Retailing Technology: Out of the Stone Age
Looking to optimize and streamline campus store sales and inventory?
Take a cue from these schools and think: technology.
Campus Technology, February 2005
by Vicki Powers
With 80 percent of sales occurring during a two-week "rush" period each year, it's safe to say that few industries operate the way campus bookstores do. The rush, characterized by hordes of students snapping up mountains of textbooks, can quickly turn disastrous if the sales operation does not run smoothly, or if inventory is not properly managed and controlled. But fear not: Innovative technology is now helping campus bookstores nationwide manage and succeed in this environment. Tools such as electronic data interchange-already in mainstream business-to-business (B2B) use, but new to many campus bookstores-and brand-new wireless point-of-sale technology are making all the difference.
For the campus bookstore, understanding customer relationship management (CRM) is key to picking up efficiency, according to David Henderson, VP/Technology for college store systems and product vendor MBS Systems. "People like to shop, but they don't like to stand in line to spend their money," he says. Henderson believes that point-of-sale (POS) technology—whether classic in-store cash registers, touchscreen POS, or eCommerce—is now essential for bookstore retailers. With POS technology, he explains, the cashier system is fully integrated with the back-office financial and inventory-management applications. The systems help organizations track and control inventory, and boost accuracy and profits by providing detailed daily sales figures and restocking alerts.
But according to Ed Schlichenmayer, VP of Industry Services for the National Association of College Stores, integrated POS technology is currently in place in only 70 percent of campus bookstores. Campus stores without POS usually don't have the funding to implement it, or staff members to handle it, he says. Still, they may have to get up to speed soon: Wireless and touchscreen POS, and integration with other campus departments, are fast becoming campus retailing expectations.
What About Wireless?
The recent wireless innovation in campus POS technology is currently being offered by vendors such as Sequoia Retail Systems, Nebraska Book Company, and MBS Systems. This technology—in use right now at Duke University (NC), California State University-Fullerton, and Bowling Green State University (OH)—allows campus bookstores to sell books and other hot items like logo goods in remote locations on or off campus; point of sale is managed sleekly with a handheld wireless unit operating on a Palm OS. With the capability of positioning salable merchandise in the path of customer traffic (say, at a football game, alumni event, graduation, or author book signing), campus stores can gain additional sales opportunities they may not have been able to realize otherwise. Previously, at remote events, says Henderson, campus retailers kept cash in cigar boxes, took hand tallies of inventory, and manually entered transactions into their systems, post-event. Today, with wireless portable solutions such as Sequoia's Wireless Partner and MBS Palm POS, sales are recorded and inventory is updated in real time or during an evening upload. The portable solutions are about one-fourth the size of an actual cash register, yet they provide true efficiency for sales and inventory. Schlichenmayer says campus bookstores are only a couple of years into the wireless retailing scene; though its use is not widespread, there are notable early adopters.
Wireless inventory. For instance, the bookstores at Duke-with 15 brick-and-mortar locations across the campus—transitioned to wireless sales and inventory in stages, beginning in 2002. The stores pursued wireless to better manage their inventory, reports Brian Buttram, associate director, Duke Stores. In the past, he says, the stores never knew how much they had of any item at any given time, despite the use of inventory cards. "Wireless is really where we've made our strides," he explains. "Before that, we were doing inventory by hand and on paper." He adds that Sequoia wrote software specific to the store's existing programs, such as its warehouse application. "Now," says Buttram, "we have lots of other campus stores tour us to get ideas."
POS—anywhere. In fact, Duke began using wireless Palm units for textbook buy-backs at remote locations in Spring 2002. (Previously, the bookstore had moved registers or laptops to the specific campus locations, which required preplanning and setup for physical plug-ins.) Today, wireless handhelds enable Duke's bookstore to handle buy-backs in the main student union where most of the student traffic flow exists. But the campus store has also started using Palms in-store and for wireless receiving in the warehouse—and that receiving scenario has turned out to be the biggest technological advance for the bookstore, Buttram explains. Employees now call up orders via the devices and receive items all at once, versus searching through files for individual purchase orders which must then be received individually.
