Tech transforms retail
Stores rely on computers to boost efficiency, profits
By Gary Evans -- Furniture Today, February 20, 2006
High Point — Technology has become a critical tool for retailers of all sizes, affecting everything from ordering samples for the store floor and managing day-to-day operations to delivering product to consumers' homes.
Because the arena is so fast-changing, retailers need to stay on top of developments if they're going to use technology to their best competitive advantage. In this report, Furniture/Today talks to five retailers about how they're using technology to improve efficiencies —and profitability.
Johnny Janosik Inc.
Johnny Janosik Inc.'s Frank Gerardi wants to be ready when his new store opens in just a few months.
Not only will the store be large — 180,000 square feet — it will be packed with forward-thinking technology that should prepare the 53-year-old Dela-ware retailer for continued growth.
"We went into a (technology) system when we were $7 million and finished at over $50 million this year," said Gerardi, CEO. "It's a totally different animal."
Johnny Janosik, with two large stores serving Delaware, Maryland, New Jersey and Virginia, will be switching software systems in the move, which it expects to complete in late May or June. In Janosik's case, it was not a matter of the company catching up to technology, but rather technology catching up to the company.
"Our predecessor works just fine," said Gerardi of the company's old system. "But there are things that we know (in the new system) that will give us cutting-edge performance. As a growing company, that's worth our investment."
Janosik's new system will be provided by CDS Solutions, a major supplier of software to the furniture industry along with Profit-Systems, GERS, Storis, Myriad and a host of other companies.
As retailers evolve, their business model changes, too, as was the case with Janosik.
"Things are considerably different than they were five years ago," said Gerardi. "Technology becomes important because of the management tool it gives you (with regard to) the bottom line. It's a tool we've needed in so many areas."
With 70 salespeople and more growth expected from the new store, Gerardi said, "You need a lot of equipment, you need speed, you need technology. And like being in a Wal-Mart, you need to process information as quickly as possible and make it convenient to the customer."
Janosik assembled a team that "spent quite a bit of time researching a variety of companies," Gerardi said. "You've got to know the right questions to ask. We approached it from, 'not here's what your system will do,' but rather 'here are our needs, will your system do it?'"
According to Gerardi, the company is installing the cables for the new store now. Employees will go through a training program in about a month, and the system is projected to "go live" for the May/June opening. Executives will have checks and balances to make sure the transition goes smoothly.
The new system will follow goods all the way through the warehouse from their arrival until the time of delivery, using Routeview, Janosik's current tracking system.
The retailer also is adding an automated call center to notify customers of deliveries, a process that has been handled manually.
"We've put a lot of things in (the system) that will give us a lot of efficiencies to do an even better job for the consumer," said Gerardi.
Ennis Fine Furniture
Ennis Fine Furniture in Boise, Idaho, is in a happy predicament.
The high-end retailer, specializing in special orders, has been so busy growing that it's neglected technology that might improve back-room efficiencies, said Karl Holsinger, controller.
"We're in the dark ages of inventory," he said, noting that Ennis doesn't use barcoding or other technology to manage its warehouse operations.
In fact, Ennis has the capability in its current Storis system to track merchandise from the dock on through to delivery, but it hasn't deployed it yet, Holsinger noted.
"It's all in there," Holsinger said. "We want to utilize it but we haven't put it on line yet. We're probably paying for the fact that we haven't done that, but when business is really good, you don't worry about things like that — until it starts to get in the way."
In an industry where flat has been the operative word for sales, Holsinger said that Ennis, with three locations in Boise, can barely keep up with its deliveries.
"Business has been so good that we've let our inventory get out of whack, and we need to address that. And we need to address our warehouse facility that we've outgrown in this location. That's the problem we're facing right now, and the technology is out there."
The retailer is happy with its financial reporting technology, also from Storis. And it uses wireless technology for communication among its three stores in Boise.
But, said Holsinger, it is "desperately trying to get caught up" in other areas.
In fact, Ennis has employed consultants to study the situation "and help us work this out," Holsinger said.
"We're looking at utilizing the stuff we already have," he said. "They already have the technology available; we just don't have the modules on line. We haven't implemented them. It's not just having the stuff, it's knowing how to implement it."
According to Holsinger, taking costs out of the "back end" of operations is as important as gaining market share.
"If you do the back room part, you can take care of the market share part. You can focus your attention on those areas, but you have to have the information to do that. You don't dare cut too much out of your back room or you won't know where you're going."
Blackburn Home Furnishings
Blackburn Home Furnishings in Nelsonville, Ohio, is a sort of "poster store" for retail technology, serving as a reference for prospective clients by its software vendor, Myriad.
Some years ago, Blackburn switched from its old system of tracking inventory. Dean Pidcock, the company's controller, described that approach as a constant hunt for pieces "we had or thought we had."
