Ames tracks zip codes to detect shopping patterns

Discount Store News, May 14, 1984

ROCKY HILL, Conn.--Ames has developed a computer program to monitor sales by zip codes for each of its 168 stores, enabling the discounter to closely track the results of direct mail flyers--the only advertising it uses.

The innovative program is one of a number already developed by the discounter. Others include:

* Weekly reports of the 20 best-selling items in each of Ames' approximately 150 merchandise classifications. There are actually three different reports available for each classification as the top 20 items are listed according to dollar volume, unit movement and gross profits.

* Similarly detailed weekly history on individual sku's by store, going back 68 weeks--a full year and the curent quarter--instantly available to merchandisers on CRT terminals.

* Reordering on a perpetual inventory basis of 9,000 sku's of basic items, mainly soft goods like underwear and pantyhose. Merchandisers still check--and, if necessary, make changes in--the computer-generated orders.

* Suggested distribution of an order of a particular sku by store, based on the store's past history of selling that item, or of similar merchandise if the product is new to the mix. This information is used by Ames' replenishment department in restocking stores.

The programs already online and those being developed are part of the discounter's effort to evolve an Ames Retail Information System (aris), a management information system that monitors and directs the total merchandise cycle. This includes such aspects as running a computerized distribution center (now being installed in Secaucus, N.J., in a former Woolco warehouse) to developing data bases for specific planograms.

The Background

ARIS, and the unusual zip code sales tracking program that is one element of that system, were detailed for DSN by Ames chairman Herbert Gilman, senior vice president Earl Spector and Eugene G. Senecal, vp, management information systems.

ARIS was designed as an "open architecture" system that allows programs to be added rather than throwing out the system and starting anew with each improvement. The long-range goal is an MIS that is a "complete loop" that will impact every aspect of the merchandising process.

Gilman said: "When we originally started to design our computer system about two and half years ago, we did it with the idea of utilizing various programs as they were designed until we reached our goal."

Senecal noted: "We used an open architecture so that when we desinged a program we had an eye on other programs down the line. We built flexibility into the system to include those other programs when they were designed and put into operation9"

Ames' zip code sales tracking program is an example of this long-range planning of additional sales retrieval information, he said. "We knew we would have such a program one day, and the open architecture design allowed us to add this feature."

The zip code tracking program has provided Ames with more benefits than just the monitoring of flyer results for sach of its stores.

Spector noted that it has helped to determine the demographics of Ames! customer base and enabled the discounter to target locations for new stores based on this information.

"We can't make money if the demographics aren't correct for us. We use the zip code program extensively to help determine where we should expand, but we crosscheck using our previous method to make sure there weren't any computer errors in our programming," he said.

the zip code sales tracking program is deceptively simple.

Basically, each time Ames sets the program in motion, it asks customers their zip code and keys in this information as part of the total capture of sales at the checkout. The massaging of this information constitutes the unique program developed by Ames' electronic data processing department staff.

Each item in Ames' mix is identified by a short-form, eight-digit sku number, with the last digit being a check number. The sku is a class and item number that runs in sequence, so that the difference in sku's for blouses, for example, would provide information on color, size and vendor.

The sku information is used to develop such standard basic sales reports as dollar volume and unit movement of merchandise.

Adding the zip code information to each specific sale captured at the checkout results in a new program geared to Ames' unusual specific needs.

This discounter's stores are located in small towns and rural markets that are outside the circulation reach of major metro newspapers. Local newspapers, oftimes just weeklies, have small circulations so that print advertising would reach only a very limited number of potential customers.

Ames therefore had to use direct mail flyers as its promotional vehicle, as only mass mailings to all the households in each store's market would reach the largest possible number of customers.

While this method offered the best way to reach customers, it was also more expensive than newspaper inserts or ROP ads. Ames' concern, therefore, was to monitor sales during flyer promotions to determine where its customers came from so that areas (such as a section of a town) that didn't generate customers wouldn't be included in mailings.