Magazine Article | February 1, 2006

Cash In On The Grocery Market

In the last three years, this POS (point of sale) VAR landed 72 grocery clients. Should you be looking at the grocery vertical to increase your sales?

Business Solutions, February 2006
Written by: Dan Schell
How Can A Grocery-Specific Solution Help You Sell More?

Sean Martin, president of Martin Business Systems, had a problem. The company that made the new POS (point of sale) software he had chosen to sell to his grocery clients had folded like so many other small ISVs (independent software developers). Now he had to tell his clients that the software company was out of business. He also needed a new POS software product. For the solution, he turned to his distributor, BlueStar.

The StoreMaxx solution from BlueStar consists of software and hardware specifically designed for the grocery vertical. The crux of the solution is the Auto~Star Compusystems Inc. retail management software. “Choosing Auto~Star was an easy decision because the company has been in business since 1982 and has a long-standing positive reputation and years of successful installs,” Martin says. “Becoming a StoreMaxx and Auto~Star reseller was the biggest business move we made lately.” In fact, three weeks after becoming a StoreMaxx VAR, Martin sold his first StoreMaxx system.

According to Kevin Smith, StoreMaxx grocery solutions manager, StoreMaxx simplifies the VAR’s decision of selecting a POS solution. “Daily, I encounter dealers and consumers who are frustrated from navigating the complexities of working with multiple equipment providers who are part of an overall solution,” states Smith. “When something breaks down, the grocery store operator has to fight the ambiguities and disclaimers of who actually owns the problem. StoreMaxx eliminates the ambiguity since we are a single source provider.” Smith adds that there are no fees and no minimums for VARs to participate in the StoreMaxx program. Training is also free and support is free to dealers whose clients subscribe to annual maintenance and updates.



Real-Time Data Needs Spawn WLAN Sales

You’ve got the POS terminals, touch screens, receipt printers, magnetic-stripe readers, bar code scanners, and scales — all the basics of a grocery POS (point of sale) solution. But today’s retailers, and grocers in particular, are seeking more than the basics from POS VARs. They want more customer information than ever gathered before to use for direct marketing. They need to know inventory levels in real time. They want to develop customized promotions on a daily basis. All of this requires POS systems that are integrated with as many back end (i.e. accounting, shipping) applications as possible.

For Sean Martin, president of Martin Business Systems, providing the networking for POS equipment is just as important as providing the hardware. And these days, much of that networking is wireless. Martin installs wireless LAN (WLAN) routers and access points and provides WLAN site surveys. He commonly sells and deploys wireless handhelds, laptops, and workstations. “We complete most of the setup for these devices at the customer’s site,” Martin explains. “The handhelds are usually used for inventory purposes, and the laptops and workstations are used for reporting, price maintenance, and cash management for the POS system.” Martin estimates he has installed 50 WLANs for his grocery clients.

For many VARs, choosing a vertical market to specialize in is a matter of opportunity. In other words, whatever market has the greatest opportunity (i.e. demand) for a technology solution is a prime target. The disadvantage of this strategy is that there is a long learning curve when entering a market you know nothing about.

When Sean Martin started his POS business in 2002, he decided to stick with a market he knew well — grocery stores. “I have been involved in the grocery industry since I was 16 years old,” comments Martin, who is the president of Martin Business Systems. “I have worked in multiple positions in grocery including service, checkout, management, and data entry. I believe that kind of experience is valuable when I am pitching my products and services to grocery clients.”

Martin estimates that within the territory he covers, there are nearly 400 possible grocery clients. According to a study by Willard Bishop Consulting (WBC), in 2004 there were 14,690 conventional supermarkets and 9,500 small grocery stores in the United States. The conventional supermarkets have at least $2 million in annual sales and carry approximately 22,000 SKUs (stock keeping units). Small grocers earn less than $2 million in annual sales and carry approximately 3,000 SKUs. The WBC study does identify some other grocery categories, but conventional supermarkets and small grocers make up the biggest opportunities for Martin.

