"Independents have suffered technological disadvantage against national chains for far too long. Independents play a vital role in the retail food industry, as well as our economy, and have an inalienable right to compete for consumers' food dollars."
Thus declared the "Declaration for Independents" campaign launched last year by StoreNext, Plano, Texas, a technology vendor geared to independents that is a joint venture of Fujitsu and Retalix.
It appears that many independent retailers are beginning to take these words to heart.
Formerly stymied by one-size-fits-all solutions designed more for big-box retailers, independents are increasingly attaining technological parity as their needs are being addressed by vendors like StoreNext, Tomax, TCI Solutions, ECR Software and NCR. Technology will be one of the dominant themes featured at this week's Supermarket Synergy Showcase, the National Grocers Association's 2005 Annual Convention and Concept Show at Bally's Las Vegas. Among the technology presentations will be a panel discussion on SN's latest State of the Industry Report on Supermarket Technology, published last week.
How can smaller retailers afford the technology solutions that larger retailers take for granted? One way is by leveraging subscription-based applications hosted by vendors serving as application service providers -- ASPs.
For example, 11-store Balducci's, which once relied on antiquated homegrown applications, is "crawling our way out of the dark ages" via an ASP solution offered by Tomax, Salt Lake City, said Carey Lowrey, chief information officer, Balducci's, Bethesda, Md.
The specialty food chain is using the Tomax-hosted, retail operations management suite called Retail.net to centralize and automate its once manual data collection process, as well as handle inventory management, vendor management, pricing and promotions.
Though currently employing the ACR-2000 point-of-sale system, over the next year Balducci's plans to start piloting Tomax's Java POS (JPOS) system in Retail.net, which Lowrey expects "will save us tons of money." Currently, Balducci's converts ACR POS data and uploads it into Retail.net at the end of the day, causing a one-day time lag. The JPOS system will be "totally integrated" with Retail.net, he said.
The Web-based Retail.net applications are distributed over a wide-area network (WAN) to thin-client devices in the store. Balducci's began using Retail.net last October as part of a technology overhaul designed to prepare the retailer for growth.
"I own the equipment and the licenses, and Tomax provides the infrastructure and the manpower to monitor the system and make changes when they're required," said Lowrey. By opting for the ASP model, Balducci's reduced its cost of implementation by about $300,000. "It was a very good deal," said Lowrey. "Because Tomax buys in bulk, they're able to provide a better deal than I could have gotten on my own."
While the low initial investment was helpful, Carey explained that implementation time weighed more heavily on his decision than cost.
"I have no quote/unquote industry standard data facility. If I were to build one and staff it with technical experts, that would have added three to nine months to the process," he explained. "The priority for me is [keeping] a small implementation team and a company that's able to primarily focus on the business."
So far, Retail.net is allowing Balducci's to do just that. "In the past, the data collection process was done manually," said Lowrey. "We'd have to gather data from the stores and put it into a spreadsheet in order to get a companywide view. At any point, someone could manipulate or change the data."
Balducci's now has the proverbial "single version of the truth," said Lowrey. "We went from a 60% comfort level in the data to about a 99% comfort level."
"For the first time, employees are having conversations about very specific information that they never had visibility into before," he said. "Now our businesspeople are able to focus more on the business. They're not spending time trying to get a common point of view because we've centralized the data."
A centralized system like Balducci's, however, requires measures to prevent the entire enterprise from going down. "Any thin-client initiative will require robust communication bandwidth between the home office and all stores, and focus on the proper resiliency and redundancy measures to guarantee uptime for mission-critical store applications," said Robert Garf, retail analyst for AMR Research, Boston, in an AMR report issued last November.
Like Balducci's, cooperative wholesaler Unified Western Grocers, Commerce, Calif., which supplies 2,500 independent retail members, sees value in the ASP model.
"ASPs give independents the opportunity to deploy at a price point that they've never been able to achieve before," said Mike Brown, general manager of retail technology, UWG.
UWG endorses, and has developed a gateway to, StoreNext's Connected Services Application. The suite is comprised of Web-enabled applications hosted via an ASP model, including sales analysis, direct-store-delivery receiving and shrink management. The suite also includes a connected item hosting (CIH) capability that aggregates an individual retailer's pricing and cost information.
Brown sees Unified playing an important role in making technology available to its independents.
"A number of independents want to look at data today at the single-store level, but their systems don't have the ability to collect and present [aggregate] data at a single location," said Brown. "So the responsibility for providing leadership and obtaining competitive pricing falls on [the wholesaler]."
Cost is also a factor for independents shopping for packaged solutions they host themselves. That was the case for one-store independent retailer Southland Trade, which wanted a packaged solution that had the quality of those used by large chains, according to Sean Harrell, information technology director, Southland Trade.
The Moyock, N.C.-based retailer has 23 POS terminals in its 40,000-square-foot store, where it sells produce and convenience items, including fuel. Its store features a restaurant and serves as a cigarette and tobacco outlet. It accepts and delivers orders made online.
"I spoke with a software vendor that wouldn't even install POS software unless I purchased all new POS terminals, along with full support contracts," said Harrell. "It would have cost me $6,000 or $7,000 per terminal just for the hardware."
Instead, Harrell opted for ECR Software's Catapult Solution. It handles everything from the POS system and inventory control to customer and employee tracking, shelf-talkers and labels, said Otis Flieth, vice president of sales, ECR Software, Boone, N.C.
"Not every single option is part of the main package, but quite a bit of it is," said Harrell, who has been using Catapult for four years. "You can access the POS mode and back-office maintenance mode all from the same cash register screen. It's a big tool for a smaller price."
Large POS vendors like Dayton, Ohio-based NCR are focusing greater attention on independents, too. NCR is positioning its Advanced Checkout Solution (ACS) as POS software suitable for a small retailer or a large chain.
Sixteen-store retailer Heinen's Fine Foods, Warrenville Heights, Ohio, a longtime NCR customer, converted its stores to ACS within six months. As a result, it was able to reduce its cashier training time from three to five days to one to two days, decrease checkout time, and develop a new loyalty program through the system's Consumer Marketing module.
"It was a dream because we were able to drastically reduce our training time and provide cashiers with tools they'd not had previously," said Carl Lindeman, installation manager, Heinen's. "We feel strongly that the system helped us further improve the checkout process."
Heinen's most recently migrated from ACS 4.0 to ACS 6.0 to take advantage of the latter's support of Global Trade Item Numbers (GTINs) and Reduced Space Symbology (RSS), allowing the retailer to scan and process EAN-8 and EAN-13 bar codes, as well as 14-digit codes. "Last year, we upgraded our POS software and a lot of our scanners and payment terminals to achieve Sunrise compliance," said Lindeman.
Bigger Not Always Better
Although independents appear to be at a technological disadvantage compared with chains, bigger doesn't always mean better.
For instance, independent grocers are often unencumbered by rigid legacy systems that larger retailers have relied on for years.
"Not having all the legacy baggage is an advantage for a smaller business," said Sean Harrell, information technology director for one-store retailer Southland Trade, Moyock, N.C. "With larger corporations, legacy systems can keep a company from integrating newer technologies because additions usually require costly, custom integrations." Additionally, the multiple data sources used by large retailers often lead to complex data consolidation. An 11-store retailer like Balducci's, Bethesda, Md., may have greater data visibility than a large chain burdened by tons of information, said Eric Olafson, chief executive officer, Tomax. "Balducci's has the ability to see information relating to each of its store's items, customers and vendors," he said.