Don't wait for QR to come to you, go out and get it - Quick Response and Electronic Data Interchange between discounters and apparel manufacturers - column

Discount Store News, August 22, 1988 by Kenneth Chanko

Don't Wait for QR to Come to You, Go Out and Get It

The results are becoming much too impressive to just be paying lip service to. If you still have only a somewhat muddled idea of what EDI and QR are all about, listen up. And for those who do know all about it yet still haven't made the commitment to installing electronic point-of-sale capturing equipment, this is for you, too.

One of a host of major apparel manufacturers with EDI (that's electronic data interchange) and QR (Quick Response) equipment in place, Haggar is using its computers to talk daily with Wal-Mart's computers and weekly with Bradlees' computers. And they're not talking about the weather or baseball averages.

Every day, Wal-Mart is transmitting sales data to Haggar, which manufactures Reed st. James-labeled bottoms. As soon as requirements for a particular sku hit the decided-upon limited number, an order is generated.

Rather than transmitting sales information, Bradlees is sending orders electronically on a weekly basis.

Average 27% Sales Increase

Greg Baloyan, vice president, corporate Quick Response at Haggar, says he doesn't have specific numbers just for discounters, but he can say this about all of Haggar's customers: "Fall 1987 was the first full season that we've had comparison figures for all our retail accounts that used EDI and/or QR methods, comapared to the previous fall season when they didn't. The average increase in sales was 27 percent. That means some [retailers] saw even greater gains. Most either experienced more sales with the same inventory or had the same sale with less inventory. Some even had both--an increase in sales and a decrease in inventory."

Eddie Haggar JR., president of Haggar Women's Wwar, says that discounters are in a better position than department stores from the get-go.

"Most discounters are ahead of the game because of their return on equity concerns.

They're big volume, more technology oriented. They're in a better position to start. Also, with all the department store mergers and acquisitions, that's set them back in terms of coordinating a corporate, uniform Quick Response strategy."

Robert M. Frazier, managing director of the Retail and Consumer Products division of Kurt Salmon Associates, the New York-based management consultant group, pointed out that "there is certainly no problem for retailers from a financial perspective. Minimizing clearance markdowns can add 2 percent to 5 percent to gross margin. And the real financial measure is the productivity of retail assets. If we can increase retail sales per square foot 50 percent, or double gross margin returns on the inventory investment, the impact is tremendous on the value of the business."

John Gunzler, former president of Seminole Manufacturing Co., quotes these numbers from a QR pilot program the manufacturer put in place with Wal-Mart two years ago: turnaround time was reduced by 75 percent, stockouts were reduced by 30 percent, and a sales increase for Wal-Mart of 31 percent for the apparel products involved. "Wal-Mart also experienced faster stock turns because of lower inventory levels," says Gunzler.

Warren White, executive vice president and general manager of Clover, the discount chain based in Philadelphia, says that QR will "improve customer satisfaction by having the product on the shelf in the right size and color more often," and it will improve productivity and sales through a better in-stock position and create a faster flow of merchandise

But it's all got to start with POS capture, with either a scanner or a wand, that includes style, size and color data. Or cashiers could handkey the information. Then you can start getting into electronic management of your inventory with your most important apparel vendor, who, believe me, are ready when you are.

You are ready to eliminate stockouts with less inventory and see sales increases of 27 or so percent, aren't you?