Point-of-Sale Artistry Decorates Franchising
Printed in USA Today
by Nancy Rathbun Scott
Cash registers may not ring anymore, but, in sophisticated franchised stores, point-of-sale machines quietly scan higher profits into business operations.
"The optimum point-of-sale system frees a franchise owner to spend more time with the customer," says Todd Murray, vice president of franchising for Pearle Vision. "That's what technology is all about: making people more productive."
Managing inventory
The most sophisticated point-of-sale systems probably reside at high-inventory retail operations like MacBirdie Golf. Chuck Lunde, president of the company that sells golf-related items, says his company's current point-of-sale system outpaces what most of the franchise owners need. But, with 12 stores open and projections for 30 by year's end, MacBirdie is poised for growth. Point-of-sale technology helps store owners micro-manage an inventory of hundreds of golf-related gift, clothing and decorator items. "The corporate system communicates with the stores so that franchisees can send orders in through the system, download sales, and update inventory stats and pricing. The system is configured with the management tools an owner needs."
Managing customer service
"In the optical business, you have to look at how the point-of-sale system facilitates efficient interaction with the customer," says Pearle Vision's Murray. "To the degree that you can provide technology that allows franchise owners to become better at developing relationships with their customers, then you've realized the most important objective."
Point-of-sale technology manages the whole account for each of Pearle Vision's 340 franchisees. When they ring up a sale, the system captures the customer's prescription, frame choice, and other details, so when that person returns, the store owner can find all the information he needs with the click of a mouse. There's value in that, says Murray.
"A typical Pearle Vision franchisee interacts with the customer about 20-40 minutes and, during that time, the technology needs to support the interaction process with such things as price quotes. That's first and foremost."
The medical component of the optical business imposes the obligation to comply with regulations, meet technical criteria for lenses, assist customers in choosing frames, and ensure proper fitting-all within an efficient period of time, because the customer is waiting. "We need to make our customers feel that their interaction has been valuable and efficient so that, in the typical two-year purchase cycle, they will choose to purchase their eye wear again at that particular location."
Driven by managed care contracts, patient eligibility information now figures into most transactions, too, whether for a pair of glasses or an eye exam. Murray says that future point-of-sale technology will enable the franchise owner to tie into an insurance company or health care provider's Web site to get that information instantly.
Managing complex finances
Denver-based Big'O Tires sees the same value in managing a store at the cash register. "We have two different companies that provide point-of-sale hardware and software for our stores. That's included in the five-week training period for new franchise owners," says Greg Foster, national director of training operations. "Information from a daily analysis of the business from sales to profitability also provides monthly financial information."
Big'O plans even greater enhancements to its point-of-sale technology. "Our current system will eventually become the complete network system for a multiple location to tie all the businesses together, as well as a state-of-the-art order system tying to our corporate distribution centers for franchisees to reorder, to check inventory, and to have instant credits issued on adjustment products that are coming through the warehouse from the company to the owner."
Murray sees the same advantage for Pearle franchise owners with two or more units. "Point-of-sale systems can simplify multi-unit management by enabling franchise owners to manage many stores with one business system from a single back office location."
Managing labor
Inventory control and accounting aren't the only dimension of back-office operations shaped by point-of-sale technology. "It gives us valuable information that allows us to gauge employee productivity and manage payrolls," says Murray. "Franchise owners can then devise incentives to gear their sales force to push certain high profitability items that also are high value items for the customer."
Murray also says that data from customer transactions time-stamped at the point-of-sale enable franchise owners to develop an ideal staffing schedule that matches stores traffic patterns.
Managing it all
For an operation like PostNet, technology has become a virtual store manager. PostNet's point-of-sale system is integrated with its shipping function. When the employee puts a package on the scale and enters the zip code, the desired time of arrival, the type of item, and the value, the store computer suggests a series of options-Airborne Express, the U.S. Postal Service, or United Parcel Service-and recommends the best method for shipping and insuring.
Meanwhile, the customer's name and other information goes into the store's marketing database, so that franchise owners can do follow-up direct marketing. At the same time, the bar code reader manages inventory and prompts the franchise owners to restock.
All of the features integrate fully with the main accounting system and payroll function. The result, says PostNet president and CEO Steven J. Greenbaum, is significant management reports. "Franchise owners can get profit reports or management reports that help determine, for example, the volume going through various categories of business."
Franchise owners love the system, but PostNet is currently rolling out a Microsoft Windows-based enhancement. "It's a major innovation because our franchisees will be able to fully utilize any Microsoft product: Internet access, word processing, database, spreadsheet. Windows opens the door to unlimited possibilities because it's a much larger platform. With a DOS-based system, you can, literally, be running out of room. But now we'll have unlimited potential and possibilities that can evolve with the needs of the system."
Pearle's Murray agrees that point-of-sale technology-no matter how good-demands ever greater innovation. "Every franchisor needs to think about how to deliver more and more value to the franchisee. Lowering the cost of goods is part of it, but the future lies with those who can position technology to enable franchisees to spend more time doing what they do best."
Seasonal Systems Ring in Holiday Sales
Franchising has just served up its first seasonal dish-Santa's Clauset-a Christmas retail store that's open only from October to the end of the Christmas season.
"Santa's Clauset will be ringing in holiday sales in kiosks and temporary in-line stores ranging in size from 2,000 to 3,000 square feet in regional malls and factory outlets throughout the country this Christmas season," says Ken Petersen, CEO of The Visions Group, which spawned Santa's Clauset
"The 50 Santa's Clauset stores planned to open this year will feature quaint holiday gift items, ornaments and Christmas decorations as well as non-holiday merchandise such as table-top collectibles," Petersen says. He estimates that at least 20 Country Clutter and Christmas Clutter franchise owners will take advantage of this unique jingle in franchising concepts. Why? "We've been buying Christmas for our Country Clutter stores since 1990 and we feel we really know the market."
The new stores feature easy-to-run, turnkey operations that come complete with centralized buying and distribution, ordering support, advertising support, in-store signage, trim, props and fixtures.
The franchisor also helps the owner stock up. "We place all the initial orders for a Santa's Clauset store. The inventory comes pre-priced, so all the franchise owner has to do is follow our 'plan-o-gram' for setting up a store. They are ready to open two to three days after receiving their merchandise."
With point-of-sale technology, inventory management is a snap. "Franchise owners lease an electronic cash register that records sales by categories, enabling them to track their categories and generate management reports on what categories are selling, how well they are selling, and what they need to reorder." Meanwhile, sales data is gathered and automatically sent by modem to the franchise company every time a sale rings up.
Santa's Clauset franchisees are poised to fling open doors at the beginning of the holiday shopping frenzy, but can shut down just as quickly when it's over. "We provide Santa's Clauset owners with a step-by-step pre-opening and operations manual, grand opening kit and grand closing kit. A totally inexperienced person can run it."

® copyright 1999 Nancy Rathbun Scott
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