What's more, this past fall, Duke expanded its wireless sales-and-inventory use to food and clothing concessions at football games. With three tents of clothing and general merchandise, five concession stands, and various vendor carts, the store's 48 wireless devices enable it to move inventory between stands and monitor sales in real time throughout the game.
"Stores see wireless as a route to greater visibility and higher customer service," Schlichenmayer relates. "It's making our stores much more responsive and allows them to merchandise a lot better."
With the mid-2003 MBS Systems/IBM partnership to bring the touchscreen panel to the higher education market, Touch POS has become another innovation that campus bookstore retailers are moving to, or seriously considering. Though its use has grown in the hospitality/restaurant industry over the past decade and is just now gaining a foothold among mass-merchant retailers, it is still fairly new to college and university campuses, according to MBS's Henderson. Yet it is ideal for campus bookstores, he maintains.
The end of the learning curve. At retail establishments, in general, he says, "Touch POS has streamlined the ability to get cashiers up to speed, which is especially important in the campus bookstore rush where half or more of the cashiers are part-time help who may be new." With Touch POS, he points out, campus stores can spend fewer dollars on training at rush time, and dedicate more payroll to the cashier on the line. Then, too, new infrared touch panels are more sensitive than original versions which required human touch, and employees often find that using a stylus or pen is easier than using finger-keying, over long shifts. The intuitive workflow and graphics provide a better ergonomic environment for cashiers, Henderson adds, and that helps increase speed at checkout, reducing the length of time customers must wait in line.
Space savers. Henderson reports that the Bowling Green State University Bookstore added two of the company's touchscreen POS systems in September 2004, and is now adding four more. Jeff Nelson, director of Bookstores and Enterprise Services, terms the screens "user-friendly," and points out that they also provide a space benefit to smaller campus locations, since a register terminal doubles as a register controller.
It's All About Integration
College and university departments often operate as silos, with separate systems that do not "speak" to one another. That means that all too often, information entered into one system needs to be manually entered into another system, when these areas interact. The Financial Aid department, for example, interacts with any number of areas across campus, and one of those is the campus bookstore. Scholarships often provide students money to buy textbooks, although they may stipulate certain requirements and limitations regarding how that money may be spent.
Financial aid connection. These are some of the reasons why Monroe Community College (NY) recently added a student financial aid module to the inventory/sales tracking system it acquired from MBS more than 12 years ago. The Financial Aid department simply provides the bookstore with a file to load into its system, and lines of credit are set up for students with financial aid funds. The bookstore's IBM POS cash register system interfaces with the financial aid software to track how much financial aid money is available and how it is spent. It also can limit the money to be spent on specific items, based on the financial aid requirements.
"The technology has helped us improve the profitability of our store and get a better handle on inventory," says Tony Wagahoff, manager of Technology at MCC Association, which runs the bookstore. "We also haven't had the need to increase staff despite the larger student numbers."
And in Florida, Palm Beach Community College is currently working with Xerox Global Services to integrate its financial aid voucher process with its campus bookstore. Previously, students often waited in bookstore lines to purchase texts with their financial aid dollars, only to find they didn't have the money available. They then waited in line at the Financial Aid office to secure the funds for the books, and afterward, returned to the bookstore lines again. Data revealed that these instances weren't isolated events: As it turned out, one in three students experienced a similar scenario, each semester. But technology alone was not the answer: Upfront process mapping with the appropriate departments-IT, Financial Aid, Procurement, and the bursar—helped the vendor set clear, achievable expectations.
Multipronged approach. "We would have done things differently, if we had not done the process work [with PBCC] upfront," says Craig Haskins, Public Sector VP for Xerox Global Services. "It caused us to deploy a lot less technology, but do it in a way to provide more impact."
To resolve the bookstore/financial aid integration problems, the college will focus on several areas in the coming months, which include a) providing financial aid dollars on students' PBCC Panther cards (rather than providing the money via a check), and b) adding electronic signature pads at point of sale, to eliminate paper receipts across four campuses, and reconcile transactions instantaneously. College administrators admit they are excited about the potential of processing more revenue without adding staffing headcount or opening new cash registers; they'll do it by eliminating cycle time associated with cumbersome transactions (such as the financial aid/ purchase transactions), and by simply handling more student transactions because of the streamlined integration.
