For Retailers, Technology is Critical, Especially in a Crisis

At Sugar and Spice, a cake and candy supply and ice cream parlor in suburban Pittsburgh, the Heenan family handles inventory by sight, experience and intuition…not to mention a little luck. Employees are supposed to note which items are low on stock. At least once a week, one of the owners walks the floor, pad and pencil in hand, checking the shelves and transferring the low inventory notes from a whiteboard to the pad.

Usually, thanks to the cohesion of a tightly-organized family-run business, it works.”But, now and then,” Keith Heenan says, “we run out of something.” At a retailer that specializes in large part on all kinds of chocolate, that’s a potentially dangerous thing. “Most customers really like chocolate, and know exactly what kind they want,” Heenan concedes.

At any retail store, running out of stock has always meant missing potential sales. But now, with gas prices nationwide averaging more than $4 a gallon and product recalls becoming increasingly common, the importance of inventory management systems has taken on whole new meaning.

Thanks to the massive tomato recall, grocers discovered just how critical it is to have efficient technology in place to avoid useless deliveries and keep shelves stocked. The US Food and Drug Administration issued a nationwide warning last week to avoid eating plum tomatoes, red Roma tomatoes, round red tomatoes and products containing these tomatoes. The tomatoes are linked to a salmonellosis outbreak.

The FDA says it is safe to eat cherry tomatoes, grape tomatoes, tomatoes sold with the vine still attached, or homegrown tomatoes, as well as certain plum tomatoes, red Roma tomatoes, round red tomatoes grown in select countries and states.

The challenge for grocers is to know the source of the produce on their shelves, says Joanna Kennedy, marketing analyst for Tomax Corp., a Salt Lake City-based retail software company. Grocers who are armed with inventory management systems are better able to assess the likelihood if any of the tainted products are on their shelves and take immediate action to block the sale of those products, she explains.

In the not so distant past, the concept of grocers having perpetual inventory was viewed as unattain¬able, not worth the effort or a project still on the drawing board. “The problem for most grocers is that there is just too much coming in all the time. They have to have a systematic way to track it,” she says.

That’s where technology can help. More and more, experts agree, supermarket operators are taking control of their space in the store and on the shelf. They’re actively managing their assortments and pricing strategies, Kennedy explains, and fundamentally moving away from the vendor-driven ap¬proach. They’re also looking for tools like demand forecasting, advanced replenishment, merchandise financial planning and assortment management.

As Kennedy explains, there are software solutions that can not only help grocers save shipping costs, boosting the bottom line, but will also build customer loyalty. That’s because a grocer who can stop trucks with the wrong inventory and expedite shipments to bring alternative inventory–who can stock shelves with safe food products–builds consumer confidence and shareholder value. Shoppers know the grocer is “on top of it” and shareholders know profits will not be lost from wasted gas from useless deliveries, she explains.

The Tomax Retail.net suite, for example, is designed to help retailers connect the dots across the demand-driven retail continuum, integrating people and processes, and providing timely, relevant, actionable information to improve retail results. Clients include retailers such as Air Terminal Gifts, The Andersons, ALCO Stores, Coach House Gifts, EZ Lube, Kelly-Moore Paints, Pamida, Party City, Raley’s Supermarkets, ShopRite, Snyders Drug Stores, Sportsman’s Warehouse, Trader Joe’s, Travel Traders, Winn Dixie, and 24 Hour Fitness.