Longo’s sets model on moving from ’burbs to city streets

MISSISSAUGA, ONTARIO Retail.net solution as part of a newly developed e-commerce business. —When Longo’s Brothers Fruit Market, an Ontario supermarket chain operating 16 stores in the Toronto Metropolitan area, looked to the future, it saw change and a move to become bigger in its market, particularly in its urban heart. A major part of that effort involved technology, and the company partnered with Tomax, using the company’s

The last two stores were recently opened and one, The Market by Longo’s BCE Place, represents a new format for the company—a smaller, urban-oriented concept that is situated in downtown Toronto. The bulk of Longo’s locations, that is those in the ’burbs, range in size from 20,000 to 40,000 square feet, but its smaller urban concept is 5,000 square feet. Current plans call for the company to open two large-format and two small-format units a year for the next five years, said John Charleson, director of information technology and supply chain management at Longo’s.

Reaching urban consumers is a major part of Longo’s growth plan. It is positioned based on superior food quality, particularly in perishables, and so is in the right place to satisfy Toronto’s sophisticated tastes. However, the company only has one other store in Toron to proper, and that is in the extremes of the city. Its other locations are in suburbs or satellite cities, including Mississauga, where the company’s headquarters is located.

To more effectively reach that urban consumer, Longo’s decided to go high tech. It purchased Canada’s leading online grocer GroceryGateway.com, but that was only a first step. The company needed to integrate multiple trade channels into the system. The business model is relatively complex. Orders are picked in Longo’s stores when they are closed to the public overnight and Longo’s delivers the orders to consumer. But, the company wanted to be able to tell customers that it was doing everything to accommodate them. “You place an order and it can get picked up at whatever store you want,” said Charleson. “We want to fit more of your schedule than our schedule for delivery.”

The immediate challenges Longo’s faced, however, were ones of data integration and integrity. Charleson said Longo’s wanted an enterprise resource planning system it could use to manage the skus it stocks in stores and has as a resource for the online business. “We wanted one system that would provide one version of the truth, providing the right product, the right price and the right description. We implemented the Tomax architecture to take that information to systems that need [it].”

As implemented, Retail.net supports all of Longo’s order fulfillment requirements and inventory control functions, according to Tomax. The single data set Retail.net contains and shares across sales channels gives Longo’s the ability to identify true item availability and permits users to make substitutions in the event of an out of stock.

Another benefit Longo’s has derived from its new system is the ability to add SKUs to its online service. With better inventory management, it can bring in new items, still manage to control costs and continue to deliver the right products efficiently. Charleson said Longo’s has only begun to explore the functionality order fulfillment capabilities Retail.net provides. Longo’s also has the ability to take additional advantage of real-time inventory visibility, customer loyalty and in-store fulfillment features, he added.

“The Retail.net single platform is the base for all strategic applications that come of it in managing shrink, optimizing ordering for perimeter departments, things that have been difficult for grocery retailers to manage. Longo’s is using Retail.net in running perpetual inventory, inventory optimization, demand forecasting and managing based on forecast levels,” noted Tomax spokeswoman Joanna Kennedy.

In other words, What Longo’s needs to approximately double in size by 2012.