OS System Upgrades Are In Demand
The grocery market is indeed a current growth area for POS VARs. The beginnings of this growth started back in the mid-1990s. During that time, the economy was strong and many grocery stores had the budgets to upgrade their POS systems in preparation for the impending doom of Y2K. Of course, nothing happened after the calendar turned to 2000, and the lackluster economic conditions of the following years didn’t spur a technology spending spree. But, during the past few years a significant change to the grocery landscape did occur, namely in the form of the introduction of superstores (e.g. Wal-Mart-like stores that also carry groceries). Since smaller grocers couldn’t compete with the superstores on price, they needed a technological advantage. They needed to offer a faster shopping experience. They needed to capture more data on customer buying habits. They needed new POS equipment — new more powerful and faster POS equipment. And they needed VARs to help select and install this equipment.

“Today’s grocery stores want new POS technology such as check scanning devices, faster receipt printers and bar code scanners, and quieter equipment overall,” Martin says. “All of this new equipment should manage turnover and training better than their legacy systems and give valuable insight into customer buying habits. Further, these stores want to offer advertising at the checkout [e.g. via two-sided pole displays or LCD flat screens], gift cards, and a modern-looking appearance at the checkout.”

Understand More Than Just POS Hardware
Keeping up to date with their competitors’ modern POS systems isn’t the only reason grocery customers seek Martin Business Systems’ help. They want more integration between their PC-based back end systems and their POS systems. That’s why the company offers more than just POS equipment repair and installation; it provides network (wired and wireless) support, analysis, and installation.

Martin himself also helps his clients with issues such as becoming EAN (electronic article number)- and DUKPT (derived unique key per transaction)-compliant. EAN is a fixed-length, numeric-only bar code symbology that is Europe’s equivalent to the U.S.’ UPC (universal product code). DUKPT is the preferred technique for providing high security for PIN-based events such as debit transactions at a cash register. “In the past few years, I was helping some clients upgrade to be DUKPT-compliant,” Martin comments. “The bigger demand has been EAN codes, which are starting to emerge, especially in the wine and beer import areas of grocery. Grocers need to have bar code scanners that can read these codes and POS systems that can accept this data. With any of these updates comes a realization by clients that newer POS systems provide a lot of functionality they didn’t know they missed before.”

Know All The Grocery Vertical’s Decision Makers
Since many of Martin’s clients are small grocers, he is commonly pitching his products and services to the store manager and sometimes the store owner, depending on the size of the project. But he notes that the store’s wholesaler could be another contact that has an impact on the purchasing decision for a new POS system. For example, one of the largest wholesalers Martin deals with stipulates that if one of its stores buys a new POS system with integrated credit card processing software, the wholesaler must approve that system first. While this scenario is rather unique, it did pose a problem for Martin, nevertheless. To get his POS software recognized by the wholesaler, he first pursued selling some POS systems with no credit card integration to smaller stores using this wholesaler. Once he had that client base, it was easier for him to make inroads to the wholesaler’s larger grocery clients in need of full-functioned POS software systems.

Expand To Complementary Verticals/Technologies
In his first three years of business, Martin amassed a client roster of 72 grocery clients all through word of mouth. While he plans to continue his focus on the grocery vertical, he anticipates a future expansion into two similar markets — convenience stores and hospitality. “Although much of the hardware is the same in the hospitality market as compared to grocery, the software and reports are very different,” he states. “To wholeheartedly serve hospitality clients, we would have to add an employee with expertise in that vertical.” He says he is also trying to add other technologies to his current grocery solution. For instance, he recently started selling a solution that includes time and attendance hardware/software from TimeCentre.

Martin understands that to be successful selling to the grocery vertical, you have to be able to sell more than just POS terminals and bar code scanners. This industry is changing, and for progressive VARs like Martin, the sales opportunities are huge.