Beyond the POS

As international chains do battle with local names, retail operations are going past the point of sale (POS) to deliver greater levels of service to their customers. At the same time, front end systems are being integrated with supply chains to ensure that outlets can deliver.

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By  Matthew Southwell Published  July 2, 2002

I|~||~||~|A quick stroll around any of the Middle East’s many shopping malls reveals just how competitive the region’s retail market has become. International chains do battle with local names on a daily basis as each outlet tries to entice tourists, expatriates and nationals to part with their hard earned money.

In an attempt to get ahead, many retail operations are turning to technology. Efficient supply chains have been deployed to ensure shelves are never under-stocked while point-of-sale (POS) systems gather as much detail on customers as possible to aid purchasing decisions and fuel marketing campaigns.

UAE-based Areej, which sells a wide range of perfumes, cosmetics and accessories, has already embraced technology to enhance its competitive advantage by implementing a heavily customised POS system and JD Edward’s One World enterprise resource planning suite.

According to TJ Van Rooyen, general manager of Areej, the POS is the single most important aspect of its implementation. “We may be building beautiful stores, but I need to know what my business is about and the only way I can do that is through the information I am gathering at the POS,” he says.

This information is gathered by the Areej sales team both on the shop floor and while a customer is paying for their goods at the POS. Demographic data and customer preferences are then entered into the POS via a series of pop up menus and later fleshed out with details from data cards and promotions.

The data is key to ensuring each outlet is stocking the right products for its customers. For example, those stores used primarily by European holidaymakers boast a wider range of sun care products than those frequented by residents, which typically offer a greater selection of cosmetics.

“Data in the store is crucial. You cannot just open a store and hope that people will come in and buy products. You need to know who is walking in, why they are walking in and what they want to buy. If you don’t know this then you can’t determine your product range or your pricing. You are dead before you even start,” he says.

In addition to ensuring that Areej has the correct items in each store, the POS allows it to track the performance of brands down to each individual line item.

“When we get the information back from the POS we can look at it and find out what products we have and haven’t sold and find out why. By having data I can analyse my business. If you have data you have proof and you no longer have to work on perceptions,” says Van Rooyen.

The ability to return to its suppliers with hard data has strengthened Areej’s negotiating position as it can tell them exactly how successful their products and promotions are doing. “We can walk into a store with a sales manger and tell them exactly what they are selling. It is to their benefit as well because if I am sitting with overstock then I cannot order more,” comments Van Rooyen.

“It also means that we can transfer stock to stores where a certain item is selling so we are no longer sitting with dead stock. This allows us to retain the value of the brand,” he adds.

||**||II|~||~||~|In addition to tracking products, Areej’s POS allows it to register staff attendance and monitor their sales performance. By analysing the data gathered, the company’s management team can also identify who is selling which products.

“If there is a focus on only one thing then we can tell that the person is not confident in certain areas and then work on that. It allows us to measure staff efficiency. It is no longer just perception because the facts are there and you can do something about it,” he says.

In addition, the POS also allows Van Rooyen to identify specialists within his sales team. For example, if a salesperson shows a particular talent for cosmetic sales they can be sent to any store that is having a make up event.

While building a better picture of a retail outlet’s customers, the POS is also the first link in the supply chain. At Areej, inventory data gathered by the POS is passed into the JDE back end and sent to the central purchasing department. From here, orders are placed and stock levels sent up and down the supply chain.

“With only one or two shops you could manage this with a manual or a less automated system, but once you get to a certain critical mass there is no way to manage the whole logistics, ordering or serving process without your front and back end being integrated — it is just not possible,” explains Evan Powell, IT manager at Areej’s parent company, Al Tayer Group.

In addition to making the supply chain more efficient, back end integration helps the central purchasing team negotiate better deals as they can buy in bulk. “Because the sales data passes through the supply chain in realtime we can do optimal buying,” comments Powell. “It is all about optimising inventory... You have to optimise your inventory without reducing it to the point where you are damaging sales,” he adds.

A number of other retailers are joining Areej in its quest for an efficient supply chain. Kuwait’s Alshaya Group has integrated its recently rolled out IBM e-POS systems with its bespoke Kerridge ERP solution, while Al Othaim connects its multitude of outlets through JD Edwards.

Sajeev Arya, operations & finance manager at EXE Technologies, suggests this increased focus on inventory management is down to a need to deliver item line information in real time. Aqili Information Systems’ director, OP Khatri, believes increased market maturity has also played its part.

