A conversation with Scott Christian, director of information technology at Wilsons Leather, a wholly-owned subsidiary of G-III Apparel Group.
Wilsons Leather is a leading specialty retailer of quality accessories and outerwear for men and women. These include leather and non-leather, branded and private-label goods, which are designed by Wilsons in collaboration with G-III and manufactured in China and India. The company operates 120 stores in 43 states, and it also markets and sells through its e-commerce site. Wilsons recently upgraded its point-of-sale (POS) system with a new solution from JDA Software.
Q: What were the issues that led you to look for a new point-of-sale solution?
Christian: The first thing was compliance with the PCI [Payment Card Industry] data standard. This is an information security standard to which the credit card issuing banks hold the retailers accountable. There are a whole bunch of privacy issues related to credit card information and a lot of things that I, as a retailer, cannot do with that information. So being PCI-compliant is a big thing and something that actually is driving a lot of changes in POS.
There are different levels of standards for different sized retailers, based on how many credit card transactions they process. As a smaller retailer, we don't have as stringent requirements as someone like Target or Best Buy - we don't, for example, have to have an audit firm come in and verify our processes - but if we were not PCI-compliant, we would be at risk of being fined by the credit card bank. And we also would be liable for any damages caused by a breach of information. In our old system, the credit card numbers that were stored in our POS were not encrypted, so that was a data security risk and we felt we were putting the organization at risk for a possible breach of that information.
So that was a big thing for us and, like I said, it is driving a lot of change in POS right now because many companies are in the same situation we were. What happened is that people had heavily customized the POS version that they probably put in for Y2K compliance, which is when our old system went in. With all that customization, it was not easy to just go out and get an upgrade from the software vendor so it kind of opened up the search again for most retailers. So there is a lot of play right now in the POS market, especially among small to mid-sized retailers that are more heavily reliant on package solutions. Big retailers do a lot of their own development and have an IT staff big enough to support that, but smaller retailers like us rely on what is available in the market.
Q: And JDA solved this problem for you?
Christian: Absolutely. In the JDA POS, the data card number is encrypted with an encryption key. Even if somebody hacked into the data base at the store, they could not get a customer's credit card number.
Q: Were there other drivers?
Christian: We also felt that we were at risk from a returns perspective. Our returns were being handled manually. We relied on the store associate to figure out, based on the receipt the customer provided or their own store knowledge, what refund or credit to give the customer. In our stores, we often will have a price that will ring up with a discount off the transaction, so the store associate had to try and determine from that receipt how much the customer actually paid for the item. Based on the way the receipt was printed, that was not always clear. So we felt there was inaccuracy in the returns. In addition, we felt that we were at risk for returns fraud, so we required a ton of information from customers that were returning items - a three-part form had to be completed and the store associate then had to key all that into the computer as part of the returns process, so the process took a long time.
Now, with the JDA application, the returns are centralized in a database that is here at our corporate office. When a customer brings a receipt back to the store, the store scans the receipt and a list pops up on the screen showing which items off that receipt are eligible for return. It gives the store associate all the information needed, so all the associate has to do is scan the receipt and select the item the customer is returning. The JDA solution also keeps track of what has been returned against that receipt - and here is where fraud can come in. Say someone paid for one item and stole another of the same item. They might be able to return both items using the receipt of the item they paid for. Now, if a customer only purchased one, once that item has been returned and the receipt scanned, the system will alert the store if that receipt is scanned again and let them know that item is not eligible for return. This has really improved the accuracy of our returns.
This system is delivered over the internet via a Virtual Private Network so it is all real-time data movement between the stores and the central server, which means there is very little time lag. If we had stores that were close enough, and in some cases we do, a customer could buy something at one store and as fast as he could drive to the second store to return it, it would already be in the centralized return data base. There is no upload and download timing and it is across all of the stores.
Q: Did you look at several vendors before deciding on JDA?
Christian: Yes, we looked at all the big vendors, including our prior provider. They basically all had solutions that met our criteria, but we really liked the easily customizable user interface with JDA. This meant that I could customize the application without having to pay JDA for custom modifications. This helped us a lot when it came to training, because we made the look and feel of the new system very similar to the POS we were using before, so there was less of a process impact on the stores. We were able to control how a transaction progresses and the order in which things were entered. The JDA interface is very flexible in letting you move these things around. So, for example, if our associates were accustomed to having the transaction number be the first thing they entered on a return, I was able to replace that with the barcode prompt for the receipt. It was important to us to be able to customize things like that so we could give it the look and feel that we wanted.
Another factor was that we had a pre-existing relationship with JDA that had been very successful. We use JDA on the back end, so all the information from the POS flows into a JDA host system. We were comfortable with the host system and confident that JDA would help us work through any integration issues. Integration really is the trick with POS implementation because POS really is an extension of whatever host supply chain system you are using. POS is the source of all of the data and if the source of the data doesn't talk well to that back end, you have a problem. We actually had experienced that with our old POS provider, and by adding JDA to the front end as well as the back end we believed that we would have fewer of those issues, and that has turned out to be true.
Finally, we knew from working with JDA in the past that they had very strong retail knowledge. It's not just about software knowledge. We looked at one other really good software company but their retail systems were a little clunky because they didn't put the retail thought process first and they didn't seem to think through what the retailer was going to use the system for. So those were the things that tipped the scale towards JDA - our background with them, their understanding of retail and the belief that we would have an easier integration.
Q: Do you use the POS system for other types of inventory control?
Christian: Absolutely. We look at two levels of sales reporting at corporate, using data that comes from POS to the JDA host. We look daily at chain level performance, because we have daily goals. My goal today might be $250,000 in sales and we evaluate that performance and report on it every morning at 3:00 a.m. as soon as we get data from all the stores and close out the day. On a weekly basis, we evaluate style selling with the same data that came from the stores using various reports that come off the JDA system. We also run an automated replenishment process using the information from POS. We may set a parameter that says a store should always have three pieces of this item. We evaluate that weekly and if a store sold one during the past week, that triggers an automatic pick for the store.
Q: Are there any lessons you learned from this project you would care to share with our readers?
Christian: In this project, the integration, which we chose to do without JDA resources, proved to be more complex than we thought it would be. We got training from JDA and thought we would be able to integrate it ourselves with our own developers. In hindsight, that was not the best decision because it was a much longer road to where we wanted to be than it would have been if we had gone to JDA and gotten their help.
JDA Software, www.jda.com
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