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Sport Chalet Improves Inventory Management

BY Marc Millstein

Sport Chalet is not looking to be the biggest retailer specializing in selling all types of sports-related merchandise—only the best.

The company has achieved a 63% increase in sales growth in the past five years and rakes in an average of $9.4 million annually per store, at $238 per square foot in a prototypical 42,000-sq.-ft. store. The stores carry product in 17 distinct merchandise divisions, and also offer scuba training and employ about 75 associates each.

It is a retail vision built on the concept of creating an extremely exciting shopping environment, offering a broad assortment of products, ease of shopping, and a merchandise strategy arranged by lifestyle and performance as well as specialty concepts, such as surfing and separate skateboard shops. Hard lines account for 52% of sales, apparel, 29%, and footwear, 19%.

But with all its success and a banner well-known for both quality and a find-anything-you-want SKU assortment, the retailer still felt it was not doing nearly enough to maximize customer information. It wanted to base buying decisions on what the shopper wanted heading forward, or forecasting customers needs, rather than basing all or most of its buying decisions on sales history.

The issues Sport Chalet was encountering with its old systems were typical of many retailers: shipments not necessarily equaling demand, problems with store and vendor on-time replenishment, and the resulting poor in-stock positioning, excess inventory, slow turns and sub-optimal product flow.

In other words, as well as the retailer was doing, it saw a ripe opportunity to vastly improve operations, cut costs, spur sales and definitely hike bottom-line profits. To do so, Sport Chalet decided to up the ante and invest in the infrastructure and applications needed to much better predict customer demand and then act on those predictions in its buying and merchandising decisions.

The forecasting customer-demand initiative was sweeping, is still ongoing and involved numerous phases. Phase 1 focused on customer-demand replenishment, including seasonality, promotional demand, lost sale, lead time and demand forecast. A second phase delved into areas such as merchandise, store and in-season planning, performance analysis and allocation.

But even with all that, it was still a leap to get to the point where Sport Chalet could begin leveraging what it terms “high-performance forecasting” to make its buying and other critical decisions based in large part on new science rather than simply human analysis. But it finally did make that leap.

The results, according to Jason Gautereaux, director, inventory management for the chain, have already included increased inventory productivity, customer and promotional service levels, and customer satisfaction as measured by comment cards. The impact also extended to improved product flow, new-store inventory productivity, reduced replenishment systems and, perhaps most important, he said, enhanced customer shopping experience.

Sport Chalet is now forging ahead into Phase 3 with a focus on vendor collaboration, merchandise allocations, CRM, work-force management and assortment planning, Gautereaux said, noting that the payback of working with SAS on the project has been exciting and substantial, and there are still numerous opportunities to optimize operations based on serving the customer.

Gautereaux made his presentation, along with Diana McHenry, director, Global Retail Practice, SAS, during the Technology & Operations Store Summit (TOPSS) in Las Vegas in October. TOPSS is produced by Chain Store Age and Retail Technology Quarterly.

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CompUSA may get a new look

BY CSA STAFF

ADDISON, Tx. After opening a new format store last month, CompUSA may be changing the format of its other stores, depending on customer demand and product interest.

According to reports, the elements found in the prototype store, located in Texas, will be incorporated into other CompUSA locations across the United States.

The nearly 7,700 square-ft. relocation site includes an Apple shop featuring Mac computers, iPods and Apple accessories, and a full-length LCD TV wall.

Additional expansions include extended gaming, which includes an entire wall devoted to the Nintendo Wii, PlayStation3 and Xbox 360 gaming platforms, plus a PC gaming setup to test equipment and play new titles.

While businesses can get their share of support with a specialized services section, all consumers can visit the store’s redesigned IT support area.

“This new store aligns CompUSA’s vision to better serve its three core customers, the technology enthusiast, educated professional and small and medium businesses,” said Gabriela Villalobos, the retailer’s sales and operations evp.

CompUSA announced in April that it would narrow its focus to three core customer groups rather than try to serve a mass audience.

The move was part of a comprehensive restructuring, initiated last February, that included an overhaul of senior management and the closure of half its store base as the privately held chain looked to improve sales and profitability.

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Walgreens withdraws from CVS provider plans

BY CSA STAFF

DEERFIELD, Ill. After many months of talks over low and below-market payment rates by CVS Caremark for four prescription plans, Walgreens has withdrawn as a pharmacy provider from the plans.

Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Progressive Casualty Insurance and Wisconsin Education Association Trust.

Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.

Trent Taylor, president of Walgreens Health Services, the managed care division of Walgreens, released the following statement:

“This is not where we wanted negotiations to lead,” he said. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.

“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark. We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”

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