Now, the full-service retailer uses a barcode system that makes inventory checking as simple as clicking a button.
With a laptop computer and the store's wireless Internet access, employees on the showroom floor immediately know the cost of products and can handle pricing on the spot.
"We don't have to go back to a desktop and look it up," said Pidcock. "We have a laptop with us and we just type the information in."
One thing "that really helped us," said Pidcock, is a barcode gun that reads a code label put on each product when it is received by Blackburn's warehouse staff.
"The first time it's downloaded, we get a report of what was scanned," said Pidcock. "Sometimes, they might make a mistake on what was scanned or they might have accidentally put the wrong sticker on it.
"So when the first report prints out, we can make any corrections we need to and then, once we get the corrections made, we just finalize the report."
The code trail tells the store when the product was received, when it came on the showroom floor, and where it went from there.
"When (the product) goes out the door, it also tells us who it was sold to. We have all this info because we have this barcode on it."
The system, which tells Blackburn executives what's selling and what's not, provides a tremendous amount of information for store managers.
"With barcodes on everything, we don't really have lost inventory," said Pidcock. "There's no great mystery about 'What's this sofa, and where did it come from?'"
Blackburn also uses other technology that is simple but packs a big punch. For instance, every employee has an e-mail account, which allows staff and management to quickly communicate.
"Not only is this a convenient way to pass on information for us, it also means we do not have to worry about misplacing Post-It notes with important phone numbers on them."
Warehouse employees also use digital cameras, an effective way to document damage when goods are received. When a problem is spotted, a photo is taken and e-mailed to the vendor.
"That way," said Pidcock, "the manufacturer sees the exact damage and can decide if they can send us a replacement part or item based on these pictures."
Cohabitat
Cohabitat, based in San Diego, imports much of its furniture and home décor, some 1,000 or more SKUs.
"There are lot of different classifications, so we need to keep a handle on what's selling because of our lead time (averaging four months)," said owner Ramu Pandit. "We need to spot trends and see where our business is going — what classifications are doing better than others."
Pandit started his business two years ago and he now has four locations in the San Diego area, with two more planned in the near future. Cohabitat started with a simple point-of-sale system that it soon outgrew.
To keep up to date, Pandit turned to the multi-store version of Intuit's QuickBooks (QB POS), which grows with his business.
"We have everything computerized," said Pandit, including "our systems, our ticketing and everything else that goes with it. The system allows us to track sales by department and spot which items are better sellers than others so we can react and order."
That's especially important for non-furniture items, whose delivery can be accelerated if margins allow the extra cost.
Information on margins also comes from the software.
"It gives us margins by items, gives us the sales, and, since we have four locations, it allows us to keep tabs on which store has which inventory.
"If we don't have it at one store, we can get it from another," Pandit said.
The old system required manual posting to enter information — a time-consuming process.
"You needed one person to do that," he said, adding that the time now required is minimal.
Price markdowns also are easier now. "We are able to tackle some of these things that used to take us many hours and do them in the push of a button."
Pandit said this enables the company to put more time into "promoting our business" and making sure items are moving as they should be.
For special orders, salespeople are able to check the system and tell customers just where their purchase is in the buying cycle. Before, said Pandit, "We had this little book and we would make notes in it."
Cohabitat's current technology will keep pace with the company's planned expansion, and new features are on the horizon.
"We're thinking of getting more barcoding, where some things can even be marked for us overseas."
Kornmeyer's
Kornmeyer's, located in Baton Rouge, La., has about a month to go before it moves from the stone age of technology into the 21st century.
During the first week in March, after its fiscal year closes, the century-old retailer will shut down its old mainframe computer system and move to a PC/Windows-based system with all the latest bells and whistles. That conversion comes at a time when Kornmeyer's is in a high-growth mode, with business surging because of replacements caused by Hurricane Katrina. In addition, it is in the process of adding 35,000 square feet to the front of the showroom and renovating the existing 57,000 square feet.
"We're excited," said Jacques Pourciau, marketing director and co-sales manager. "The technology we have works and is not inherently inefficient. But parts are becoming hard to come by. And the rest of the world has been adapting and growing into these new technologies."
Kornmeyer's hasn't been completely rooted in old technology. It has already implemented RF (radio frequency) barcode scanners for wireless inventory control.
This system will be converted to CDS' Retail 6 software run on a Windows format that will provide Kornmeyer's a seamless operation from start to finish.
"There's the sheer excitement of having the latest technology," said Pourciau, noting that everything in the retailer's system will be wireless, from servers to printers to the PDAs on the showroom floor.
"This will be glitzy and impressive to the customer," said Pourciau, adding, "It also makes the process more streamlined. They can get out the door faster, which is what they want."
In addition, the new system will give Pourciau and other managers new efficiencies in the data they collect.
"I will now be able to spend time looking at the numbers and making decisions on what they are instead of entering the numbers," he said.
