley's.
Raley's beverage alcohol department handles over 1,200 wine, spirit and beer SKUs. According to Bob Jennings, senior category manager, alcohol beverages, he and his four-person staff can analyze the chain's scan data in all manner of ways. "It is absolutely customizable," he said. "We can run hundreds of different reports. We can run a report about how much cabernet over $10 was sold yesterday."
"It is very different than it used to be. Back 25 years ago, when there was no scanning, you went with your gut feeling," he said. "There's no fooling around any more."
The newest capability for Jennings is the ability to look at daily sales. "If I wanted, I could look at yesterday's sales in each individual store," he said. "Before, we could look at the week but not the day."
Raley's computer system even alerts Jennings's department if an item is selling much faster than usual, allowing more to be ordered before it goes out of stock.
Testing New Equipment
Dekle of ABC is currently testing the use of handheld computer terminals in nine of the chain's stores. Managers can use the devices, from Symbol Technologies, which are equipped with laser- powered barcode scanners and radio frequency transmitters, to order product as they walk around their stores. They simply scan products or even shelf tags, enter a number to be ordered and then hit "enter." The order is then sent to the store's computerized ordering system to be automatically processed.
"Our store managers are in love with these devices. They're saying it cuts the time it takes to order by two-thirds," said Dekle.
The devices can also be used to scan in products as they are delivered from ABC's main warehouse. At the warehouse, the computer system creates a barcode, or "license plate," for each box. "We have a huge inventory and every bottle counts," said Dekle. "We are almost to the point where we know, at all times, where every case is and when it is going somewhere else. Right now, we are working on tracking store-to-store transfers and returns." Such control has enabled ABC to reduce its shrinkage levels to 0.5%, while the industry average for shrink is 4% to 5%.
Dekle is also testing four touchscreen registers at one store. "I'm always looking for things to make that cashier an interactive salesperson, so they are not just ringing up sales," he said.
Internet Sales
Many beverage alcohol retailers continue to venture into the arena of internet sales -- and computer companies are keeping up. Some computer systems have added the ability to link a store's inventory data directly to its website. This allows the information displayed on the website, about what products are available for purchase, to remain up-to-date. Information about customers can also be linked so that people who visit the website and provide information about themselves can automatically be added to the store's customer-history profiles, even if they have never actually set foot in the store.
These capabilities are so new, some retailers hesitate to use them. 67 Wine & Spirits in New York City, for instance, prefers not to link its inventory data to its website (67wine.com). "While connecting them is definitely the most accurate and automatic way of doing it, you do run some risk of hackers. And we've elected not to do it," said Jamil Antoine, head of internet operations for 67 Wine & Spirits. Instead, someone at 67 checks the website regularly to remove out-of-stock items and add new ones.
67 is also in the midst of launching an outlet website, to be called 67outlet.com, which will sell wines by the case only and will only ship them to the billing address of the customer's credit card.
For all the potentials and possibilities in computer systems, both retailers and computer companies advise being cautious when investigating the newest offerings. Every retailer has run into some things that did not run as smoothly as planned. One retailer who had just spent about two years and $2 million installing a cutting-edge computer system was contacted for this article. Would he like to talk about his new system and his experiences in installing it? "I would love to," he said, "but I have just settled with the computer company after a year of litigation."
Other retailers have found their first attempts at websites were unworkable and have had to start over from scratch.
And while some retailers, such as ABC, have found online ordering to be a great boon, others have found it to be more trouble than it is worth. "Especially if you have a dial-up connection, it can be almost impossible," said Alan Chancer of Creative Information Systems, a company that specializes in liquor store installations and is the provider of the system for 67 Wine & Spirits. "Most prefer to pick up the phone and order."
Still, Dekle is a firm believer in using the latest in computer technology to improve and grow a business. "Our systems do so many things, people often ask us, 'How can you do all that?'" he said. "I say, 'How can we not?' There's always a cost, of course, but having these capabilities have helped make ABC what it is."