COMPUTING PROFITS

For a long time, beverage alcohol retailers — perhaps because their industry is so regulated, perhaps because their businesses tend to be small compared to other types of retail — had the reputation of being slow to implement computer systems in their stores.798prft

Times have changed. “Twelve years ago, we had two cash registers,” admitted Fred Rosen, whose store, Sam’s Wine Warehouse in Chicago, is, he said, the largest beverage alcohol store in America. “My sons had to drag me, kicking and screaming, from the Stone Age to the Computer Age.”

These days, Rosen has eight people, out of a staff of more than 100, who are dedicated to running his computer systems. And he has established a website that is attracting attention, and orders, at the rate of 5,000 hits per week. “It’s funny. We all wear Bermuda shorts and T-shirts in the store,” said Rosen, “but we have the most up-to-date computer equipment available.”

Computer-savvy retailers are using technology in increasingly diverse ways, from running websites, like Sam’s, to tracking the time and attendance of their employees, from organizing the rare wines in their wine cellars to showing in-store advertisements, complete with sound and color, on the screens of their p-o-s terminals.

And computer companies are refining the products they offer to beverage alcohol retailers. “Computer systems have always done the nuts and bolts,” said Bill Simmith of Merchant Software Corporation, a company that specializes in software for liquor stores. “Now, we’re at the next level, where retailers can use all that information to make better buying decisions and better decisions about how they can market themselves.” Recent developments in some computer systems include the ability to use handheld, wireless terminals, so that retailers can enter inventory information directly into their computer systems as they walk around their stores, and the ability to support touchscreens at the point-of-sale, for faster and easier check-outs.

And the computer industry as a whole is facing two developments that have ramifications for the computer-using retailer. “The two biggest trends are, number one, being Year 2000 compliant and, number two, offering Windows-based systems,” said Brent Melbye of Cam Data Systems. Melbye predicts that these two challenges for computer companies will act as hurdles, causing a fall-out of companies that do not overcome them. Being Year 2000 compliant means having computer systems — hardware and operating systems as well as application software — that will not be flummoxed by the new millennium.

Decades ago, when the earliest computers had much smaller memories, computer programmers saved space by storing the year as only two digits rather than four. For example, 1998 would be stored as 98. This did not cause a problem until these systems had to start considering dates past 1999. A computer system that sees the year as only two digits would see the year 2000 as 00.

This might cause that system to completely freeze up, becoming unable to function because it thinks the year entered is invalid. Already, some p-o-s and credit-card authorization terminals have failed to function when presented with a credit card that had an expiration date beyond 1999, for example. Or a system might continue to function, but would incorrectly figure calculations that depend on the date, such as sorting sales histories or creating invoices and orders.

Many companies providing computer systems for beverage alcohol retailers have either already released Year 2000 compliant systems or are planning to by the end of this year. If the company that provides a retailer’s p-o-s software does not provide a Year 2000 compliant version, the retailer may have no choice but to replace the system. And even if their company does provide a Year 2000 version, retailers who are currently using an old version of that system may have to go through a replacement process. However, for those who are using a more recent version of a system — less than four or five years old, one computer company said — becoming Year 2000 ready may just entail a simple upgrade.

Companies providing p-o-s software warn that retailers also have to make sure that their hardware and their operating systems are Year 2000 compliant. These components may also need to be upgraded or replaced. (See sidebar.)

Window of Opportunity

Many of the computer companies that offer retail systems are releasing versions of their products that run under the Windows operating system. Why? “For the same reason that Bill Gates is up in front of that Senate committee,” said David Thomas, president of Intellilink, a company whose software, called Easy1, runs under Windows NT. “Probably 90% of the PCs sold now have Windows.”

The idea is that retailers using Windows-based retail systems will have an easier time using other software products, which are most likely to be Windows-based themselves. “Basically, 90% of all the development work is being done in Windows and you want to be in what everyone is writing in,” explained Robert Brown, president of ProphetLine.

However, some companies are being cautious about the Windows phenomenon, especially for the point-of-sale. Many note that their non-Windows-based systems can already easily export data to Windows programs such as Excel, a spreadsheet product. And they say that other operating systems, such as DOS, can be faster and easier to use at the point-of-sale. “We are looking at doing a Windows version very carefully,” said Doug Beard, vice president of sales and marketing for SK Technologies Corp., “but we haven’t seen a [Windows-based] system that is as efficient at the point-of-sale as our DOS-based product is.”

