What can your business learn from survival in the supermarket jungle?
Almost no business is as cutthroat as the supermarket industry – razor thin margins while surviving on turns. Where most supermarkets aren’t around today one grocery chain – has used a completely different approach not only to survive but prosper. This chain has increased margins and expanded/tripled in size from 3 stores to ten. Read this case study to see how they did it and what your business can learn and use.
The food industry –like many others– has experienced a reduction in volume of sales during the past years, a local company has been able to overcome the challenges and strengthen its position in the market: Plaza Loíza Supermarkets.
Under the leadership of the Márquez family, this supermarket chain is becoming famous for its variety of products and its extensive lines of seafood, meats, fruits and vegetables. This adds to the innovative vision of creating a better buying experience for their customers while they are at the store. In sum, these factors have elicited customer support to the chain and the opportunity of growing from three stores in 2009 to ten nowadays. The ten stores are located in San Juan, Ponce, Bayamón, Carolina and Trujillo Alto but have an island-wide impact.
Today, this native company with over 25 years of experience hires 560 employees. In 2012, it reported estimated sales of over $105 millions. According to the Consumer Radiography study, this puts them at third place in the San Juan Metropolitan Area.
Plaza Loíza Supermarkets’ management is focused on its goal of turning the supermarket chain into the most innovative one in Puerto Rico. Thus, technology has a very important role in their business, as it is the main tool to becoming more efficient, fast and precise in operating the chain.
The chain’s ten stores are interconnected to the main office, where inventory control is kept as well as purchasing and accounting functions. The central office monitors information and data from each store 24-7.
The estimated impact of losing the connection, and data transmittal, is a loss of about $20,000 each day per store. On the other hand, this loss would have an adverse impact in areas like inventory, the purchasing process, and stocking up gondolas, among others.
A day of malfunctions in the technical system could cause delays in several processes, as employees from such key departments as accounting would be pressed to complete them manually.
As expected, the growth of Plaza Loíza Supermarkets brought with it the need to execute operational and technological changes in order to reduce costs, maximize earnings and provide a better service to customers.
Among several challenges, the chain saw an increase in the volume of data they needed to manage, which got complicated because of the limited capacity of their network. In addition, as the business grew, its infrastructure reached its maximum operational point. This generated frequent breakdowns and service interruptions. The result were problems with communication, real time, inventory management and distribution, and a delay in payment transactions — causing more waiting time for customers.
The fact that they had contracts with different suppliers for telecommunication services made it worse, as it hindered an integrated strategic plan and increased technology costs.
A detailed analysis of Plaza Loíza Supermarkets’ technological infrastructure and needs by WorldNet’s experts produced a recommendation to strengthen the infrastructure in order to increase capacity and allow for all locations to be interconnected — including the central office and the stores.
In terms of voice, data and redundancy, WorldNet installed on-net UNEL and a three-line Cisco switchboard at one of the locations. Headquarters got improved service with a data solution with Internet EFM 7.5 MG; and a T1 EFM for each store, connected to the main office.
Telephone and data services were standardized at all supermarkets, and they also got support applications for inventory for higher efficiency in the operation.
Another finished project is the installation of fiber at the main office at Loíza Street as well as the Norte Shopping Center y Baldorioty de Castro Avenue locations — where existing services were migrated to the new infrastructure.
The technology installed by WorldNet at Plaza Loíza Supermarkets has substantially improved various operational areas, including: call management; receiving, registering and dispatching inventory; communication and data exchange between locations; and speed for payment transactions.
These changes motivate employees to be engaged with their jobs, as they can take advantage of tools that speed their tasks. Also, the innovations have produced a better experience for consumers who buy at the stores.
Undoubtedly, the new infrastructure and interconnectivity at all locations of Plaza Loíza Supermarkets improves the company’s competitiveness and take its operation to the next level by generating savings that translate into higher operational efficiency.
“Technology is fundamental for the operational success of our business, and it is closely related to our ability to grow and strengthen our position in the market. But what gives us the most satisfaction is being able to advance to the level of excellence in customer service we aspire to at all times “, said Mr. Márquez.
This is why Plaza Loíza Supermarkets, just like hundreds of clients, have trusted WorldNet with their telecommunications needs. They know that all of WorldNet’s suggestions are supported by a team of technology specialists with ample experience.
“We have a relationship with WorldNet of over eight years, and we have felt supported at all phases of the process. We feel that thanks to their services we keep on advancing towards our goal of becoming the most innovative supermarket in all Puerto Rico. Without a doubt, WorldNet’s technology has been our best ally”, finished Márquez.