Giant Tools for Would-be Giants

By: Dan Jablons

Recently I got a free subscription to Business 2.0. In my profession I get lots of these free subscriptions. Some are great, some are just excuses to sell me things I probably wouldn't buy anyway. But Business 2.0 is one of those rare ones that has data that both large and small business owners can use, and I recommend it.

I received the January/February 2005 issue, and came upon an article entitled "7-Eleven Gets Sophisticated" by Elizabeth Esfahani. In this article, she described all the things that 7-Eleven was doing to reinvent themselves, and as a result they have improved their price per share, inventory turns, and revenue. Being in the inventory control business, I was immediately sucked in. The article describes in detail, how 7-Eleven worked with "technology that rival's Wal-Mart's." I wanted to know about that too, since I sell technology solutions. So now the author has me hooked in two ways. This was key research for me. It was a Sunday morning. I was excited. I told my family that I needed a little time to do this research. They could see that look in my eye that said, "Dad's into something heavy. Let him go." I closed the door to my office to begin reading.

I began pouring through the article to look for the "cutting edge inventory control technology." I wanted to know what this giant retailer was doing, and how they were leveraging the same technology that Wal-Mart was using to improve their performance. I was hopeful that these hidden industry secrets would be revealed to me. I could then take this data to Island Pacific and encourage them to add it to Retail Pro, which would help all of our customers successfully compete against the "big boys."

The article begins by discussing where 7-Eleven was at (not doing so well) and the research they were doing to improve their image; to remove themselves from the simple "gasoline and cigarette" retailer to something more sophisticated. On top of that, how they were using "some of the most sophisticated systems for gauging demand, predicting sales, and filling orders in the business today." Wow. And they were spending more than $500 million in the last decade to develop it. Wow again.

Jim Keyes, CEO of 7-Eleven is quoted in the article. He says, "Technology has allowed us to take back our destiny." Those are words that I certainly understand. But now I want the meat - the juicy stuff of what they exactly implemented - that took their turns from 12 per year to 19 per year. I thought to myself, "they probably developed some new technique, some new measure of inventory and sales to do that." It's in this article. I'm going to find it. I'm on a mission.

I scanned through the marketing data about how 7-Eleven was going to market itself as "cool." Interesting data, but I wanted to know what technology they were using to improve their turns. Finally, I found it. I took out a legal pad to make notes. I'm ready.

The first nugget appears on page 96. This new technology that 7-Eleven has leveraged allows any store manager to pull up real-time data about what products are selling best at their location. Retail Pro already does that. Nothing new here. The store managers can also get inventory information on other stores in the chain. Retail Pro does that too.

Their system also tracks the weather for them, so they can forecast umbrella sales. OK, Retail Pro doesn't do that. But anyone with internet access could get that data and apply it to their merchandise if they needed to. At this point, I figure that the author is easing me into the vast technological discoveries I'm about to read about. OK, I'll be patient. I read on.

In order to tweak their inventories, 7-Eleven developed a hand-held device that enables them to recount inventories on a regular basis, so that they can be sure they are looking at good numbers. They also use these handhelds to help place orders for items that need to be replenished. The article describes how one particular store manager used the system to "calculate how many have moved since last week and suggests an order." I have several customers doing that today, using Retail Pro's Min/Max and Auto PO features. The stores suggest purchase orders to the corporate location, which are converted to real orders and then shipped. This empowers the store managers to order what they know they can sell. Proposed purchase orders have been part of Retail Pro since I started in Version 4. (We're on version 8 these days.)

The article now goes into how 7-Eleven has altered its warehousing. They've done an amazing job of distributing product that way, but so few of my customers work that way, that it doesn't hold much interest for me. But a great deal of what they are talking about is available in IPMS, the merchandising system that Retail Pro will soon link with, which will enable multiple levels of replenishment from multiple warehouses.

In the next section, the focus shifts to 7- Eleven's VP of Merchandising. I'm sure this is where the real sophisticated stuff is going to come out. The article describes how he looks at sales by location to figure out what is selling where. Retail Pro's On Hand and Sold report (in the Merchandising area) does that. The article goes on to talk about how he uses the sales data he gets to develop new products (a towelette that removes coffee stains - I need that. I make my first note - find out where I can get that towelette).

The article continues, now talking more about the clever changes 7-Eleven has made to their merchandising offerings - better, fresher food, more interesting choices, etc. And then the article ends. What? Where were the vast technological changes that I had heard about? Did I miss the new formulas, new methodologies? The cutting edge technological advances? I'm worried. I start re-reading the article. The truth is, everything they offer, we can already do. How can that be? I opened the door. My family was surprised to see me so soon. We had lunch together. I was a little disappointed, but they quickly cheered me up. I have a great family. "I guess there aren't any new secrets," I thought. The basics of retailing are what makes stores profitable. We already own a lot of what this giant retailer is discovering.

As I thought more about the article, I realized that I wanted to communicate something to our customers. I wanted them to know that they had great technology that they could leverage. I wanted them to be proud of what they had. More than that, I wanted them to use this technology to the same advantage that 7-Eleven had. Sure, it's an investment to get this going (both training time from us, and our customers' own personal time to invoke this in their own businesses), but it surely isn't the $500 million that 7-Eleven invested! I also realized that this is why our membership program works so well. The membership fees that our customers pay are used to create developments in the Retail Pro software. These developments are not dreams created by programmers; they are suggestions made by the thousands and thousands of retailers who use Retail Pro software every day. And these retailers are bright, inventive entrepreneurs with vision, who contribute these great ideas to everyone's benefit. It's a community approach, but it works. It combines the resources and ingenuity of thousands of professionals. We all win to the degree that we all participate in making the product better and better.

So I certainly suggest to all Retail Pro customers (and in fact, to anyone who has a technology solution in their store) that they invest in their own systems and their own technology. Take the time to get FULLY trained on the product, and learn all the great features, the nooks and crannies, that will improve your bottom line. Participate in the membership programs that provide the research and development necessary to make the software even more powerful. That's how all of us, as a community, can win.

For more information, visit www.onestepdata.com.

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