PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Web technology developers are finding success solving problems that few people—even within a retail organization—know exist.
Retailers invest a lot of effort into devising promotional campaigns with CPG manufacturers, including working out details about point-of-purchase displays, endcaps, and supporting signage inside and outside of stores. But the effort all amounts to nothing if store staffers don’t get displays up in a timely fashion or fail to install the correct signs, or if the consumer packaged goods company doesn’t deliver the product when it should.
Such lapses are common. BP Oil Corp.’s convenience stores, for instance, experience promotional execution rates as low as 60-70%. “That’s clearly not acceptable,” says John Anderson, U.S. manager of marketing and merchandising for BP Oil.
Thus BP Oil was open to trying out web-based POP display monitoring technology in its convenience stores when developer Goliath Solutions approached it nearly two years ago. After an 18-month test in five cities, the execution rate for POP promotions in test stores hit 98%, Anderson reports. The result: “We’ve optimized sales, improved our margin, increased our sales per square foot and increased same store sales,” Anderson says.
Invisible to the consumer
Using the web to help stores execute POP promotions and other special displays is only one example of the way the Internet is affecting store operations in subtle ways. From web-based central management of sign printing to monitoring how often the rest room door opens and closes, the web is having a big impact on store operations. And in some ways, the impact is as big as the impact that selling online has had. “More and more we see the best growth opportunities coming from these web-oriented companies that are not obvious to the end consumer,” says Todd Marcy, principal with Dolphin Equity Partners, a venture capital company that has invested in a number of Internet-based companies.
In many of the applications, the technology is strictly b2b and it’s likely that few people outside of those with a direct interest in the technology-or the outcome of the solution that the technology provides-even think about the problem being solved, much less know the companies that are solving it.
Take sign printing. Retail chains use millions of signs, and they all have to be coordinated with marketing programs and placed in the proper spots in stores. Office supply retailer Staples Inc.’s 1,100 stores, for instance, print more than 2 million signs a week, from signs hanging from ceilings to shelf price tags.
Wanting to streamline its sign printing systems, Staples implemented a web-based sign printing system from Seattle-based AccessVia nearly two years ago. The AccessVia Web dSignShop program allows retailers to load sign data at headquarters. Associates at each store download the sign data via a PC equipped with a browser. Previously, associates accessed a sign program via a green-screen computer terminal. Headquarters had to download software and print instructions to every store, which meant robust data connections to every store and maintenance and management issues at every store. In addition, the program was difficult to use. Staples had to a have sign-printing expertise at its help desk to answer calls from store associates.
Focus on the customer
With the web-based sign program, calls to the help desk have decreased by 90%, Staples says, while the timeliness and accuracy of signs have increased. Staples won’t put a dollar figure on the improvements. But Bob Madill, Staples vice president of sales and merchandising, says Staples has achieved multiple benefits from web-based sign printing. “The accuracy of pricing at the store level has increased and the consistency of presentation at the store level has improved,” he says. Noting that Staples has registered increases in store personnel productivity and increases in comparable store sales, Madill says, “The metrics have risen significantly and this has been a contributing factor. This allows our associate to spend more time interacting with customers.”
The major reason that associates are more productive is that the system is so easy to use, says David Hubbard, Staples director of visual merchandising systems and processing. “There are so many efficiencies in this system, things like prompting the user as to what to do next and showing the user in a visual way how to load the sign stock,” Hubbard says. In addition, the signs come into the system and out on the printer in plan-o-gram order, so the associate does not have to sort them before installation. “That kind of interaction didn’t exist with the previous system,” Hubbard says.
Further, a web-based sign program allows stores to change shelf labels more quickly as products change. “Especially when we roll out technology products, the features could be changing,” Madill says. “Instead of having a rigid template, we now have the flexibility to communicate that information as it changes.”
All stores need to access the sign printing program is an Internet connection and a browser-equipped PC. Stores pay a monthly fee for the AccessVia service, starting at $1,500 for a chain of 35 to 50 stores. The per-store fee goes down as the number of stores goes up, says Dean Sleeper, president of AccessVia. AccessVia’s 150 customer include Bed, Bath & Beyond Inc., The Sports Authority Inc., Target Corp., Kroger Co. and Safeway Inc.
While the AccessVia system moves data from headquarters to store, Goliath Solutions uses the web to move data from the store to headquarters. Chicago-based Goliath Solutions provides a system of radio frequency i.d. tags and in-store sensing devices that feed data from the RFID tags to a web site that retail or CPG executives can access to make sure stores are executing marketing plans. “For our customers, being able to access this information over the web in real time is key,” says Robert Michelson, president of Goliath Solutions.
The battery-operated sending devices, about the size of a videocassette, read RFID tags within 100 feet. They can report not only that the sign or display has been installed, but also where within the store it is, so executives can make sure that they are in the agreed-upon places.