Tony Pitale of Innovative Computer Solutions, a company that offers a Windows-based version of its product as well as two other versions that run under different operating systems, pointed out that retailers may not want to add additional software to the equipment running their point-of-sale system. “In my opinion, you want your computer system to run your business. If you also want to run Word and Excel and all those things, then you are really doing two different things,” he said. “If you use just the one system, you might crash your whole p-o-s system because you’re making a shelf-talker or a sign. PCs are so cheap these days that it really doesn’t pay to take that risk.”

Internet Commerce

The growth of the Internet has also provided retailers with new computer-related possibilities. “There’s been a terrific dissemination of information,” said Fred Rosen of Sam’s. “It used to be that only wine people knew what was good. Now, that information is available to everyone. The average person has all the information that only wine enthusiasts had 10 years ago.”And like many retailers, Rosen finds a strong wine/computer correlation in his customers: simply, those that are interested in wine tend to use the internet.

Sam’s Wine Warehouse, one of the first beverage alcohol retailers to launch its own website, has been online for the last five to six years. The website (www.sams-wine.com) lists special events happening at the store, provides information on products, including bordeaux futures, and allows visitors, in situations where legal, to order products to be delivered. The two obstacles to on-line ordering for the beverage alcohol industry are preventing minors from obtaining alcohol and obeying the tangle of state laws that prohibit interstate shipping.

Rosen reported that Sam’s has never had a problem with minors trying to order on-line. “A teenager is not going to order a beaujolais and then sit around and wait for it to be delivered. That’s just not what teenagers do,” he said. In addition, his site warns people about to order that they must be of age and when a shipment does arrive, the signature of a person of legal age is required.

As for following all the different states’ laws about shipping alcohol, Rosen finds these to be a frustration. “I can ship worldwide but not to Florida,” he complained.

Still, he finds that having the website is well worth it. According to Rosen, Sam’s Wine Warehouse now maintains the website itself. “And $400 a month was the most we ever paid when we had other people do it,” he said.

According to Jeff Balcerzak, data processing administrator for another Chicago-area retailer, Schaefer’s, the cost of having a website varies depending on the services you require. Right now, Schaefer’s pays $40 a month for its site (www.schaefers.com). “We get basic service but it can be hundred of dollars a month for a system that includes secure order placing, where the information is encrypted,” he said. And it was Schaefer’s staff, including Balcerzak and Sterling Pratt, the operation’s graphic designer, who created the website, which was launched last June.

Schaefer’s site does not allow customers to order on-line. Instead, they e-mail their order to the store and then a staff member calls them back. “We feel strongly that direct communication, human contact, is an aspect of our service,” said Balcerzak, who added that talking directly to the customer allows a Schaefer’s staff member to explain the laws about interstate shipping, if need be.

Some beverage alcohol retailers have found an alternative way to get onto the Internet. And this one allows information about their products to be taken directly from their p-o-s systems. Wine Access, at its website, www.wineaccess.com, presents users with information about wine, including reviews, and with a list of retailers from across the country, all of whom have web pages at the site that describe their stores, publicize their special events and list the products they have available.

The idea is that users will choose stores near them, ones that can legally ship to them and ones that they might visit in person in the future. “What we want is a store in every community,” said Jim Weinrott, president of Wine Access. “Shipping is expensive, and there are also the legal issues.”

The focus on getting users to choose stores near them also helps the participating retailers, Weinrott added. “What retailers really want to do is dominate their part of the world, whether that’s 10 blocks in Manhattan or a 100-mile radius in Wyoming,” he explained. “Willy-nilly shipping doesn’t create relationships. If you can get a customer into your store, the likelihood of retaining them goes way up.”

The cost for the retailer is $3,000 a year. For that, they get a home page, an events page and — “the real guts of it,” according to Weinrott — their own catalog of products. This is organized with a table of contents, arranging the wines by appellation. When a user clicks on any wine, they get a detail sheet that includes information like reviews, quotes from the winemaker, the store’s price and a purchase button.

The catalog of products is taken from the store’s own p-o-s system. In fact, Wine Access is currently working with several computer companies to ensure that this product information can be exported easily.

Moore Brothers Wine Company, a two-year-old wine shop in Pennsauken, NJ, was one of the first retailers to join Wine Access. And though it is one of the smallest — listing only about 180 products in its online catalog — it gets 50-60 visitors to its pages a day and $1,000 a week in on-line sales. “The hyper-text links and the resources in Wine Access are valuable,” said Gregory Moore, owner. “We couldn’t afford to do all that ourselves. It would cost a fortune.”