"The processes will speed up customer transaction times by about half, during financial aid [usage]," states Kathie Perez, store manager at the PBCC bookstore. "We see this as a real customer service 'plus.'" Perez adds that the vastly improved integration also will reduce write-off of lost paper receipts and speed up reconciliation time with the college, so students' aid dollars will be refunded faster.
Inventory Goes Electronic
When it comes to technological advances in inventory management, campus stores are now employing—and enjoying—three major improvements: license plate receiving, electronic data interchange (EDI), and streamlined transfer request.
License to receive. In Spring 2004, the Bowling Green State University Bookstore added license plate receiving (the second campus bookstore in the US to do so) to dramatically reduce the time required to receive textbook inventory and get it out onto the sales floor. In the past, every item in a bookstore shipment had to be counted and manually entered in the system. Today, University Bookstore employees simply scan a barcode on the outside of a textbook shipment box, and the book count and SKU numbers contained in the box are automatically downloaded into the system-no more book-by-book counts. A purchase order in the system matches up the items, store retailers add a ticket, and items are ready for the sales floor. Most college bookstores don't have the luxury of a large receiving area or book storage, so this makes it especially critical to check items in and move them onto the shelf as soon as possible. What used to be a week to receive shipments and get items onto the sales floor, has now been shortened to one day at BGSU. Because University Bookstore receives a huge bin containing eight to 10 pallets of books at the beginning of each semester, and then receives additional orders every day, license plate receiving has significantly improved the store's efficiency and productivity, say its administrators.
The Time is Right for RFID
Radio frequency identification tags—RFID for short—may indeed be the wave of the future in retail environments, but that wave is rolling in now. As companies such as Benetton and Proctor & Gamble test the concept, mass-merchant giant Wal-Mart is requiring its top 100 suppliers to include RFID tags in all cases and pallets in 2005. The power behind RFID lies in tiny radio frequency transmitter-and-antenna chips, each the size of a grain of sand. The chips are embedded in packaging label "tags" which are attached to shipping cases and pallets. They automatically relay to computers detailed information about the contents of a package or container. Importantly, the tags can be read by wireless handheld scanners or scanners in a specific location. The technology is expected to reduce much of the manual labor and human error involved in tracking inventory through bar codes, say industry pundits. Ultimately, they maintain, RFID will replace bar codes as an essential aid in inventory management. But the technology will do more, they add: It will also reduce theft as shelves, dressing rooms, and doors are equipped with RFID receivers to monitor an item's movement through the store (the transmitter is deactivated at purchase).
How will this technology affect campus bookstores in the future? Dramatically, according to Jim Zaorski, CEO of Sequoia Retail Systems, a provider of sales, inventory, and textbook management systems for higher education.
"RFID is the perfect technology for campus bookstores because of the nature of the business," Zaorski relates. "Eighty percent of store business is done in [two rush periods that take place over] four weeks each year, and twice a year, stores have to bring in temporary people who are untrained to handle the rush. With RFID, stores don't have to worry about theft or training people—the technology will replace the people."
Just as campus bookstores were early adopters of handheld technology devices for sales, Zaorski expects a similar response to RFID. He estimates it will be about five years before RFID is widely adopted by campus bookstores, but it may be about seven to eight years before it is widespread in the retail community at large. Still, the tags—which currently run about $1 to $2 apiece—must fall to 20 cents, Zaorski says, before they go mainstream. When they do, he says, they will streamline distribution and inventory from crate to cash register. What's more, he adds, companies will save millions of dollars in wages, since workers will no longer have to identify and check in the goods coming into the warehouse. Industry experts are predicting that inventory control will become near perfect, and stores will be less likely to run short of popular items. With the new technology, employees can walk the aisles with their RFID scanners to quickly and easily conduct store inventory—added inventory control with significant labor savings, says Zaorski.
