While retail isn't its focus, selling haircare products accounts for close to 30% of Regis Corp.'s revenue. A merchandise management system helps the company's planning and distribution staff control the replenishment of its inventory.
In 2000, retail sales accounted for only 28% of Regis Corp.'s (Minneapolis) annual revenue. So, why would it invest time and money implementing a system to manage its retail inventory? Considering that 28% of Regis Corp.'s 2000 revenue was $360 million, it's an investment that makes perfect sense.
In business since 1922, the company accounts for nearly 6,700 salons spanning the United States, United Kingdom, Canada, and Puerto Rico. Regis claims $1.14 billion of the fragmented $90 billion worldwide haircare industry. Its two distribution centers (Chattanooga, TN, and Salt Lake City) processed 70 million units of haircare product last year. Until recently the management of this inventory was handled by an internally developed replenishment system. Managing the retail business wasn't high on the priority list of this service-oriented company. But when retail sales started generating profit, the company took notice.
Pruning For Growth
"The software we were using was probably off-the-shelf at one point," says Todd Green, VP of Merchandise Planning and Distribution. "But we modified it so much over the years, it was really homegrown. With our growth and the increase in the amount of retail business we've been doing, we didn't feel our program was going to help us take the business where we needed to be."
Green explains where Regis needs to be in no uncertain terms. "We're opening 400 new corporate stores in the next year, and that number climbs to 600 when you add in franchises." Green explains the company intends to grow without adding significantly to its corporate staff. "Our inventory management system is new to us, but we're already seeing we're more efficient from a personnel standpoint. We'll digest our growth without adding personnel."
The inventory management solution Green speaks of is JDA's Merchandise Management System (MMS), a software program Regis recently adopted for its AS/400 server. On top of the personnel overhead savings, Regis is predicting a 10% reduction in inventory costs as a result of its newfound efficiency. "It's given us an accurate view of our sales and inventory data," explains Green. "We were looking for better accuracy and control of our sales and inventory data, to achieve sales growth while reducing our inventory commitment." Put simply, Regis is getting more to market and managing less inventory backup at its distribution centers.
While Regis had grown comfortable with its old system, its limitations gave the company more reason to switch. A proprietary platform restricted the company from interfacing with its financial, distribution, data warehouse, and POS (point of sale) systems. Green says the new program allows interoperability with these facets of the business, giving him a clearer picture of how business systems work together.
Hold On To What Works
The switch to JDA's MMS was not made without analysis of what would be lost with the change. "We lost the expertise we had gained on our old software, but we worked hard with the JDA staff to make sure we weren't walking away from data critical to our business," Green said. "If there was a report, screen, or piece of information we needed from the old system, we figured out how to accommodate that need." Green says that the ability to customize its software is important to Regis, because it is a salon first and a retailer second. He contends that an out-of-the-box solution for retail-centered businesses would not work for Regis salons.
Regis implemented the system in its entire network of salons in a phased approach that took little more than 18 months - no small feat considering the logistics involved in getting an installation of this magnitude up and running. For perspective, consider the salons represented under the Regis umbrella: MasterCuts, Trade Secret, SmartStyle, SuperCuts, WalMart Salons, and HairCrafters, not to mention Regis itself and the hundreds of once independently owned single and small-chain locations that Regis has acquired.
Regis employs more than 40,000 people worldwide who depend on the system to service the 106 million customers who passed through its doors last year. Thanks in part to a new perspective on the retail side of the business, Regis expects to reach its targeted 10% to 13% revenue increase this year, continuing a streak of growth that started with a haircut in 1922.Questions about this article? E-mail the author at MattP@corrypub.com.