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BY CSA STAFF

Harry & David Adds New IT Platform

Tired of struggling to gain more visibility and efficiencies across its retail and wholesale businesses, Harry & David Operations Corp., Medford, Ore., is adding an integrated IT platform from SAP America.

The well-known multi-channel gourmet-food retailer has been a gift-giving resource for more than 70 years, and the company is poised for more growth. “The seasonality of our business demands a platform that can rapidly scale and meet our ever-changing needs,” said Joe Foley, CIO, Harry & David Holdings.

Realizing it needed an integrated business model, Harry & David began searching for a single operating platform that would enable the company to absorb operating costs and provide a foundation for growth. The SAP for Retail suite from Newtown Square, Pa.-based SAP America, a subsidiary of Germany-based SAP AG, promises to fulfill these requirements.

By leveraging the suite’s merchandise and assortment planning, and forecasting and replenishment modules, Harry & David can pursue more targeted merchandise selections in its retail stores. It will also support demand-driven processes and inventory management across its wholesale operations.

The company will initially apply the solution among its food and beverage offerings. The next stage is to apply SAP’s ERP (enterprise resource planning) financials module.

Giant Eagle Creates Unified Store Experience

Giant Eagle, Pittsburgh, tapped long-time technology partner IBM, Armonk, N.Y., when it was ready to establish a unified shopping experience across its network of stores.

Focused on providing its shoppers with the highest quality foods and convenient services, Giant Eagle needed a technology infrastructure that could deliver a consistent, standard integration architecture for in-store applications. IBM’s Store Integration Framework, which is built on Java 2 Enterprise edition (J2EE) architectures and open standards, fit the bill.

The chain’s first priority was to use the infrastructure to connect its GetGo c-store IT systems with its IBM SurePOS ACE for 4690 operating system. This will enable all fuel stations to be used as virtual POS devices. The framework also supports the acceptance of the Giant Eagle Advantage loyalty card at nontraditional POS units, such as fuel pumps.

The framework is also supporting the addition of IBM’s Personal Shopping Assistant (PSA) solution that features Cuesol’s Cart Companion software and Motorola’s portable shopping devices. Now shoppers can automatically scan and bag groceries as they shop. They also pay for groceries at a dedicated checkout station. The PSA solution is currently available in five Giant Eagle supermarkets.

“Through the use of open systems and standards, the IBM framework ensures we can improve connectivity and reduce the time it takes to roll out new innovations and promotions,” said Russ Ross, senior VP and CIO, Giant Eagle.

The Children’s Place Enhances Merchandise Planning

A complex planning process prompted The Children’s Place Retail Stores Inc. to search for a flexible, integrated solution that would connect the financial and merchandise-planning operations across its Disney Store brand. The chain found its ideal solution from long-time partner, SAS, Cary, N.C.

By adding the SAS Integrated Merchandise Planning suite, the retailer is preparing to use business intelligence to manage financial planning, assortment planning, forecasting and in-store management for more than 300 Disney stores.

“The solution will help us streamline planning, reduce ad hoc reporting needs and decrease the time we spend gathering data,” said Richard Flaks, senior VP, planning allocation and IT, The Children’s Place, Secaucus, N.J.

“This will afford our team more time to evaluate optimal business scenarios and make smarter decisions,” he added. “The solution’s combination of integrated merchandise planning, powerful analytics, usability and scalability establishes a platform for us to grow on.”

SAS’ integrated merchandise-planning solution also will help Disney Store meet the challenges of the rapidly changing environment, according to SAS.

The chain is currently implementing the solution. SAS declined to reveal when the installation will be complete.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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