How Lowe’s Food Stores expects the web to increase sales of perishables

With 65 grocery stores in Texas and New Mexico, Lowe’s Food Stores Inc. runs into plenty of competition from major grocery chains that have the advantage of operating on a larger scale to keep prices down and products fresh, says Rory Glidewell, director of information systems. But by implementing a new web-based product- and price-management system from StoreNext Technologies, Lowe’s expects to better compete with the big guys, he tells InternetRetailer.com. “Our market is extremely competitive,” he says, “but with this system we’ll be able to do demand-based ordering and show significant improvements in margins and sales.”

Although Lowe’s is still rolling out the StoreNext system, it recently tested a manual process of gathering and analyzing data from multiple sources to plan ordering and pricing based on sales, current availability of inventory and estimated demand. The test proved that Littlefield, TX-based Lowe’s could produce higher profits and increase sales of perishable goods, he says. By ordering the right amount of bread based on expected demand, for instance, it kept fresher goods on store shelves and was better able to sell them out without marking down prices.

But the manual process of gathering and analyzing data from POS systems, warehouses and suppliers is too time-consuming to conduct on an ongoing basis, Glidewell says. Instead, Lowe’s expects to reap the same benefits and more by implementing a web-based suite of StoreNext applications, including Connected Item Hosting, Connected Direct Store Delivery and Connected Store Analytics & Reporting. The application suite is hosted by StoreNext, which operates as a joint venture of Retalix Ltd. and Fujitsu Transaction Solutions Inc.

Glidewell says the new StoreNext suite directly integrates with the StoreNext POS system that Lowe’s has operated for several years. It also provides direct data sharing with the grocer’s wholesaler, Affiliated Foods Inc., providing Lowe’s managers with a single web-based view of sales and inventory status. Lowe’s has also retained CRS, a systems integrator and StoreNext reseller, to build a demand-planning system that integrates with the StoreNext suite to recommend order size and pricing for perishable products.

The system is being set up so that Lowe’s will be able to distribute new pricing schedules all at once over the web to the entire chain or to groups of stores or individual locations, but stores will receive only pricing data related to products they carry. In the past, batched files of pricing data covered the entire product line of all Lowe’s stores, forcing store personnel to sift through reams of data to find the pricing applicable to their locations, Glidewell says. Through another custom application built by CRS, store personnel will receive pricing information printed out on tags according to the order in which they appear on shelves, he adds.

Store managers will still have the option to set their own promotional pricing, but by entering these prices into the StoreNext system, Lowe’s corporate managers will be able to monitor their compliance with corporate goals on margins, Glidewell says. “In the past, if store managers made changes to pricing, headquarters wouldn’t know right away,” he says. “Now we’re getting more control.”