staying fresh

New technology helps retailers focus on freshness and maintain the power of their brands.

It wasn’t long ago that convenience stores were stuffed with nothing but pre-packaged foods with a long shelf life. That’s not the case today, as consumers have dictated what matters most: convenient products with freshness and quality. That, after all, is what builds brands and grows business. Every banana and every loaf of bread must meet the quality standards of the business or risk hurting the brand.

Convenience retailers agree on the vital need to maintain code dates and discard or mark down product that has outlived its shelf life. But execution—ensuring compliance and operational consistency across a vast network of stores to increase sales and build the brand—remains a challenge. Randy Fields, CEO and chairman of Park City Group Inc. (800-772-4556; www.parkcitygroup.com) and co-founder of Mrs. Fields Cookies, thinks technology is the answer.

Fresh is best, and stale is ‘no sale’

As a follow-up to his success in the cookie business, Fields has applied same technology that helped build the Mrs. Fields Cookies brand and to the retail marketplace with Park City Group’s Fresh Market Manager. This software simplifies the planning and execution of complex processes and delivers actionable information to improve store profitability. Fields learned the lessons of freshness and consistent quality first-hand and applied the principles that made Mrs. Fields Cookies a success to the fresh and perishable departments of grocery and convenience stores.

“Unfortunately, many c-store managers subscribe to the motto, ‘It isn’t old until it is sold’ at the expense of quality and freshness,” says Fields. “They prepare a huge stack of breakfast items at 4:00 a.m. and set them under a heat lamp, so they don’t have to worry about running out.”

Some retailers, on the other hand, turn over responsibility for taking inventory and restocking products to vendors who may fill shelves with overstock just to free up space on their trucks. Neither seems to be the correct answer.

“The fact is that every time you sell a product that is below the quality expectations of today’s consumers,” Fields stresses, “you run the risk of destroying your brand and impairing your future sales.”

The ideal inventory consists of the right product in the right quantity at the right time. To that end, good category management must be supported by agile technology utilizing real-time data to determine—store by store, hour by hour—how much of each product should be made available and at what time the items will likely sell. Technology also delivers the detailed statistical analysis and forecasting of every store’s inventory. Doing so determines when out-of-stocks and lack of availability are creating additional sales opportunities, and when shrink is excessive because too much product was made and exceeded its useful life.

“C-stores that implemented Fresh Market Manager have experienced substantial increases in the profitability of their perishable products on the order of 3% to 5% of profits, along with increases in sales of perishable products from 10% to 50%,” Fields adds.

Action creates profit, information doesn’t
A common problem in c-store management is that the right information is not always available at the appropriate level of the organization.

“People at different levels of the organization require different types of information,” says Fields. “A merchandiser or buyer in the home office, for example, needs to know the actual profitability of items—not the profitability promised by the vendor—after taking into account labor, packaging and shrink at the consumer level. The store manager, on the other hand, needs to know how much product to have on hand at what time to satisfy demand while avoiding excessive throwaway and shrink.”

The answer is technology that efficiently analyzes all the necessary data elements: point of sale, inventory, receiving, distribution and vendor information. It also sorts priorities automatically by level of the organization, so managers at each level of the company can focus on the most important economic gains or losses to be dealt with day by day. Equally important, that information has to be presented in a way that is actionable, not just analyzable.

“Convenience store managers are not financial analysts,” Fields stresses. “It’s not enough to give them the right information. The information has to automatically cause the manager to take action.”

That’s where technology comes in, bringing actionable information to the appropriate levels to improve profitability. It replaces a manager’s evaluation of SKUs with a system that performs tasks based on rules and definitions concerning appropriate levels of variance. Far beyond exception reporting, technology should guide the user to the correct action.

Wawa Inc. (Wawa, PA) has implemented the technology to provide organizational information to its regional and area managers and supervisors in the field. At the start of each day, these managers receive a download of information specific to their individual responsibilities. Marketing managers, for example, receive sales data via their laptops. Supervisors review individual store sales and have daily access to information needed to troubleshoot problems.

“As a result, all Wawa managers have the data necessary to spot potential problems,” says John Cunningham, Wawa’s director of operations technology. “And, because each view allows the regional manager to see the performance of all stores in that geographical area, managers can learn from each other and leverage the most effective operational practices throughout the enterprise.”

Technology can solve problems in five categories:

  • Administration – automation of the “administrivia,” (as Fields calls it) that keeps managers away from people and forces them to deal with paper and process.
  • Planning. “The handling of daily crises is antithetical to planning,” says Fields. “Technology can help plan products, quantities and times, schedule labor and perform financial forecasting.”
  • Decision support. Technology analyzes the myriad of available data to supply actionable information and guide decision-making.
  • Human resources. Technology allows more effective scheduling to match business demand. When labor is managed effectively, service improves. Yes, customers like great prices, but they also want good service.
  • Compliance. “How can owners know if they’re achieving their goals if they can’t be sure that people responsible for execution are in compliance?” asks Fields. “Technology can close the loop by reporting compliance and noncompliance. Owners are given the visibility they need to take the appropriate action. Non-compliance perverts the brand.”

However, Fields brings up an important caveat for retailers regarding technology.

“Timing is everything,” he says. “It’s quite likely that a company will eventually have the information available. Unfortunately it’s usually long after the problem has occurred. After all, the last thing you want to do is act upon information that is old—it’s like driving forward while focused on the rearview mirror.”

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