Natural Foods Merchandiser

Evolve with retail technology

Do the words technology, computers and digital make you want to bust open the nearest bottle of sedatives? If a fax machine is your store's most cutting-edge equipment, it could be time to move your store into the 21st century, because your competitors are offering the convenience of self-checkout lanes and the savings of current-to-the-day pricing.

"You don't think Wal-Mart is out there just writing numbers in a notebook, do you?" asks Jeri Barrett, who recently implemented a new automated ordering system in her Herbal Solutions store in Aiken, S.C., to keep up with competition.

In fact, Franklin, Tenn.-based research and advisory firm IHL Consulting Group released a report in October concluding that traditional grocery outlets, warehouse clubs, supercenters and grocery-offering mass merchants will spend about $9.8 billion on information technology and communications systems in 2006, up 5.9 percent from 2005.

Richard MacKillop, chief executive officer of OrderDog, a technology company geared toward naturals retailers, says when he looks at a store, there are two giveaways that the store is losing money: when employees are still putting price tags on products and when the back room looks like a paper bomb went off. Both, he says, can be helped through updating the store's technology.

Ordering and inventory systems

Because ordering is an everyday part of retailing, an automated ordering system is a logical place for a naturals store to begin its technological updating. Barrett, of Herbal Solutions, says the handheld scanner she purchased a few months ago for ordering and inventory has saved her hours of valuable time and helped noticeably increase her profit margins. "For us, the system costs $99 a month, but we have realized an increase in sales on average of $2,000 a month," she says. "So that means, for the people who can't do the math, that our sales increased $24,000 during the course of the year. I can't think of a product in the world that I can put on my shelf that is going to give me that kind of return for my money."

A system like Barrett's allows a retailer to scan an item on the shelf and tell instantly when they last placed an order with that company, what they ordered and how many, what's currently on special from that vendor, wholesale prices and retail prices. Retailers can order products one at a time as they walk through the store with the scanner. Products such as OrderDog's iPAL and Living Naturally's Scan Genius can help managers tighten up their inventory and stay on top of price changes, increasing ordering accuracy and helping to control out-of-stocks.

OrderDog's MacKillop says he recommends that retailers consider a scanner when their ordering time starts taking up more than one day a week. "Our studies have shown that [when a scanning system is implemented], 70 percent of ordering time will go away," he says. That 70 percent can translate to more time spent with customers.

MacKillop adds that being able to scan product as it comes in the back door helps factor in the costs of shipping. It can also help keep product prices updated as they move to the shelf. Chris Anderson, who recently began using an automated ordering system in his Chelan, Wash., store Bear Foods Natural Market, says the process has helped his staff identify several mistakes in pricing that they had previously made. Though sometimes they had overpriced and sometimes underpriced, Anderson says the increasing efficiency has been worth it.

Point-of-sale systems

A new point-of-sale system, including an updated user interface, integrated scanner and scale, printer and credit card scanner, can help streamline inventory and customer purchase histories. Starting at around $1,000, POS systems can be a serious investment. But they can increase efficiency and speed of checkout, which translates to better customer service. Danny Wells, a consultant for the natural products industry and former retailer and partner of Living Naturally, suggests that stores grossing more than $1 million should consider an automated, integrated POS system, and says a POS system is "mandatory" for a store grossing more than $3 million.

A POS system, combined with an automated ordering system and a fresh, often-updated Web site, can eliminate most of the "paper bomb" common to retail, keep track of customer loyalty information and inventory data and keep you up to date on pricing.

Anderson, of Bear Natural Foods Market, also recently made the transition to a completely new POS system after a six-month transition to using a hand-held scanner for ordering. Though Anderson says the learning curve for the new system has been high, his store couldn't handle doing everything manually anymore once his sales had risen around the $1 million mark. He adds that the new system frees up his employees from having to keep the minutiae of hundreds of products in their minds for ordering, allowing them to focus more on merchandising and other tasks important for the store's development.


"I believe there are two types of natural product retailers today—those who have a Web site, and those who will have a Web site," Wells says in his publication Why Natural Products Retailers Need a Web Site Today. "Your customers expect you to have a Web site," he says.

At the very least, a Web site with basic information like directions, store hours, staff profiles and e-mail capabilities can be helpful. "Wasting phone time on hold or trying to locate the right person to talk to is being replaced with e-mail," Wells says. "[It's] direct. Succinct. Timely."

But with more than 73 million Americans going online for health information, Wells says, your store can take advantage of the platform to become your customers' source for the wellness lowdown. Providing articles on the latest health research and the current specials in your store can be useful and attractive to customers who are motivated to educate themselves and apply their new learning as they shop in your store.

Working with a local Web contractor or a company that provides a ready-to-use Web template for naturals retailers can help you set up an attractive Web presence if you and your staff are less than confident in your Web skills, because savvy shoppers can sense quality, or lack thereof, in a Web site.

Keeping the site's message current and comprehensive is key, Wells says, so customers go to your site first for nutritional information. "Consumers make snap judgments in seconds," says Wells, in a presentation on using technology to increase sales. "Lose their trust, and they'll click on to a competitor's site."

Natural Foods Merchandiser volume XXVII/number 12/p. 14, 16

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