Optimize Your Front End With Line Busting Technology

1
Optimize Your Front End With Line Busting
Technology

• Mike Hawk, Retail Systems
• Business Analyst, IKEA
• September 14, 2006

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Agenda

• Who is IKEA
• IKEAs Philosophy
• Challenges A Need Identified
• About the Agilysys/IKEA Partnership
• The Value Proposition of Line Busting
• What You Need to Know
• Critical Success Factors
• The Road Ahead for IKEA
• Q A

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About IKEA

• Worlds Leading Home Furnishings Retailer
• IKEA is headquartered in Älmhult Sweden
• Main IT center Helsingborg Sweden
• IT offices Älmhult Sweden, Paris France,
  Wallau Werne Germany, Singapore China,
  Philadelphia PA, US
• Operates over 226 stores throughout North
  America, Europe, Middle East and Asia

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About IKEA

• Global Sales
• FY 2005 17.7 billion (USD)
• U.S. Sales 2.0 billion (USD)
• U.S. is Number 2 in Sales Behind only Germany
• NA Stores
• FY 2005 26 Stores in U.S. 11 in Canada
• FY 2006 29 Stores in U.S. 11 in Canada (W.
  Sacramento, CA Canton, MI Round Rock, TX)

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About IKEA

• 96,000 co-workers in 33 countries
• Average 1 million customers per day worldwide
• On weekends we see some stores with 250,000
  visitors

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IKEAs Philosophy

• To create a better everyday life for the many
  people
• DIY/Low Price Image We do part, you do part,
  together we save money
• Stocking everything for the home under one roof,
  we aim to inspire customers with ideas by sharing
  hints and tips about smart, new solutions.

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The Challenges
A picture from a grand opening captures the
chaos.
How do you manage this influx of traffic?
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The Challenges

• Potential loss of sales and profits due to long
  lines
• Irregular customer flow during store openings,
  holidays and peak times during the week
• Impatient, unhappy customers carrying around
  heavy loads of home décor products

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The Challenges

• Checkout at IKEA took too long
• 53 percent of IKEA customers surveyed said there
  was a need for improvement in IKEAs cash lane
  queues
• Customers were observed placing their items to
  the side and leaving the store
• Occurred most often during store openings,
  promotions and advertising campaigns which drew
  large numbers of customers
• The problems occurred even when the 20 plus lanes
  in the store were fully staffed

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The Need

• A way to checkout customers quickly and
  efficiently so they kept returning
• A cost-effective solution that was within budget
• A flexible solution that integrated with existing
  IBM point-of-sale system and self service concept

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Why Agilysys?

• An established company founded in 1963
• Sales offices throughout North America and in
  the Asia Pacific region
• A trusted business advisor
• Quick response rates and great customer service
• Knowledgeable about equipment ordering so order
  is accurate
• Technology expertise
• Programming and support

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Why Agilysys?

• Vast retail industry expertise and respected
  reputation among customers
• Giant Food Stores
• Wegmans
• Regal Cinemas
• Talbots
• Duane Reade
• Gordmans
• Apple Retail Stores

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Why Agilysys?

• Dedicated supplier contacts
• An IBM business partner for more than 15 years
• Recipient of the IBM Business Partner Leadership
  award for the third year as well as other
  recognitions
• Awarded Premier Solution Partner of the Year by
  Symbol Technologies

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The Solution

• The Agilysys NextPositionTM Solution
• Part of the Agilysys NextVision mobile and
  wireless software suite
• Extends retailers POS system into a mobile,
  handheld device
• Looks like an additional terminal to the store
  controller
• Allows flexibility in customer handling by
  accepting payment on the unit
• Demonstrates IKEAs commitment to better service
  when dealing with the unplanned peaks

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The Solution

• Implementation Integration
• Hardware
• Symbol SPT1846 Handheld running Palm OS
• Zebra Cameo Printers with integrated MSR
• Software
• IBM GSA on 4690 OS
• NextPosition Software on Handheld
• TSNT on Windows PC

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The Solution

• Project details
• IBM provided some customization to terminal sales
  to deal with virtual devices
• Agilysys provided NextPosition customization for
  keyboard layout, manager functions, etc.
• 6 month on-site implementation from start of
  development to pilot testing, close and rollout

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The SolutionChallenges Along the Way

• Post implementation
• System reliability
• Lack of working methods to deal with issues
• Batteries not charged
• PC not turned on
• Unsure of how much wireless coverage would be
  needed
• Only wireless on front end
• Is it enough?

An IKEA store associate line busting to speed
checkout.
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The SolutionChallenges Along the Way

• Post implementation
• Working methods questions remained
• How to select customers?
• Who goes first?
• How to direct exit traffic flow following
  wireless checkout?
• Who is the right employee to operate the units?
• What skill set is needed?
• Does the person need to be a cashier?
• Or customer service rep?

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The SolutionChallenges Along the Way

• Post implementation
• Customers unsatisfied with selection process
• System reliability of network
• Printer issues related to system cables not
  secure
• Not supported internally by IT since this was
  business driven initiative
• No support on evenings/weekends when the peaks
  were occurring

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Critical Success Factors

• Results
• Showed increased queue speed during peak periods
• Showed better customer satisfaction when dealing
  with unplanned peaks
• Proved network security when dealing with
  sensitive data

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What You Need to Know

• IT needs to be involved in the selection process
  - The What
• Hardware and Software needs to be owned and
  supported by IT
• Limit amount of special functions on the unit
• Companys management needs to determine the
  working methods - The How
• How do you select the customers in line?
• How do you deal with customer once complete?
• How will you deal with payments?
• Determine if payment will be taken at unit or
  integrated with other self service type concepts
  (i.e. self checkout or suspended transactions)

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What You Need to Know

• In general
• Can you get a better ROI by integrating other
  functions onto unit for use during non-peak
  periods?

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The Value Propositionof Line Busting

• Cost-effective because its a mobile, wireless
  solution (less expensive than additional
  registers)
• Its a flexible solution that can be integrated
  with existing IBM POS and self serve concepts
• Stable / Secure System
• Supported by Agilysys 24/7 and 365 days/year
• Quick and easy to implement
• Proven for the last six years IKEA has been
  using the technology successfully

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The Road Ahead for IKEA

• Next generation Mobile POS at IKEA
• Upgraded technologies
• Symbol PDT8146 PPT8846 running CE.NET
• NextPosition for CE.NET
• TSNT running on 4690 OS (eliminates the PC in
  the middle)
• Better support structure
• IKEA IT owns the solution for better internal
  support
• New technologies give better system performance,
  reliability and availability

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The Road Ahead for IKEA

• Better working methods
• Trained management to use the handhelds
• Added functionality to get a better ROI
• Shelf Price Audit
• NextManager
• Wireless POS Alerts
• Mobile Reporting
• E-mail
• Inventory Cycle Counts
• Integrated with self service checkouts to further
  increase throughput

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The Road Ahead

• There will be bumps Dont go it alone!
• Partnerships are important internally and
  externally
• Be a purple cow transform your business by
  being remarkable - differentiate or die. -- Seth
  Godin
• Spectacular achievement is always preceded by
  spectacular preparation. -- Robert H. Schuller

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Questions and Answers

• Michael Hawk
• Retail Systems Business Analyst
• www.IKEA.com
• mike.hawk_at_memo.IKEA.com