And Moore, who, by law, can only ship within New Jersey, finds that Wine Access does attract customers to the store itself. “Our site gives directions to our store,” he said. “A great many people come to pick up their purchases, which is all the better.”

Many retailers feel that most of the developments within the computer industry — with the exception of the Year 2000 problem — are beneficial. “I like the current trends,” said Schaefer’s Balcerzak, who often develops in-house computer programs for the store. “Everything is making it easier to do what I want to do. *


Computer Systems Buyers’ Guide

A listing of selected companies whose hardware and software have applications for beverage alcohol operations.

ACR Systems, Inc.: ACR is both a provider of open-systems server/client hardware and a developer of retail management applications. Its ACR-2000 applications include point-of-sale, 15 add-on modules and an inventory control system. Call 1-800-747-9772 or e-mail the company at acr@acr2000.com.

Amherst Systems, Inc.: Amherst offers RetailTrak, a computer system designed specifically for beverage alcohol retailers. Its software runs on industry-standard PCs and can handle a frequent-shopper/courtesy-card program that records customer purchase histories. Prices for a one-register system, including hardware and cash-register software, start at $5,700. Call 1-800-535-4767 or visit the company’s website at www.amherst.com.

ATLANTIC SYSTEMS, INC.: This company has offered computer systems designed specifically for liquor stores since 1980. Recent improvements to its Windows-based product, called Spirits 97, include the ability to track accumulation deals, more flexibility in setting parameters for purchase orders and for automatic discounts and the ability to use the newest generation of wireless terminals. The company provides a complete system, including hardware, software, installation, training and support. Call 732-280-6616 or visit the company’s website at http://www.asi-nj.com.

CAM DATA SYSTEMS, INC.: This 16-year-old company offers a PC-based system meant for small- to medium-sized operations, including chains of up to 40 stores. The company can provide all the hardware and software for a system as well as installation and support services. Prices start at approximately $15,000 for a single-register system with scanning. Call 1-800-726-3282 or visit www.camdata.com.

Crichlow Data Sciences, Inc.: This company’s product, called The General Store, is meant for smaller retailers, with 15 stores or less. The PC software comes in two versions: Professional, which includes accounting functions and costs $1,995 for a networked version and $1,295 for a single-user; and Entry-Level, which contains just inventory control and can support a maximum of two registers, costs $695 for a networked version and $395 for a single user. For more information, call 1-800-678-4535 or visit www.thegeneralstore.com.

Datasym, Inc.: This company offers hardware and software products for small to medium operations, including chains. Its retail systems are currently installed in over 100,000 retail terminal applications and in almost 200 liquor stores throughout North America. Prices range from $2,000 for a single p-o-s terminal to $5,000 for a fully integrated system including back office and inventory software. Call 1-800-265-9930 or go to www.datasym.com.

Efficient Market Services, Inc. (EMS): This company can provide a retailer with consumer-demand information, using, among other data, the information from the retailer’s own POS system. The service’s specialties include providing information about new and seasonal products and forecasting the effects of a promotion. For example, EMS can provide exact information on how an advertisement or a special display changes the sales of the featured products. Indeed, the company claims that its forecasts for promotions are within a case of what actually sells 80% of the time. This service is currently being used by almost 4,000 supermarkets across the country, including Kroger, American Stores and Ahold. Call 847-267-8399 or visit the company’s website at http://www.emsinfo.com.

IBM: IBM’sSureOne is a p-o-s terminal/personal computer designed for small- to medium-sized retailers. It can run all existing PC applications, including Windows, OS/2 and DOS. The basic model, which includes a cash drawer, costs approximately $3,000. Call 1-800-871-9240 or visit www.ibm.com.

Innovative Computer Solutions: This 18-year-old company sells Control Plus, a computer system designed specifically for beverage alcohol retailers. The system, available in versions that run under Windows or Unix as well as one that runs on Alpha Micros computers, can operate in single-store operations or in chains and can handle up to 14 checkout stations per store. Prices for Control Plus, including both hardware and software, start at $8,700 for a set-up including one register and a scanner. Forty hours of on-site training are included. Call 732-223-0909.

Integrated Data Management Systems: This company offers TCSM97, a system for smaller operations, including chains of up to 10 stores, which uses standard electronic cash registers rather than PCs at the check-out. The software alone costs $1,400, while prices for a complete system, including a PC, one cash register, a scanner and the software, starts at $4,500. Call 781-224-3901 or visit the company’s website at www.idmsys.com.

