Uncover New Sales In Grocery POS

When most VARs examine a vertical, the only aspect scrutinized is the amount of earning potential. Of course, there’s a lot more that goes into the decision — length of sales cycle, size of market, what the needs are, etc. Dale Eubanks, CEO and president of NextPoint, LLC, has selected a vertical that allows his company to keep daylight hours and is easy to service. Additionally, the vertical is growing, has a short sales cycle, is easy to service, and is in need of a few relatively easy-to-sell solutions. His target? Independent grocery stores.

Why Sell POS To Independent Grocery Stores?
According to Eubanks, there are a few distinguishing characteristics of an independent grocery store. First, independents typically are owned by one person. Whereas selling POS to a chain involves working through different IT departments, the CFO, and even boards, selling to an independent often can be done face-to-face over coffee or lunch. Additionally, Eubanks says when an independent owner decides to buy a new POS system, they’ll do so, on average, within two months. Alternatively, chains might talk about working the purchase into the next year’s budget.

Another characteristic of this market is the size of the store. Eubanks says the average independent supermarket has five lanes. Eubanks has avoided selling to markets with a couple of lanes (e.g. c-stores) because those types of customers require service over a wide time span. “With multiple lanes, if one goes down on the weekend, the grocery store can continue to operate until Monday,” Eubanks explains. “If the only register at a c-store goes down, it’s a crisis requiring us to be on-site.” The VAR also says that whereas many chains, c-stores, and the hospitality market have longer hours, most independents open at 7 a.m. and close by 10 p.m.

These points are that much more important when you find out that NextPoint has only six technical employees servicing 150 supermarket customers throughout the southeastern United States. Being able to reduce the amount of time servicing customers is a vital key to having such a low technician to customer ratio.

Another reason Eubanks targets independents is that there are a lot of them, and the number is growing. By using numbers garnered from wholesalers in his region, Eubanks estimates there are at least 800 independent operators in the southeastern United States. In addition, he points to a recent trend of chains going out of business. “Chains are having a hard time competing against Wal-Mart because they’re trying to emulate Wal-Mart,” says Eubanks. “The independent grocer approaches business differently. Many independents still take your groceries out to your car. Many still have the owner in the store. You can request products at many independent stores, and they’ll stock the item just for you.” What this does, according to Eubanks, is build loyalty and satisfied customers. Whereas many chains use a cookie-cutter approach to launching stores throughout a region, independents look closely at a town and work toward meeting the needs of the neighborhood.

Give Grocery Customers Direct Store Delivery Functionality
When selling POS solutions to independent grocery stores, Eubanks says there are three areas that often resonate with owners. The first pertains to inventory. As Eubanks points out, this problem often begins at the receiving dock/back door. While many grocers know what’s coming in the back door and what’s being sold, they often don’t have a firm grasp on the actual cost of the goods being sold. “Most independents think that as long as they have cash flow, they’re doing well,” says Eubanks. “However, no supermarket knows their profitability until they have accurate, timely inventory counts.”

To give customers such capabilities, NextPoint recommends Marketmaster POS software, which has direct store delivery (DSD) functionality built in. This means that if a wholesaler has electronic invoicing, a grocer using Marketmaster can know the exact cost of items. Eubanks explains, “It’s possible to see what a manufacturer’s prices are online. However, that’s the cost sitting at the warehouse. There’s also fuel costs and surcharges that will be tacked on. Electronic invoicing means exact costs, which means a grocer can accurately track profitability.”

Additionally, Eubanks says the Marketmaster software gives grocers the ability to set up automatic reordering. This further improves a grocer’s control over inventory. He says while many merchants have been using such systems for a while, automatic reordering is relatively new to the supermarket industry. To ease customers into such solutions, Eubanks recommends starting with a small section of the store, rather than rolling out the entire process storewide.

 For another VAR’s tips to grocery POS success, go to BSMinfo.com/jp/3314.

Grocers Need Secure Payment Processing
Another source of revenue for NextPoint is PCI (Payment Card Industry) remediation work for independent grocers. The requirements put forth by the PCI council dictate any business processing payment cards must meet strict security guidelines, both at the POS and throughout any network infrastructure. According to the VAR, independent grocery stores fall into a PCI category whereby the owner can read all the requirements, work with a VAR to ensure the guidelines are met, fill out a form, and get PCI certification. Large chains have to hire third parties to come in and certify them.

Eubanks says his PCI work has come in the form of selling new PCI-compliant hardware and software (check with your vendor partners to ensure the products you’re selling are compliant) to grocery stores using POS systems so old that they cannot be upgraded to meet PCI requirements. While the VAR says many independent grocers initially thought PCI compliance was hype akin to Y2K, unified warning messages from the credit card companies, wholesalers, and the VAR community have sufficiently convinced grocers that PCI is a legitimate concern and worth the technology spend. To that point, Eubanks estimates his company has earned $350,000 each of the last two years on PCI work alone.

POS Video: Your Easiest Sell?
The final and most lucrative aspect to NextPoint’s success in the independent grocery vertical is video security. “Due to the economy, there’s more stealing, sliding [sliding the item around the scanner, as opposed to across it, to avoid ringing it up], and swapping price stickers than ever,” says Eubanks. To combat such loss, NextPoint sells and installs video security systems to its customers.

The VAR’s typical video security system for an average five-lane store includes 16 cameras. He recommends 550 dpi (dots-per-inch) infrared cameras (which can record in little to no light). Eubanks says it’s important to cover certain areas in the store. Obviously, the POS terminals should be covered, and Eubanks says, ideally, a store will have one camera for each. Additionally, NextPoint recommends cameras covering the produce section and deli to catch “slip and falls” (customers faking fall injuries) on camera. He also ensures a camera is covering the high-dollar meats to catch customers swapping price stickers. All cameras are connected via RG-59 coaxial cable to a DVR (digital video recorder). Eubanks sets the DVR to record only when motion is sensed, thus increasing the available recording time of the DVR. To further increase recording time, the VAR sets the DVR to record at 7.5 frames per second (the naked eye sees at 16 fps), which is more than adequate to catch details in recorded events. Using those settings, Eubanks says a 500 GB hard drive within the DVR can store about 30 days of footage, adequate for catching “slip and falls” and writers of bad checks. The total cost of these systems is $13,000.

You might be wondering if such a price tag puts off prospective buyers. Eubanks happily reports that it does not. In fact, he says it’s his easiest sell. “Independents commonly find empty cartons and open boxes of medicine throughout the store,” he says. “They might not know exactly what it’s costing them, but they’re so frustrated that the frustration outweighs the logic of any ROI tied to such a solution. In fact, you don’t have to address the ROI of video security; the need is built in.” NextPoint initially started selling video security as a sideline to its main POS business, but Eubanks quickly realized that the product offering was much more. In fact, today video security solutions account for 30% of NextPoint’s annual revenue.

What all this boils down to is a 20% increase in revenue for NextPoint in 2008 and a projected increase of 20% in 2009. While some VARs might call that a lofty projection considering the state of the economy, Eubanks is confident the independent grocery POS market is one that will continue to pay dividends.