How Smart & Final made its stores Smarter
The business mission was all too common: turn an outdated infrastructure system into a robust, agile engine capable of improving decision making and driving revenue higher across channels.
The results, however, have been anything but common, especially for retailers today struggling to stay ahead in such a fast-changing demographic and technological market environment.
By leveraging a series of new analytics solutions and then rolling out mobile tablets so that store associates could proactively make better decisions, Smart & Final, a warehouse-style grocer based in Commerce, Calif., realized "hundreds of millions of dollars" in increased revenues, said Rich Stefani, VP for IT store systems and business intelligence.
Rich Stefani, head of IT at Smart & Final, talked about how a tablet-based system backed by new analytical software helped improve accuracy in inventory, pricing and other aspects.
Stefani spoke about the move to leverage analytics, mobile and information-sharing throughout the business, and especially at the store level, at the recent Teradata Partners Conference and Expo held at the Georgia World Congress Center in Atlanta.
Smart & Final had sought to fight out-of-stocks, pricing errors, inaccurate product placement vs. planograms and schematic sets, and inability to accurately and swiftly fulfill extra-large orders from key business customers, among other crucial areas.
The drive to address these massive issues come against a backdrop of intensive industry efforts, and frustration, over many decades to fight waste and improve profits in the extremely high-transaction yet low-margin grocery business. With the advent of new business intelligence and analytics solutions, as well as highly agile mobile devices to both transmit and access key data, retailers are finally in position to make major strides in these areas and at the store level in particular.
The answers for Smart & Final came as a series of analytical solutions designed to tap into the company's massive data warehouse and decipher which specific moves would provide the greatest paybacks. The operator of more than 300 stores leverages Teradata's core data warehousing technology to capture and store massive amount of historical data that serves as the foundation of its analytics efforts.
For Smart & Final, a crucial part of the effort involved outfitting every store with mobile tablets for associates to scan items for pricing accuracy, check inventory levels and product placement at the shelf level and pre-plan for incoming shipments. For Smart & Final, the need to delve deeply into the data for much better assortment planning and reducing out-of-stocks were top priorities given the companies diverse customer base and wide variation in demands patterns by store.
"We might have one store 95 percent Hispanic, another 95 percent Caucasian and another 60 percent Asian. How do we cater and make sure we have the right items at the right time for the customers in each of our stores?" Stefani asked. "How do we effectively manage each assortment and easily get information to our store associates, our executive team, and our merchants?"
In addition to the assortment challenge, Smart & Final is growing quickly, operating multiple banners including Smart & Final, Smart & Final Extra and Cash & Carry, geared toward shopper segments such as households, businesses and foodservice operators.
"Our company is on a 10 percent growth plan. We just acquired many of the Haggen stores. We opened 33 stores this year alone, and in the last three years we have opened about 60 stores. Prior to that, we probably opened five stores in the course of eight or nine years. So we are on this massive growth surge now," Stefani said.
For Smart & Final, the information challenges that all retailers struggle with simply could not be tolerated given the challenges—and opportunities—facing the company. The solutions it developed provided KPIs (key performance indicators) on sales, out-of-stocks, store orders, schematic information, pricing, new products, inventory and warehousing, and transportation status. They also show which business customers surround a particular store, how much they typically spend, and how much they spent in the past year. The new solution set also provides data about top customers, bottom customers, orders by store associates, orders and items by warehouse, and order accuracy.
Store associates are now empowered to scan items to routinely check and correct pricing, schematic accuracy, placement and performance of new products, and communicate instantly via the tablets to appropriate executives about potential issues that require intervention above the store level.
"Associates can scan and see where an item or order is in the pipeline. It provides full visibility about every item. Any issue can be shared with anyone in the corporate office by just holding and clicking a special tab on the mobile tablet, which then converts the alert to an e-mail and sends it to the correct manager or executive," Stefani said.
To date, the company has deployed 2,300 mobile devices, which have registered nearly 1 million logins and more than 5 million item orders and inquiries and 16 million scans to check pricing and placement. Given strong utilization, Smart & Final is looking at layering on new capabilities.
"Computer-assisted ordering is absolutely the next thing. There are great tools out there, and we probably will leverage vendor partners for developing those algorithms," Stefani said. "But that is probably the biggest next step because I should not have to ask a store associate to make an order."
As for obstacles related to implementing computer-assisted ordering, Stefani pointed to the need for every item to be scanned at checkout, a persistent problem within the food industry but even greater when there's a wide variety of customers such as small business and foodservice.
"It is time. In our business, unlike a traditional supermarket chain, we have people buying both single items and also cases. We don't only have shopping carts at checkout but also flatbeds," he said. "But the savings with [computer assisted ordering] are so much greater than the inconvenience of scanning each item that I think we will get there."
Analytical System Considerations
The payback from investments in analytics are considerable, but so are the challenges of determining the best path forward. Build? Buy? Partner?
In Smart & Final's case, Rich Stefani decided to build analytic solutions in-house and tie them into Apple tablets in the stores. Making that decision hinged on a number of factors, including having a key associate on board who was both comfortable with the technology and coding required, and eager to take on the challenge.
In addition to the strength and depth of internal IT talent, other considerations that factored into Smart & Final's decision-making included:
- The integration of new solutions with existing enterprise legacy systems;
- The need to have proper security on devices to be used in the store;
- Responsive design so the solution will work with current and subsequent device changes;
- How to handle operation systems updates of traveling wireless at the store and the impacts on the point of sale when large file sizes are downloaded;
- The ability to customize the applications so they provide the most appropriate and valuable functionality for business executives, store associates and managers.