INVENTORY

Around the World

BY Deena M. Amato-McCoy

Abercrombie & Fitch understands that the key to international branding is to deliver a consistent store experience across the globe.

By adopting an open operating platform and integrated point-of-sale infrastructure, the company is able to centrally manage all business operations, including supply chain, inventory management and POS processing, across international borders. The retailer’s international stores now garner close to $1 billion in sales.

“International stores are much more profitable than U.S.-based stores due to several reasons, including that they are much less promotional and their price-point strategy is a little different in those stores,” said Jon Rudy, the retailer’s VP merchandising systems, during a presentation at Oracle’s Retail Cross Talk 2012 conference.

A&F launched its international strategy in Canada and the U.K. in 2006 and 2007, respectively, using its existing legacy systems to support the expansion. The platform lacked visibility into financial impacts, especially those related to merchandising. For example, all planners managed financials in spreadsheets, a manual process that made it impossible to determine if they were over- or under-buying.

“[The process] took a toll on merchandise allocation because we used to plan floor space based on their orders,” said Raj Lakshmaihgari, director of merchandising systems, Abercrombie & Fitch. “If there were shipping delays, we had to change floor sets. Then we began to overbuy to stay stocked. The challenge here was that all merchandise was shipped to our Columbus, Ohio-based distribution center, and it sat there until it was needed.”

Since this practice tied up capital and also made it difficult to efficiently replenish stock overseas, it quickly became clear that these systems and processes couldn’t sustain future international growth.

In 2009, the retailer selected the Oracle Retail Merchandising system, which resides in the company’s Columbus-based corporate data center. Since adding the platform, A&F increased its inventory ordering accuracy from an average of 94% to 100% accuracy.

“This helps us in our metric control, getting a floor set properly organized and getting the merchandise into the store at the right time,” Lakshmaihgari said. “We also decreased air shipments from 25% of total shipments to 8%, which is a huge cost savings.”

To support its global POS strategy, the retailer also deployed Oracle’s Retail Point-of-Sale Software Systems (ORPOS). Prior to adding the POS platform, the company was managing terminals across 1,100 locations, each with their own servers and associated databases.

“The process was too overwhelming for the size of our IT team [which consists of one development manager, eight POS developers and a payment manager] and what we had to do,” explained Simon Kish, Abercrombie & Fitch’s director of IT. Subsequently, he explained, the chain decided to create a centralized strategy that required it to bring POS processing back into its Ohio-based data center.

Similarly, A&F implemented regional databases that manage up to 30 stores each. To integrate these databases, A&F is using open-source database replication software to synchronize multiple repositories into a centralized database in the data center. This configuration streamlines the process the chain uses to transmit pricing to each POS system nightly, Kish explained, and also distributes sales information to other business systems. The end result is that A&F has a near-real-time view of what is happening in its stores on a global level.

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Focus on: ADA Compliance

BY CSA STAFF

Seasonal, temporary and pop-up retailers have an added challenge this year. As of March, any retail space constructed or altered must meet the Department of Justice’s latest ADA requirements and the 2010 Standards for Accessible Design.

That applies to all new retail construction and any alterations to retail spaces; and if an existing facility is used, then retailers must conduct “readily achievable barrier removal.”

Eve Hill, senior counselor to the assistant attorney general for the civil rights division of the Department of Justice and a subject-matter expert on ADA, explained, “The readily achievable barrier removal obligation may be determined partially in light of the temporary nature of the space and whether the retailer already owns the space or is just renting it for a short period of time. Either way, both the retail tenant and the landlord have obligations regarding physical access to an existing space.”

When a retailer moves into a space, they should consider what the barriers are and which ones are “readily achievable” to remove. According to Hill, determining what can be readily removed is based in part on the resources available to the retailer.

“A large regional or national retail company has more resources to dedicate to making the space accessible than a mom-and-pop retailer might have, so that is taken into consideration when deciding what is readily achievable,” she noted.

For the purposes of the ADA compliance, both tenants and landlords are equally responsible to the person with a disability. For instance, if a person with a disability tries to gain access and is unable to do so, they are allowed to sue the landlord, the tenant or both.

When a retailer is opening a seasonal or temporary store in an existing space that was already in compliance with the ADA’s 1990 standards, the retailer doesn’t have to modify the space to the 2012 standards unless they are physically altering the space. Simply adding merchandise or painting the walls does not alter the space, but additions, such as built-in cabinets, movable racks or even temporary point-of-sale lanes, are required to comply with new standards.

Additionally, a pop-up store that may be open for a very short time is still expected to comply with ADA requirements. However, in most cases, the landlord is responsible for making the necessary accessibility modifications and the tenant should make sure the leasing contract spells out who is responsible.

From September through December, retailers are opening more seasonal stores and also dealing with higher traffic and increased inventories. All of these factors contribute to a higher risk for barriers or obstructions to ADA compliance.

