Technology: Plural Platforms Top Priority

Today’s c-store retailers want technology platforms that will allow them to manage fuel brands, foodservice operations, remain PCI compliant, easily access data and help improve customer service simultaneously.

Sound like a tall order? It’s really not, said Jenny Bullard, chief information officer of the Jones Co., which owns 177 Flash Foods stores in Georgia and Florida. Effective business intelligence solutions, like Pinnacle Corp.’s EPM business intelligence tool, which is used at Flash Foods, are readily available, but retailers using them should be fully PCI compliant.

"A big challenge right now for the industry is everybody getting their arms around PCI compliance to accept credit cards across a secure network," Bullard said. "A lot of retailers are in the midst of becoming compliant, others are completely compliant, but there are retailers who still haven’t gotten the information they need to understand it."

Not surprisingly, Bullard said, the other major technology-related concern is setting up alternative methods of payment to avoid paying credit card interchange fees. "Gas has become a high-dollar item, and since interchange fees are percentage-based, as gas prices continue to rise so do credit card processing fees and margins get lower."

NACS State of the Industry report data shows why avoiding fees is so important to channel wellbeing. Convenience store industry sales surged to a new high of $577.4 billion in 2007, yet profits dropped by $1.4 billion largely because of higher credit card fees, which jumped $1 billion (15.2%) to reach $7.6 billion.

Industry pretax profits during the same time period dropped by roughly the same amount, $1.4 billion, falling to $3.4 billion. The net effect is that the industry’s credit card fees are now more than double the industry’s pretax profits, an extraordinary development considering that credit card fees surpassed industry profits for the first time ever last year.

Flash Foods has had a loyalty program since 2005 that ties customer’s ACH to the loyalty card, and, Bullard said, it has dramatically reduced the amount of interchange fees her company must pay.

In addition to bypassing the interchange, Flash’s loyalty cards keep track of the demographics of who store customers are and what they’re buying. But gathering information is just the beginning, Bullard observed—companies need to know how to effectively use the data they collect.

A recent survey of retail corporate and information technology managers by AMR Research revealed that 47% felt improving category management is their current highest tech priority, with pricing management and time and attendance tied for second place with 40% each.

Data synchronization, which permits manufacturers and retailers to share data, has been a hot topic for several years now. While about 11,000 manufacturers currently use the Global Data Synchronization Network, only about 135 retailing chains do. However, though it’s not presently a priority, nearly two-thirds of those surveyed said they plan to take advantage of this technology in the next few years.

A strong trend toward using available technology to increase store energy efficiency is favorably impacting storeowners’ bottom lines. Skylights, LEDs, recycling, heat reclamation from refrigerated units and alternative energy sources are becoming more frequent within the convenience channel, and with good reason: Energy Star estimates that a 10% reduction in energy expenditures can produce a 15% net margin increase and a rise in sales of $71 per square foot.

Paring refrigeration energy use is rapidly becoming another high-tech priority.

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