The consultant sees RFID implementation occurring in phases: In a year or two, he estimates, it will be used for shipping and receiving. Shipments will move through "gates" similar to those used for airport security, and a computer attached to the system will automatically update the items in the shipment, as part of inventory control. The days of scanning countless boxes one-by-one as they arrive in their pallets will soon be over, says Zaorski; with RFID, only about two minutes will be required to accurately capture the entire inventory at once.
EDI to the rescue. Then there's electronic data interchange (EDI), the B2B solution that has for some time now been enabling mainstream retailers and distributors to automatically manage inventory by communicating electronically with vendors. Indeed, though EDI has been the preferred process of conducting many forms of B2B commerce across diverse industries, it is now being extended to merchandise such as CDs, DVDs, and general-appeal books found in campus bookstores.
"EDI goes beyond just placing an order electronically," Bowling Green's Nelson explains. "It's central to our inventory management. Replenishment orders are automatically generated based on what's been sold, so we don't have to take inventory for the purpose of replenishing an order." Based on its success with license plate receiving, University Bookstore added EDI in Fall 2004 for two additional departments: general-appeal books, and music/videos. The EDI application is fully integrated with the MBS general merchandise and financial applications to provide full electronic communication with the store's EDI-based vendors, Arrow
Manufacturing and Ingram Book Company. These vendors handle the bookstore's inventory in the two departments, and because of the EDI technology, know precisely when to replenish items.
Nelson says that the bookstore looked first to EDI as a way to manage the general books department with reduced staff size. The department previously employed two full-time and two part-time workers, but retirements had caused the staff to shrink. Now, the general books area can operate efficiently with one part-time employee, plus a full-time manager shared with another department. Productivity has increased in just the few months since implementation.
"The inventory management program has allowed us to not only continue the management of the department, but actually implement improvements in selection, replenishment ordering, and receiving," Nelson relates. What's more, he adds, "I do not expect the [open staff] positions will need to be filled, and the current staff will be able to devote more time to special events, merchandising, marketing and promotion, customer service, and other related activities."
All this, from about 17 percent of the bookstore's total non-textbook sales, which are processed via EDI with Arrow and Ingram. The bookstore is planning to expand the program to other areas in the future, as vendors join the MBS EDI program, and as resources allow.
Calling all transfers. Duke University's bookstore also reaps the efficiency benefits related to technology advances in inventory and warehousing. The Duke Stores use transfer request software (which facilitates transfers between the warehouse and the stores), written specifically for Duke by Sequoia Retail Systems. The stores simply run a report that tells the Duke warehouse what it needs to fill. (Buttram, at Duke, says this technology has made it possible to have one less person in the store; the individual who used to visually scan inventory by walking around the store and seeing what was needed from the warehouse is no longer needed.) Warehouse employees then use wireless handhelds to locate items to be transferred to the stores. Based on minimum and maximum requirements detailed in the system, features in the software also automatically generate transfer requests when stores are getting low on products.
"Now, we can do it all electronically," Buttram says. "Everyone has embraced the new technology. And we didn't run into any problems with employees, because it's made their jobs easier."
Technology Is a Lot, But It's Not Everything
Despite all the innovative technology available to campus bookstores, Nelson at BGSU says it's important to remember that technology won't solve everything. Three years ago, University Bookstore did very little with technology and used just a couple of features in its bookstore system: the textbook management application, and POS. Over the years, BGSU has deployed the full breadth of options for the system, which today integrates financial applications, student financial aid, EDI, Web commerce, and Touch POS. Still, Nelson believes much of a campus bookstore's success depends on the capacity of the bookstore system being used and the number of checkout lines available for customers. "We take advantage of technology if it makes sense and if it somehow benefits the customer," Nelson relates. "And we time our register lines, which average five to 10 minutes each rush. Getting lines down has been critical for us."
Campus bookstores face the same challenges other retail establishments face, including customer service issues, appropriateness of inventory, and the "do we, or don't we?" of new technology. The goal for many, however, is using technology to improve the customer experience—whether that translates into the ability to buy or sell books and merchandise off site, wherever the customer is, or whether it simply means shortening lines during those mad, mad weeks of bookstore rush.