Expansion Ease
Inventory management is a challenge for many retailers. For action-sports specialty retailer Zumiez, inventory management meant controlling on-hand replacement components for point of sale. By entering into a strategic partnership with a third-party vendor, Zumiez is reconfiguring its POS fleet, reducing on-hand inventory and supporting new-store openings.
The retailer’s mall-based stores operate across 23 states, and cater to shoppers seeking brands centered around skateboarding, surfing, snowboarding and Bicycle Motocross (BMX). The chain also has a multifaceted marketing approach that includes using its Web site (www.zumiez.com) to sell merchandise online and create a virtual community.
Its loyal customers helped the retailer earn $1.6 million in its first quarter, ended May 5, 2007, compared with $1.1 million during the same period last year. Revenue rose 45.8% to $68.8 million from $47.8 million, while same-store sales increased 11.3%. The company opened 19 new stores during the quarter and is on track to open 50 stores by the end of its fiscal year in February 2008.
“We’re aiming to get a skateboard in every household,” quipped Kevin Sonney, technology specialist at Everett, Wash.-based Zumiez.
To support this aggressive growth plan, the company recently re-focused its technology strategy. One point of this strategy was to improve the configuration of its POS system.
The company’s previous POS solution included components from more than a dozen independent sources. As Zumiez ordered components, hardware arrived at headquarters where it was stored until it was needed at store level.
Inventory management was complicated, however, and each vendor shipment required a separate invoice for payment. Tracking and expediting shipments required many phone calls, and one late or missing shipment could delay an entire store setup.
This operation was not conducive to the company’s expansion plans. “We are opening roughly a store each week, and our data volume has grown dramatically,” Sonney said. “We also want to increase store square footage by 20%, and open 50 stores in a year.”
As if coordinating deliveries and determining how much product was needed wasn’t difficult enough, it was up to the company’s lean IT department, comprised of seven employees, to manage this schedule and resource base.
To eliminate these challenges, Zumiez decided to consolidate its PC-based POS solution with the help of Vernon Hills, Ill.-based CDW, a provider of brand-name technology products and services.
Retailers work directly with a dedicated CDW account manager to find technology solutions tailored specifically to their needs. The company also provides customized contracts that deliver on-site services and training programs by partners including HP Services and Unisys.
Zumiez and CDW jointly constructed a new POS solution that eliminated any barriers to rapid deployment. First, Sonney consolidated all of Zumiez’s in-store technology purchasing and now conducts this task through CDW. This enabled the company to clean out excess IT inventory residing at headquarters, and simplify the ordering process for new hardware, software and peripherals.
When the chain began configuring its new POS system, it chose to run a proprietary solution based on Apropos retail-enterprise software. (This solution is available through Irvine, Calif.-based Epicor CRS.)
The new POS solution was originally a SCO Unix-based system. Today, the solution runs on a Linux operating system from Red Hat.
“We moved from Unix to Linux because five years ago, Apropos began phasing out SCO and migrating to a Linux platform,” Sonney said.
Linux is an open-source system that operates similar to Unix, but provides personal computer users a free or very low-cost operating system. Since it conforms to the Portable Operating System Interface standard user and programming interfaces, developers can write programs that can be adapted to the platform.
The forced migration has been a positive move for Zumiez. “We saved money by using the free version of Linux vs. buying SCO licenses,” he explained.
AWork in Progress
As a new location nears its opening, the store’s IT team sets up, configures and tests each POS system at Zumiez’s headquarters. When each configuration is complete, IT repacks the gear onto a pallet for shipment to the new location, where store personnel can easily and independently set it up.
All of the components are delivered to stores via UPS, often within 48 hours.
As soon as the system ships, Zumiez immediately restocks with a replacement unit from CDW. In-store setups are kept at headquarters. Each system is ready to be configured, palletized and shipped to new or remodeled store locations, keeping the chain on its store-opening schedule.
“Revenue flows as soon as a store opens. Delaying an opening because of a missing barcode scanner or cables is not an option,” he noted.
“One of the main benefits of the solution has been its ease,” Sonney said. “Like a virtual warehouse, CDW has all of the components we need. We never have to worry about not having everything a store needs to open on time.”
Zumiez keeps fewer than five in-store setups in stock at any time because, “CDW can promptly restock us with units as they are shipped out to new locations,” Sonney said.
Once the unit is installed at store level, the chain downloads price and inventory files from corporate. This keeps all data files synchronized between each POS system and the corporate network.
To manage and protect this escalating data flow, Sonney needed greater capacity in both the data center and its offsite disaster-recovery center.
While the company operates a wide variety of applications, including Exchange, Citrix and SQL servers, Sonney believed that a blade server solution would be Zumiez’s best bet for scalability, reliability and resilience.
A server blade is a single circuit board that contains multiple networks and processors typically found in multiple boards. These cost-efficient blades, which slide into existing servers, are smaller and use less power than traditional servers.
“We needed a high-performance solution robust enough to support our growth across all of those applications, and we wanted to make the best use of our server space while economizing on power and leveraging our SAN [storage area network] infrastructure,” Sonney said. “CDW helped us look at hardware-neutral solutions that would reliably perform regardless of which option we chose.”