Magazine Article | July 1, 2003

The Power Behind NASCAR Merchandise Sales

Source: Innovative Retail Technologies

Action Performance sells more than $400 million in NASCAR-licensed merchandise annually. A high-tech mobile POS configuration lets the company take its goods to the fans.

Integrated Solutions For Retailers, July 2003

With 75% market share, Action Performance is the largest licensed merchandiser of diecast scaled replicas of motor sports vehicles, apparel, and memorabilia. It represents many of the hottest drivers in NASCAR, including superstars like Dale Earnhardt, Jr. and Jeff Gordon. The company markets and sells its products through many channels, including the Web, QVC, wholesale distribution to 10,000 retail dealers, brick-and-mortar stores in Charlotte, NC, and Phoenix, and its popular Trackside Trailers at NASCAR events. The growth of the Trackside Trailers division of Action Performance has mirrored the growth of NASCAR, which has risen rapidly from a series of grassroots events to a multibillion-dollar spectator sport. But as little as three years ago, these 36 Trackside Trailers (which service more than 350,000 fans per weekend, 39 weekends per year) were in complete sales disarray.

Trackside Trailers serve throngs of willing spenders, averaging more than $10,000 in sales per trailer, per event. Last year, more than 7 million people attended NASCAR-sanctioned motor sports events. To process as many customers as possible at each race, the retailer focused on speed, and speed alone. Action Performance considered POS technology a hindrance to its fast-paced sales environment, favoring cash transactions, money aprons, and knuckle-busting credit card machines that handled store-and-forward credit transactions. Those credit sales were sent via phone line for daily batch authorization after the store closed. And, while the desired transaction speed was achieved, the desired sales revenue was not. Accepting credit without pre-authorization proved a risky endeavor. Aside from the additional labor burden this imposed, it resulted in a high rate of decline - to the tune of $50,000 to $60,000 per event.

Without a POS system to monitor sales, inventory stock outs were another common problem on the trailers. Replenishment was a logistical nightmare. With limited travel time between events, Trackside Trailers can't feasibly return to the Action Performance DC in Charlotte, NC, to restock between events. Therefore, inventory replenishment trucks full of merchandise are dispatched from the DC on a weekly basis and sent to the race sites. Unfortunately, DC employees could do little more than fill the trucks with their best guesses of what merchandise was needed for the next race. If Earnhardt, Jr. won the race the previous Sunday, for instance, the company would simply go heavy on the Earnhardt, Jr. merchandise it shipped to the next race site. Although physical end-of-quarter inventories were taken on each trailer, sales trends were history by the time they were discovered.

Four months prior to the 2000 NASCAR season, Action Performance decided it was time to address its business intelligence needs and improve the stability of its transactions. At the very least, building a POS system would help the company manage inventory and replenishment, while reducing cash handling and batch credit processing problems that led to loss. But putting a POS terminal between its clerks and its customers might slow down the rate of sales, which was a hard pill for the company to swallow.

Wireless Meets The Need For Transaction Speed
Transaction speed was deemed priority number one. Action Performance must make the most of a three-day race weekend and process as many customers as possible. With no POS systems to interact with, clerks could wait on three or four people at a time. Chris Williams, director of trackside operations at Action Performance, called on integrator POSitive (Gaithersburg, MD) for help. POSitive Technology chose Quicksell Commerce POS software, which has since been purchased by Microsoft (Redmond, WA) and evolved into its RMS (Retail Management System). The application runs on Pioneer POS (Walnut, CA) touch monitors. The touch interface allows clerks to handle cash transactions with the touch of a single button and process credit sales in two touch strokes. But, configuring a mobile network to process credit authorization in real time was a particular challenge.

NASCAR races are held in locations that represent a cross section of American geography - from cities like Charlotte, NC, to out-of-the-way places like the Poconos of Pennsylvania. With the uncertainty of cellular service in many of NASCAR's remote track locations, the initial connectivity solution was to contract with phone companies at each race site for phone lines at each trailer. Unfortunately, the most phone lines available to the trailers at any location are six, and in some cases there are none. So, the retailer partnered with Orinoco (Allentown, PA), an outdoor wireless communication vendor, to set up a hub and spoke system among the trailers. Certain trailers (called "centrals") are equipped with hard-wired Internet lines. Other trailers are wirelessly "spoked" from each central trailer. The spoke trailers transmit to the central trailers, which transmit to the Internet. Instead of needing one phone line per trailer, the system allows Action Performance to support credit processing for 10 to 12 trailers per phone line.

The retailer partnered with satellite communications specialists MotoSAT (Salt Lake City) to develop connectivity in locations where absolutely no phone lines are available. A satellite Internet connection dish is mounted on the roof of each central trailer, replacing the phone line used for connectivity in the earlier description. The Trackside Trailers can set up shop in the remotest of locations and within five minutes have a high-bandwidth connection to a satellite orbiting 22 miles above the earth. A GPS (global positioning system) is built into the solution, giving the trailer operator the ability to drive in, hit a button to unfold the dish, lock onto the satellite, and provide the connection. Using either configuration, credit transactions that used to take 20 seconds or more are now processed in as little as 3 seconds.

Anytime, Anywhere Access To Inventory And Sales Data
These network configurations also provide lines of communication to Action Performance headquarters. With the RMS software managing sales and inventory levels in a SQL database, the corporate office can dial in via the network and poll sales and inventory data anytime. Inventory restock trucks, which run constantly between the Action Performance DC and the Trackside Trailers, are outfitted with the same hybrid satellite/land line communication configuration. This gives the corporate office complete visibility of inventory, whether that inventory resides on the Trackside Trailers, inventory trailers, or in the DC.

POSitive Technology worked with Action Performance to bar code its entire inventory at the warehouse to facilitate inventory tracking and expedite the transaction process. Symbol Technologies (Holtsville, NY) bar code scanners are used at the POS to process transactions and gather sales data. Symbol 2800 handhelds are also in on the action at a select few of the highest-volume trailers, where not even six traditional POS terminals can handle the customer volume. The handheld units are connected to the SQL database via an 802.11b wireless network, enabling real-time transaction processing. Clerks are currently using them to expedite cash transactions only.

Accurate Data, Better Bottom Line
Action Performance has recently gone public, making fast and accurate sales and revenue reporting all the more important. With no communication between trackside and the corporate office, the best it could previously do was to take basic cash counts at the end of each event, tack on an estimate of credit card sales, and post the data. A week or two later, when the actual sales figures were posted, the original estimates and the actual numbers often did not agree.

With RMS and the relevant technology in place to support it, the company's sales and inventory data accuracy has had a positive impact on the bottom line. The company's stock has been healthy, and as the popularity of NASCAR continues to explode, Action Performance is poised for long-term growth.