“Previously, people were not worried about inventory and they were more focused on sales. As long as they knew what they were selling they were happy. However, as business has grown, volume has increased and they [retailers] are getting worried about stock management at an item level as it affects their ability to deliver and compete,” adds Basel Tutunji, director of sales, Intershop Middle East.

||**||III|~||~||~|By automating its supply chain over a two-year period, Al Othaim has been able to reduce its manpower by 450 people and use its surplus workforce to staff new stores. Abdulla Mazi, IT director, Al Othaim, explains that it has also allowed the retailer to reduce its inventory by about 30%.

“We have reduced the time goods spend in the warehouse. We have also stopped having to stock goods at the stores, which means we can use the space on the shelves for more products. This gives our customers more choice and boosts sales,” he says.

According to its group IT manager, Zoran Krispinovic, Alshaya has achieved even better results and has been able to drop its inventory by 50% At the same time, stock accuracy has risen to 99%, which allows the group to reduce the amount of warehouse space it requires.

“We are minimising the impact on our warehousing because we are not in the warehousing business. We are reducing our supply chain by automating the process and making it as quick as possible,” he says.

While an effective POS system and efficient supply chain remain the technology prerequisites for a competitive retail operation, some of the region’s organisations are beginning to look towards the Internet and mobile devices to make them stand out from the crowd. Some are investing in web sites to ensure customers don’t even have to visit the store while others are beginning to their take services to the shop floor with the deployment of assisted shopping solutions.

Al Othaim, for example, is due to launch its Intershop-based web offering by the end of September. Mazi, reports that the company began investing in an online presence in response to customer requests. When phase one of the complete, the site will offer 2500 of the 14,000 products the store carries.

“We have a lot of customers who would like to shop online, especially for fast moving items. We think that we will have a regular weekly customer for the online grocery shopping and this will make the site a success,” he says.

To begin with, the online initiative will work on a ‘cash on delivery’ basis, but as Saudi Arabia establishes an official payment gateway, the whole ordering and payment process will be carried out online.

According to Sunil Chadha, regional manager of Symbol Middle East, the move towards mobile solutions is being driven by a combination of the region’s demanding customers and influences from abroad, where the major retailers are already heavily using wireless technology.

||**||IV|~||~||~|“International companies have a lot of experience in using technology and they are bringing this here and improving levels of service to the extent where a customer now expects good service when they walk through the door. If the local companies do not upgrade then they will lose market share,” he says.

At the forefront of the mobile movement is assisted shopping in high-end stores. By arming sales staff with mobile devices, such as PDAs, information can be provided on the spot, which ensures staff can stay with the customer rather than vanishing into the storeroom.

“When customers walk in staff with PDA type devices are helping people chose sizes, verify stock, look up colours or take orders, for example. It is a whole new experience in shopping for the customer — they no longer have to carry a bag or use a trolley because the order can be collected for them by other sales staff,” explains Chadha.

Symbol is already piloting such a solution with an unnamed retail operation in Kuwait and a high end stationary store in Saudi Arabia. Areej is also showing an interest in assisted shopping. Van Rooyen says it would help the company cover its large stores more effectively and provide yet more ‘special’ services. For example, PDAs could be loaded with software that suggests a selection of products once the customer’s preferences have been entered, he says.

“Some of the Areej shops are massive, but they only have two points of sale because they are not supermarkets. However, they have lots of assistants so why should the person go to the POS when they can be served on the spot? When the customer asks for something the assistant should be able to tell them there and then because it is a key part of Areej’s ability to service the customer. I am not saying it is going to revolutionise sales but it will certainly help,” he explains.

Handhelds are also being pushed out to the customers themselves. By providing shoppers with their own barcode scanner they are able to scan their items as they pick them up, which saves them having to queue at the POS.

Ahmed Hisham, territory manager for Gulf & Pakistan at the retail solutions division of NCR, says such solution also saves the retail outlet money in terms of staffing as the POS system can be totally automated.

Symbol’s Chadha adds that this not only provides a better customer experience because it speeds their visit, but also gives the retail operator an opportunity to market preferred brands.

“While customers are shopping with the scanner marketing messages can be sent out. For example, if a customer picks up a particular item then the handheld can suggest something similar that is on promotion. This gives the customer control and options, which is what the successful use of technology in the retail sector is all about,” he explains.||**||

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