Archive for May, 2009

10 Myths About Selecting a Retail System
Monday, May 18th, 2009

It’s easy to select a new system. It’s HARD to select the RIGHT system. Over the years, I have heard retailers say such things as, ‘all systems basically function the same’, ‘they all have their issues’, and ‘if it works for ‘X’ it will work for me’. It is this kind of attitude that is likely to get you into trouble. Over time, I have developed a list of 10 myths about selecting a new retail system:

Choices - by fotobicchio

Choices - by fotobicchi

Myth #1 - If it works for other retailers, it will work for me.
This is absolutely not true. The exact same system could be a great fit for one retailer and a disaster for another.  Even if you believe the retailer is very similar to you, there are always differences; merchandise mix, number or size of stores, distribution methods, employee skill/sophistication, personalities, etc.  These differentiations can all impact on how a system will work for one retailer vs. another.

Myth #2 - All systems basically do the same thing.
On the surface Retail systems all have to provide a certain level of basic functionality in order to operate in a retail environment. But it goes beyond this. Is the system easy to use, intuitive? How is the system going to help you improve? Does it have the required level of sophistication that is going to enable your company to grow and thrive, or will it’s rigidity be a hindrance? Yes, most systems have the basic functionality, but whether it is in-depth , forward-thinking, and intuitive can be a very different story.

Myth #3 - Underlying technology is not important 
If it works and runs on a Windows PC then it must be OK. Not true! The underlying technology is very important. Is it current? Is it open or proprietary? Can it inter-operate and play well with others? Purchasing a system that is an aging or dying technology or completely closed and requiring special or proprietary knowledge can be very limiting.

Myth #4 - System must be PCI compliant
With the number of credit card security breaches we have experienced recently, certainly all solutions MUST be PCI compliant by now. That is simply not true. Some may be fully compliant, some may only be partially compliant, and others may not be at all. This needs to be reviewed, questioned, and challenged. Being PCI compliant is more than simply about software. This is your data and you are at risk, not the vendor. Do your homework.

Myth #5 - Architecture is not important
Not all architectures are the same. Is it centralized or distributed? Is it client server or thin client? Is it web-based? How easy is it to deploy the software? Are software updates automatic? These can have an effect on your operations and your total cost of ownership, and ultimately your bottom line.

Myth #6 -  If they don’t have what I need, it can always be customized
While this may be true, it is really not recommended. Customizations can be expensive and risky. There is more cost than just the initial development; documentation needs to be customized, specialized training may be needed, support team needs to be educated, and upgrades are more costly as customizations need to be re-incorporated. In addition, customizations can cause the software to become unstable.

Myth #7 - Store activity does not have to communicate in real-time 
Yes for some, seeing their store sales the following day is acceptable, but how the data is communicated can be very important. Whether real-time, near real-time, or nightly, it is extremely important that data is communicated accurately, consistently, is easily verifiable, and has proper failover should connections be lost. Also, not all data is created equal, maybe seeing some data in real-time is critical while some is not, All this must be considered when evaluating store communications.

Myth #8 - If they don’t have what I need, I can always ‘plug-in’ another module
This can be a viable approach, but not all systems/architecture easily support this. Some vendors may support 3rd party modules/applications right out of the box, others may require some integration effort, while some may not support this at all. Integration can be painful and expensive if not working with the right solution. 

Myth #9 - As long as it has the data, I can get what I need
Be extremely careful here. I hear vendors say that ALL the time. We have the data you need, so you surely can report on it. This is not necessarily true. How is this data accessed? Most vendors will have a set of base (canned) reports (but not all!), and then typically you can modify or add reports of your own. How easily is this done? Can data be summarized, filtered, organized? Is the database complex or proprietary? Do they have their own end-user tool? Can you use 3rd party tools (such as Crystal Reports or JasperSoft)? Do you require any special knowledge/skills to access the data? Be very careful to make sure  that you will truly be able to access the data, in the format you need it, and with the skillset you have.

Myth #10 - It costs less and does the same thing
Similar to myth #2, not all systems are alike, and therefore, you cannot simply go with the lowest cost solution. You get what you pay for definitely applies here. Now, that being said, there are less expensive solutions that may work for you, but you need to evaluate all of the above and see where a solution fits within your budget. Just as you would not consider a system that exceeds your budget, you should probably not be considering a solution that falls below the lower range of your budget either.