Intellilink Services, Inc.: This company’s software for liquor stores, called Easy1, runs under Windows NT and offers retailers the option of using touchscreen terminals at the point of sale. Its terminals can also be set to play in-store advertisements, which include both visuals and audio. Prices for the point-of-sale system, including both hardware, with a 15-inch touchscreen, and software, start at $3,995. For $500 more, retailers can add a store-management system, including inventory control and ordering functions. A system to link the stores in a chain is also available. The company offers two free guides to help retailers assess their computer needs. Call 205-464-6669 or visit www.ilsa.com.

Merchant Software Corporation: Over 1,200 copies of the Liquor Store Controller have been sold since the software product was first introduced by MicroBiz in 1987. Merchant Software, a company specializing exclusively in software for beverage retailers, acquired the product in 1995. The software comes with a free database of 10,000 common products to aid in entering a store’s inventory. Prices start at $1,795 for a single user. Call 1-800-565-6675 or visit www.merchantsoft.com.

NCR: This company, which, back in 1884, made the first mechanical cash registers, is currently a leading provider of technology for retail operations of all types. Its latest products include a self-checkout system, which allows customers to ring up their own sales, and DecisioNet, a wireless shelf-label system. Call 937-445-5000 or visit the company’s website at www.ncr.com.

ProphetLine:This company, which produces software for small- to medium-sized specialty retailers, was named a Retail Application Developer of the Year by Microsoft in 1996. Its point-of-sale system, the ProphetLine System Manager, is priced starting at $1,995 for a single user with one lane and at $2,495 for a multi-user version. The company plans to release Version 6.0, its third-generation Windows-based system, in June. This version can use touchscreen terminals at the point of sale and can allow a chain to poll its stores using the Internet. Access the company’s web site at www.prophetline.com or call 1-800-875-6592.

Sales Management Systems: QuickSell 2000, a Windows-based system for small to medium-sized retailers, has won awards and recognition from Microsoft, IBM and the National Retail Federation. The company also offers QuickSell Headquarters to link the stores in a chain through phone lines or the Internet. Call 1-800-322-3052 or visit the company’s website at www.smspos.com.

SK Technologies: StoreKare is a DOS-based point-of-sale system that can be used in conjunction with 11 other store-management software modules, which includes one for time and another for attendance and sales and profit analysis. The software is designed for small to medium-sized retailers, including chains with up to 50 stores. Prices start, for a single store, at approximately $7,000 for a system including both hardware and software. Call 954-418-0101 or visit the company’s website at www.storekare.com.


Keeping Up With The Times

So, how do you figure out if your system will run correctly in the Year 2000?

While there are some beverage alcohol retailers who have written their own software — and will have to do any necessary rewriting themselves — most have bought packaged software and will need to contact their vendors to check their Year 2000 status. Many computer companies also have Year 2000 information on their websites.

The first step for retailers should be to compile a list of all the products they use that might be affected. This would include application software, such as their actual point-of-sale system, their operating system, such as Unix, DOS or Windows, and their hardware. In some cases, non-computer equipment, things that use embedded chip technology, such as elevators or badge readers, may also be affected.

According to Alan Lipson, a senior information technology specialist at IBM who is currently focusing on Year 2000 issues for the retail industry, software that is fully Year 2000 compliant should be able to do three types of things with that date. First, a system, running right now, should be able to handle the Year 2000 as a date in the future. The most common example: a credit-card authorization system should be able to identify a Year 2000 expiration date as valid. Second, the system should be able to make the change from December 31, 1999 to January 1, 2000 without problems.

Third — “And this is the one that people tend to forget,” said Lipson — once in the Year 2000, the system should be able to handle dates in the past. For example, a system that checks a customer’s age should still be able to recognize birthdates before the Year 2000 as valid.

Intellilink’s Dave Thomas advises retailers to know just how their system has been fixed to handle the Year 2000. While some products are fixed by changing what had been a two-digit year to a four-digit one, in other cases, systems are being fixed using a process called “windowing,” in which the two-digit system is kept and the system is told which numbers, perhaps 00 to 20, to consider as 2000 years, and which — 21 to 99 — to consider as 1900 ones. “Windowing” is, in a way, a postponement of the problem: once the year 2020 is reached, in this example, the system will run into problems determining what century it is in.

So, how bad will this all be? Lipson pointed out that some problems may not be all that terrible. For example, many personal computers, though they cannot turn over to the 2000 date themselves, simply need to be reset manually to continue to work.

And, he said, even if changes need to be made, it does not necessarily mean that every piece of hardware or software needs to be repaired or replaced. “It could just be the operating system or just the hardware,” he explained. “It may just be a piece of the system.”

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