STORES Magazine - August 2008 - (Page 70)

NUTS AND BOLTS / MERCHANDISING Merchandising in Mexico Rapid expansion made modernizing operations a must for OXXO BY LAURI GIESEN from 12% to less than 2% A year later, OXXO updated its warehouse applications and added new pricing and planning capabilities with additional components of the Oracle suite. It also completed the groundwork to put into place more sophisticated analytic abilities for the future. The firm’s initial goals were to improve capabilities for segmentation, pricing, inventory control and replenishment, as well as to implement a modern approach to category management. The new approach not only modernized and simplified the merchandising and processing systems, but it allowed the company to segment merchandise and pricing to fit the needs of individual stores. “Segmentation was impossible to acOXXO OUT-OF-STOCKS complish with our old system,” Trevino says. Store-level inventory control The company has been able to implement an automated replenishing system that allows the chain to better control its inventory at the store level. As a result, OXXO has been able to reduce out-ofstocks from 12 percent to less than 2 percent. “We believe we had previously lost sales by being out of stock so much, so this change has most likely helped increase sales,” Trevino says. The automated system also has “improved our value proposition,” Trevino says. “Previously, the chain had to carry the same merchandise in each store; the new system helps OXXO analyze sales at the individual store level, as well as demographic information and customer behavior, to determine the merchandise mix for each store. “Before, we were a ‘one-size-fits-all’ operation and we could not react to different consumer behavior and space restraints” at individual stores, Trevino says. In addition to customizing the merchandise carried at each store, the sysWWW.STORES.ORG rying to keep pace with rapid growth is a problem many retailers wish they had. For FEMSA Comercio, which operates a chain of OXXO-branded convenience stores in northern Mexico, developing a computerized operating system that could track merchandising, warehouse operations, assortment planning, pricing and business planning during torrid expansion was a real problem. T By 2003, the chain was opening an average of 100 new stores per month. Today, OXXO has more than 6,000 stores and continues to grow at a rate of about 700 stores annually. Such rapid expansion had caused real problems in managing operations. When the chain was a small company, it could effectively run things on its COBOL-based, internally developed computer system. But as the chain grew, the internal system was limited in what it could do. “It did not operate on a standard server and was not an open system,” says OXXO CIO Reuben Trevino. “We faced problems with flexibility 70 STORES / AUGUST 2008 and scalability. That was not a big problem when we were just 200 stores, but the system just could not handle our growth rate.” The chain hired Andersen Consulting (now Accenture) to analyze its operations, and the consultants recommended that the company implement an integrated merchandising system. After looking at several proposals, OXXO installed a new IT foundation in 2006 and purchased the Oracle E-business suite of financial products to run on it. Included in that suite were Oracle’s database management and other retail merchandising products. http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

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