CENTRALIZING IT

Liza Casabona

Like most retailers, natural food retailers need to handle an increasingly complex array of technologies to run their business. But natural food retailers have additional layers of complexity to deal with, ranging from more vendors and direct-store deliveries to maintenance of a well-defined niche.

SN sought out two natural food retailers to find out how they are juggling technology and found two on opposite sides of the size spectrum -- Earth Fare (small) and Wild Oats (big). What they both had in common was a need to simplify and integrate their systems into a more centralized format. The following profiles explain how each went about this task.

Earth Fare's New Pricing and Item Control

Not so long ago, Earth Fare -- a regional natural foods chain based in Asheville, N.C. -- operated just two stores that still hand-priced their items. Now Earth Fare has stores ranging in size from 11,000 to 28,000 square feet, with plans to open another six over the next two years. And its technology is more sophisticated.

Following a rapid growth period a few years ago, the chain updated itself with a few basic technology systems, including a new point-of-sale system. Today, girding up for another expansion period, the chain is adding headquarters and store back-end systems.

"We're trying to move forward into the 21st century as rapidly as possible," said Troy DeGroff, vice president, sales and marketing for Earth Fare. To accomplish that, Earth Fare recently installed RetailSuite from Tucson, Ariz.-based TCI Solutions, replacing a three-year-old back-end system from Systech, whose POS software continues to be used.

RetailSuite includes Headquarters Price Management System (HQPM2); Store Manager (SM) for store-level inventory control; Perpetual Inventory module, which reviews inventories for the entire company or at individual stores for stock replenishment; and FRENDS, which does automated task scheduling, file transfers and remote job execution. Earth Fare plans to implement the RetailSuite by the end of the second quarter of 2003, according to TCI, which noted that the retailer did a private ROI study that indicated HQPM2 will pay for itself in less than one year.

The most immediate benefit of the new software, DeGroff pointed out, is that it will provide a centralized database platform, or master data repository, which will allow all of the chain's existing systems to speak to one another.

Until this technology upgrade, the software systems running the front and back ends and the accounting functions couldn't communicate. TCI's systems are designed to bring order to the "spaghetti" of systems that often exist at a retail chain, said Lance Jacobs, TCI's president and chief executive officer.

Earth Fare has set up a virtual store lab to test the HQPM2 and SM packages and to cleanse existing system data and work out all potential bugs over the next several months to ensure a seamless rollout.

DeGroff anticipates that the TCI system will enable the company to do automatic pricing and to implement rules-based pricing. The first step, however, will be to generate purchase orders for vendors. "We have a lot of vendors," he explained. "Natural foods stores deal with more vendors than a conventional supermarket, and we have a ton of DSD vendors as well that we work with."

Ultimately, DeGroff said, the chain would like to do electronic data interchange (EDI) with vendors; perpetual inventory in store departments where it is feasible; computer-assisted ordering; and paperless accounting.

In addition to Systech's front-end software and the newly purchased TCI platform, Earth Fare also uses accounting software from Great Plains Software, Fargo, N.D. (now owned by microsoft) and a jerry-rigged warehouse software that executives hope to replace in the near future as part of the current technology initiative, DeGroff told SN.

Five years ago, Earth Fare did not even have an information technology department, DeGroff said. Today, an active IT department is in place to facilitate the implementation of the software pieces the chain needs to move forward.

"These initiatives will help us to expand much quicker," DeGroff pointed out. "It will allow for us to be more competitive in the markets we enter."

Moreover, as Earth Fare streamlines some processes, it will make it easier to deal with the small vendors "that you absolutely need as a natural foods retailer," he said. "It will allow us to give them more attention too. That way, if you decide on a small local vendor who's got the best cheese in the world, you've got more time because everything has been made easier."

Wild Oats Exploits the Web

The great centralizing technology now is the Internet, and more and more companies are leveraging the Internet to bring more centralized control over their IT functions. One such chain is Wild Oats, Boulder, Colo., which runs 101 stores of widely varying sizes in 23 states and Canada under multiple banners.

About two years ago, Wild Oats began a project to centralize its computing through Web-based applications connecting the headquarters to all the stores. Over the last six months, scale management, sign production and store ordering are among the applications under this initiative.

"What is significant is that by going to the central model, we can deploy at a much faster rate than with a distributed computing model, thereby receiving the benefits much quicker," said John Lauderbach, vice president of technology and logistics for the chain. "We also will have a lower capital investment than we would with the distributed model, and that will allow more flexibility to adapt to market condition changes."

In particular, Wild Oats has embraced the following systems:

A hosted scale management system called InterScale from ADC, Tampa, Fla. The system manages promotions automatically with pre-set dates, and collects production data from scales.

A demand-based store ordering system, Store for Retail, from IMI Americas, Mt. Laurel, N.J. (SN, Feb. 3, 2003, Page 47). The system is expected to help Wild Oats order from its wide array of suppliers -- about 10 times as many as a conventional supermarket. The system includes perpetual inventory, automated store ordering, guided store ordering, consumer-demand forecasting and collection of POS data.

A wireless store infrastructure based on Symbol's IEEE 802.11b wireless LAN.

The Java 2 Enterprise Edition (J2EE), an open-standards development platform "that has proved to be stable and scale very gracefully," said Lauderbach.

A browser-based sign and tag production, dSIGN, from AccessVia, Seattle.

Future plans include the rollout of a new labor scheduling application. "Our goal is to eliminate several manual functions we engage in today, which should improve accuracy and lower cost," Lauderbach noted of the widespread changes.

Prior to the centralization of its systems and data, Wild Oats' wide-area network was primarily used only to facilitate e-mail and communicate product price lists in a limited number of categories. With the new installations, Lauderbach said, the stores have been pulled into one standard, cohesive network with data sharing and hosting capabilities.

For example, the central office now supports scale pricing, signage and tags for food-service items, meat, seafood and some produce by sending out one batch to all the scales in all the stores at night. This eliminates pricing conflicts that used to occur within stores as a result of the manual procedure that required diskettes to be inserted into each scale across the chain.

The ultimate hope, Lauderbach explained, is to establish a "reasonable standard" across the chain's whole store base, while maintaining the uniqueness that defines Wild Oats stores. Maintaining that uniqueness was the greatest challenge in deploying new applications, he said. "Hosted applications are great for IT," he said, "but if the response times to stores are a couple seconds per click, they would negatively impact operations."