Magazine Article | February 1, 2003

Priced To Sell

Source: Innovative Retail Technologies

After rolling out an integrated price optimization solution, Riesbeck Food Markets, Inc. was able to reduce manual data entry times by more than 91.7% and improve pricing consistency.

Integrated Solutions For Retailers, February 2003

Sometimes the old adage "if it ain't broke, don't fix it," just doesn't apply. With several patches and workarounds in place, for instance, a 10-year-old POS system can still limp along. But don't fool yourself into thinking that until "Y3K" rolls around your legacy systems are getting the job done.

Riesbeck Food Markets, Inc. (St. Clairsville, OH) found itself facing this situation with their legacy price optimization solution. After making the decision to scrap its legacy system for an integrated, centrally managed solution, there were immediate confirmations that the grocer made the right decision. For instance, the retailer no longer has to rely on slow service and outside programmers - two problems it experienced with its former vendor. And, no more making redundant data entry points to get all 12 stores on board, which it had to do previously because it would have been too expensive to integrate its legacy system to its various POS solutions.

Yesterday's Solution Becomes Today's Legacy
Years ago Riesbeck's was the beta site for a price optimization solution. They were the standard that its partner-vendor used to work out any bugs and get the solution ready to market to other retailers. Riesbeck's IT consultant also played a significant role in the solution. He knew it inside and out, and he handled all the upgrades. Then, he decided one day that he wanted to focus on selling the software full-time instead of working with Riesbeck Food Markets. As time went on and Riesbeck rolled out newer POS and other systems, the price optimization solution needed some upgrades. Riesbeck, the grocer that originally helped launch the new software solution, was put on the back burner. "We weren't able to get changes or enhancements to the solution for months at a time, and we didn't have any in-house programmers to provide the upgrades we needed," says Mark Kemp, MIS (management information systems) director of Riesbeck Food Markets.

Outdated Software Has To Go
After surveying its software situation, Riesbeck Food Markets knew it had to dump its legacy price optimization solution and upgrade. "We were in a situation where some vendors were sending us ASCII files and we couldn't import them into our database," recalls Kemp. "What's more, we couldn't interface our legacy system with our 12 stores, making it necessary for each store to manually change prices." And, prices often needed to be changed. Sometimes Riesbeck was able to save money by purchasing certain food items in large quantities. The savings would get passed along to customers in the form of a TPR (temporary price reduction). Or, perhaps the grocer wanted to run special prices on items that were close to their expiration date. There were always new food items the grocer added to its repertoire, too. All this added up to redundant data entry and an increased chance for pricing mistakes. Kemp and coworker Steve Benware attended an FMI MARKETECHNICS show in the spring of 1999. "We wanted a Windows-based solution that could scale with our business and be upgraded without the aid of outside programmers," says Kemp. Many of the solutions Kemp and Benware observed were either DOS-based and not very user-friendly, or, if they were Windows-based, they cost close to $1 million. The one solution that stood out as being the best fit for a retailer Riesbeck's size was TCI Solutions' (Tucson, AZ) HQPM2 (Headquarters Price Merchandise Manager) solution. The HQPM2 features an HDF (host definition file) editor, which enables the application to accept data from all types of disparate systems, a significant advantage over Riesbeck's legacy system.

Major Time Savings, Improved Accuracy
Using its new price optimization solution, Riesbeck is able to receive price information from vendors in the morning, manually add information to its central database once, and, after store hours, batch-update all 12 stores' POS systems. By not having to repeat these steps 12 times, Riesbeck Food Markets cut its price management data entry by 91.7%.

Next, the retailer plans to input its buyers' pricing rules into the system. "Right now we rely on our buyers to know and perform the necessary calculations for making changes to food items within their individual areas of responsibility," says Kemp. "Down the road, we would like to have that information in our price optimization solution so that we could automatically make those changes." The role of buyers would then be to double check the price optimization reports and to focus more time on getting new products and better deals for the stores.