While some retailers are struggling to win customers over in a recession, the service retail sector is thriving. Knowing that people still need haircuts, the key objective at Ratner Companies is characterized by high-touch customer interaction.
Ratner Companies, the largest family-owned and operated chain of hair salons in the country, operates 900 salons under seven salon brands, all of which carry retail products in-store.
Determined to streamline inventory and customer management, the team at Ratner replaced their outdated POS system with the Tomax Retail.net solution in 2001. The company coupled Tomax’s POS standard system and merchandising system with a custom-developed system to manage the workflow process in hair salons.
Tim Lemieux, SVP & CIO at Ratner, says the main reason the company needed to do customization was to address loss prevention issues while at the same time promoting positive customer interaction. “If you’re in stock you’re going to meet the customer’s expectations by having the right product at the right time without having too much inventory,” says Lemieux.
Prior to deploying Tomax, each salon was managing inventory on an individual basis. Some stores did not have any type of direct data on how much of a particular product was selling, so they would replenish based only on their perception, not on factual inventory data. This became problematic, as some stores ordered popular products in excess, leaving other stores without any stock of that product.
The company needed to be sure the right products were getting to the right stores and cut inventory to avoid overstock. Because the stores are primarily service-oriented, the fundamental goal for Ratner is to make sure the workforce runs efficiently and repeat/loyal business is optimized.
The customization took several years to design and complete, and started with a 40-store pilot, eventually rolling out fully live in 2006 to all Ratner salons.
When a customer walks into a Ratner salon, they are “checked in” to the system. The automated list helps keep the integrity, as the customer is then moved from “waiting” to “in service” once a stylist is free. Once services are rendered, the customer is moved to check out at the point of sale.
“What we’ve found early on--which is pretty typical for most hair salons--is that without a control to check in clients as they enter the salon, there is an opportunity for the cash not to make it to the register,” says Lemieux. “It helps us ensure that we are being true to our brand, and if somebody walks in, they’re going to be serviced, for the most part, in the order they walk in.”
In addition to helping streamline customer service operations, the big payoff of the implementation optimized inventory management. Using the Tomax solution enables the salons to order inventory based solely on what is sold through the register. Based on that fill rate, the stores replenish and keep to a target inventory that tries to balance the image of being in stock by having enough product with the actual amount of sales projected within the next four weeks of business. Stores went from ordering themselves to have the computer look at the sales rate by SKU for that location and automatically replenish (central replenish) products based on sales, not on perception.
Since the implementation of centralized replenishment, Ratner has ultimately reduced inventory by 20% without creating out-of-stocks. Sales have also increased, according to Lemieux.
“The vast majority of our salon leaders are stylists so they still cut hair while they manage stores,” says Lemieux. “Anything we can do to pull activities away form salon leader to be less administrative and more productive, we feel is a positive thing. By moving from this ordering process, we went to a mechanism where, from the corporate office we would track how many were selling and establish minimums and maximums. By doing that, we’ve reduced the inventory level pretty substantially and sales increased.”