White Paper

Connected Retailer Store Solution Supports K&G's Plans for Long-term Growth

For more than 10 years, discount clothing retailer K&G has faced an enviable challenge: how to manage explosive growth. STS is helping them meet it with effective systems for serving the needs of their customers and stores.

Background
When Steve Greenspan made his first foray into retailing, in 1989, the Atlanta-based going-out-of-business consultant sidestepped into an unexpected opportunity. Greenspan had leased a warehouse to liquidate men's clothing from a manufacturer whose shipments had been refused by a bankrupt department store. But when his first weekend netted more than $100,000, he realized he had tapped into a huge, unseen demand with significant potential for long-term growth. To pursue it, Steve created K&G.

The first store provided everything that had attracted customers to his liquidation sale: a large selection of quality men's clothing at discount prices, presented in an efficient, well-organized shopping environment. The setup recognized that most men don't want to build a wardrobe by going from store to store. According to Steve, men approach shopping as a chore, not as a recreation, and they want to pay for the merchandise, not for the real estate it's in. They also tend to shop on the weekends, when they have more time. 'We respond to all those needs,' he says. 'At K&G, they get in, get out, and nobody gets hurt.'

With an off-main location, staff trained to help customers help themselves, plus unique Friday to Sunday opening hours, that first store achieved the right balance of quality, selection, service, and cost. However, the success of the concept meant that Steve soon faced another challenge: how to maintain that balance while managing growth. By 1998, K&G had expanded to 35 stores in 17 US markets, then added 35 more outlets over the next four years. As their business increased, so did their need for effective and adaptable retail IT.

Challenge
Scott Saban, K&G's VP of Operations and Information Systems, says that although K&G's initial requirements were fairly simple, they were looking ahead from the start. 'We recognized the potential need for a fully integrated enterprise system that could support our distinctive concept and evolve with our business, he says.

In recent years, improving the efficiency of K&G's inventory management has become especially critical to their ongoing success. Most K&G stores are replenished daily to keep pace with high-volume sales, and to satisfy their customers' interest in new and varied stock. As a result, the retailer depends on very fast turnarounds from receiving to display.

Point of Sale Manager Felix Berrios notes that POS enhancements are also key. 'We're constantly looking for ways to boost traffic, retain customers, and increase our overall sales volumes,' he says. 'At the same time, our emphasis on efficiency means that we can't afford to delay transactions and make our customers wait.'

Solution
To meet these challenges, K&G selected the Connected Retailer Store Solution. Store is a best-of-breed, Windows®-based automation system designed to improve customer service; generate better management information about customers, merchandise, and sales processes; compile reports; and help sales associates maximize the time they spend with customers. It includes POS, back office, and a complete configuration toolset to modify business rules ā€” rapidly and independently ā€” in response to changing business needs.

Results
Efficient inventory management. Store Solution's Store Inventory Tracking has helped K&G process stock quickly and efficiently. Dan Campbell, Director of MIS, notes that each store now uses handheld devices, interfaced with POS, to download and track all UPC information. 'The system works very well to identify and help correct ticketing and document management errors,' he says.

Dan adds that the technology has improved their inventory procedures and results. 'The use of handhelds in conjunction with STS's Store Inventory Tracking saves us a lot of time with our twice-yearly physical inventory,' he says. 'Because we no longer have to outsource, we get a faster ROI.'

'Not having to deal with an outside source to do our inventories keeps things more streamlined from a systems point of view,' Dan continues. 'We don't need to worry about time delays or corruptions when receiving our data, and we can supply our Inventory Accountants with the information they need to do auditing, much faster than before.'

Effective transaction processing. K&G also depends on the Store Solution to manage information effectively at POS. According to Dan, it now takes them much less time to process transactions and credit cards. Data is captured reliably to feed all downstream systems. This includes customers' zip code information, which is collected and processed by a module in STS's Sales Audit. K&G uses the data to plan new store openings in their existing markets.

In addition, full offline capabilities mean they never have to worry about POS being unavailable, especially during peak periods.

STS technology has helped K&G adopt more creative sales and marketing tools. For example, to improve customer service and loyalty, the retailer is phasing out the use of traditional gift certificates in favor of electronic money cards. The cards are credited in any amount, then debited with each purchase. By preventing cash-backs on unused balances, customers are encouraged to return until the full value of the card has been spent. The cards have been very popular with individuals, as well as with companies who purchase them as incentives and gifts.

Voucher Authorization enables K&G to obtain real-time approvals. They also use Voucher Management, part of the Connected Retailer Sales Analytics Solution, to manage their money cards. It has served to increase customer service and sales, while decreasing losses through fraud.

A long-term investment with proven returns. Scott Saban believes that these recent improvements to K&G's inventory and POS systems have once again validated his decision to adopt STS technology more than a decade ago.

'In the beginning, we saw an opportunity for growth and believed in what we could do,' he says. 'So did STS. The quality and capabilities of their products were more than we needed at first, but it was an investment in value that has really paid off.'

'We didn't want to limit ourselves or modify our strategy to suit the technology available,' Scott continues. 'We looked for a company that would take the time to really understand our business, offer the right range of products and services, and support us as long-term partners in growth. We found that at STS, and we've been proud to have them with us for the past 10 years.'