Bonus Myth - We can do this on our own. Who needs consultants?
While you can use this list to arm yourself with valuable knowledge, having outside expertise is still recommended. Consultants bring expertise, an outside point of view/perspective, and in-depth industry knowledge of best business practices, technology, and software vendors. In the long run, a consultant can save you time, money, frustration and costly delays.

I’m sure I’ve missed a few, what myths would you add? What words of warning or advice can you share that will help others?



Why Aren’t There More Grocery Stores On-line?
Monday, May 4th, 2009

I predict one day soon shopping for groceries online will be as common downloading songs. It just makes sense. Read my recent encounter with Grocery Gateway and you will understand why I see it this way.

I recently had the opportunity to meet with John Charleson, IT Director of Longo’s. Since 1956, Longo’s has been serving the Greater Toronto Area (GTA) with high service, high quality grocery stores. Longo’s has participated in the online grocery business since 1999. At first, they were merely the supplier to Grocery Gateway, where their shoppers would come into the store on a daily business and pick orders for their online customers. After Grocery Gateway made a brief departure using their own central distribution, Longo’s purchased the near bankrupt Grocery Gateway in 2004, and brought personal shopping back to their stores. The rest, as they say, is history. The online business was profitable within 6-9 months and has seen phenomonal growth at a pace of 15-25% per year.

A few more stats about their online business:

  • Fills 4,000-8,000 orders per week in the GTA from about 6 stores.
  • Regular customers order every 2nd week (supplemented by a few visits to the store in the interim)
  • 8,000 SKUs available online
  • Average online order is $140 vs $30 in-store
  • Online sales account for about 5-10% of total sales.

Sales continue to grow as they add more stores for Grocery Gateway shoppers, expanding their customer reach, while increasing the number of SKUs available online.

What a great service. I remember my mom calling the local grocer placing an order over the phone, and having a delivery man show up later that same day with fresh goods, well packed, and carried right into our kitchen with a warm smile. Longo’s has been long on customer service and now has the ability to provide this kind of service to its customers once again, en masse, through the use of technology. While technology plays a significant role in this service, the personal and human touch is what makes it such a huge success.


Online Order Process:

Orders are placed online, and then picked at a nearby location by real people. Using handheld devices, the ’shoppers’ walk the aisles picking out the best produce and fresh products with a caring and discerning eye, as if they were buying groceries for their own family. If a product is not available, then the shopper will pick an appropriate substitution. Orders are packed in re-usable cartons and then picked up by the delivery trucks first thing in the morning. Longo’s uses their own well-trained delivery personnel, as this ultimately becomes the only ‘face’ to the customer. Delivery personnel provide friendly, high level service, carrying all cartons right into the customer’s kitchen for convenient unpacking.

Longo’s prides themselves on customer service and they are pleased with the satisfaction their customers get with this service. Many have said they could no longer live without it. Longo’s is always trying to improve upon this.

Even with their great service and an award-winning e-commerce site, they have plans (vision) for numerous improvements:

  • Improve fill rates by showing available inventory by region and making more intelligent automated substitiutions, when the item is not found.
  • Give customers the option of picking up their order at the store (with attendant putting packed groceries right into vehicle) or receiving it at home.
  • Add more SKUs and specialized SKUs, depending on region of purchase.
  • Offer promotions and specials while shopping online.
  • Offer product suggestions based on purchase history.

This shows Longo’s desire to continually improve the overall online shopping experience. I think they can take this even further with more social interaction by adding such features as online product reviews, ’shopper’ feedback, and online discussions.


Why Aren’t More Grocers Providing This Service?

I think this is the ideal online business for for brick & mortar retailers. Tesco has been doing this for years with continued and growing success. It’s a time-saver, it’s ecologically friendly (less travel, re-usable cartons), and is a huge convenience for your customers. I understand that this is not a simple service to add and will be difficult to make it profitable, but nonetheless it is a great service to your customer and can give you an edge over your competition. Yes, it will eat into already tight margins, but as we have seen with other industries - adjust to the online world and make it work (profitable) or potentially lose altogether.

I am curious to hear what others think? Do you know of any grocers that are already providing this kind of service? Do you think you would use this type of service if it was available in your area? What other improvements would you recommend for online grocery shopping?

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