“Anecdotally, I hear more complaints about issues such as extra merchandise in aisles so that the aisle becomes inaccessible,” Hill said. “We also hear complaints that people who need assistance have more trouble getting help because the store associates are otherwise occupied and not prepared to help them. And retailers are fitting a lot more merchandise into the same space, so often products are on high shelves and unreachable.”

Making sure store associates are adequately prepared to assist shoppers is one of the more subtle expectations of ADA compliance. As the number of senior citizens and elderly shoppers continues to grow, assisting people with cognitive challenges becomes a larger component of ADA compliance.

“As people get older, they typically need more clarity about where to go and how to conduct business,” Hill added. Store associates should be prepared to volunteer help or assistance without seeming patronizing. You can’t grab a person with a disability and move them to another area in the store but you can offer assistance, which is generally appreciated.”

Her suggestion for retailers opening seasonal or temporary spaces is to start by evaluating the space for barriers and envisioning how they would get through the store if they had a disability. “Think about a variety of disabilities — not only people with wheelchairs and walkers but also those whose vision is impaired, or who can’t hear as well.”

Although the Department of Justice doesn’t recommend specific training for how to comply with ADA requirements and serve the public, the Department of Education has an ADA network with 10 regional centers that provide training and information to local areas. Retailers and store managers are encouraged to use these regional ADA centers as a training resource.

“Another way to gain insight into the needs of people with disabilities is to actually employ people with disabilities in your stores,” Hill advised. “The only problem with hiring someone with a disability on a temporary basis is that you are going to want to bring them on permanently.”

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Focus on: Lighting

BY CSA STAFF

Brookshire Brothers has launched a comprehensive lighting update involving in-store, parking lot, exterior signage and refrigerated case fixtures.

Using a combination of new linear fluorescent lighting and LED technologies — from GE Lighting, East Cleveland, Ohio — Brookshire Brothers will reduce its annual operating costs more than $235,000. The relamping has eliminated more than 3.8 million lbs. of CO2 emissions, with a reduction of 2.4 million kilowatt hours (kWhs) in electricity use.

“When we looked at options to impact our total energy costs, we identified several areas at different stores where new lighting, including LED fixtures, made a compelling case, both indoors and out,” said Eric Johnson, director of construction, Brookshire Brothers, Lufkin, Texas, which operates 72 supermarkets in Texas and Louisiana.

The fluorescent lighting retrofit, now completed chainwide, involved replacing 32-watt bulbs in approximately 450 four-lamp fixtures with GE’s more energy-efficient 28-watt T8 lamps. Existing ballasts were replaced with GE’s high-efficiency UltraMax electronic ballasts as needed. Each ballast installed will create additional energy savings of approximately eight watts per fixture.

The supermarket operator will save an average $3,200 per store annually in electricity expense with its new 28-watt solution, which represents a more than $220,000 annual cost benefit based on a $.09 kWh electricity rate and 12 hours use per day.

Brookshire Brothers is also utilizing LED technology. The chain replaced the fluorescent lighting in refrigerated display cases in four locations with GE’s Immersion RV40 LED lighting, designed to eliminate light-source glare and wasteful light spill typical of fluorescent-equipped displays. The LEDs will deliver a 60% energy reduction and are rated for 50,000-hours life, four times longer than the fluorescents they replaced.

“Our electrical contractor told me, ‘You wouldn’t believe how much of the work we do for you is to repair fluorescent door lighting.’ ” Johnson said. “In the stores that have been converted, everything is lit 100% of the time. That adds up to sales right there.”

Johnson plans to specify the LED lighting in upcoming conversions of additional stores.

Additionally, wine displays in two stores have been lit with GE’s LED Replacement Lamps, which work well in applications in which a narrow, focused beam spread is preferred. Forty-five 75-watt halogen lamps (940 lumens) in each store were changed to long-life GE 10-watt PAR30 LED floodlights (500 lumens). Previously, Brookshire had replaced an average 50 halogen bulbs per location each year. Now, the company will count $3,200 in combined annual energy and maintenance savings.

To date, five of the company’s parking lots have been retrofitted with GE Evolve LED Area Lights. The new 210-watt lights replaced the existing 400-watt high-intensity discharge (HID) fixtures in two lots. In the other two, 1,000-watt HIDs were replaced by 270-watt Area Lights.

As a result of the watts-per-fixture reduction, Brookshire Brothers will save more than $14,000 annually in electricity costs and will also profit from reduced-maintenance time-related expenses. More parking lot retrofits are in the offing.

Store managers are impressed with the lighting upgrade, Johnson said.

“The parking lots shine, the signage is crisper, and the colors of the products show much better,” he said. “There have only been very positive comments. In each case where new LED lighting was specified, it was easy to support that decision financially through decreased energy consumption, reduced maintenance, increased dependability and extended lamp life.”

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Apr-01-2013 01:53 pm

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