Scott Hartman, president of Rutter's Farm Stores, said the relationship between retailers and suppliers is integral to the implementation of new technologies.
By Ross Markman, Retail Relations Editor
Nearly 40 years after York, Pa.-based Rutter's Farm Stores opened its first unit, the chain's current president plays as big a role as anyone in the convenience industry, particularly when it comes to technology.
Chairman of the board of the National Association of Convenience Stores (NACS), Scott Hartman also served as 2005 chairman of the Petroleum Convenience Alliance for Technology Standards (PCATS), as well as on the boards of the Pennsylvania Food Merchants and the Pennsylvania Responsible Tobacco Retail Sales Certification Program, among others.
But it's perhaps standards of and enhancements to convenience retailing technology that most interests the third-generation business owner, who, it seems, is intent to have all 50 central Pennsylvania Rutter's stores at the forefront of the industry's technological endeavors. The chain plans to open three more stores by year's end.
Hartman's family, which also has operated Rutter's Dairy since 1921, is one of the oldest continuously operated family farms in the country, established in 1747.
Convenience Store Decisions visited with Hartman last month, asking him to weigh in on the future of technology in the c-store industry, examining how retailers and suppliers can work together in the process.
The key, he said, is embracing a building-block approach and—much like his family's 259-year-old farm—continue to evolve to higher levels of sophistication. The problem, however, is a large percentage of retailers aren't as open to technology.
"I think it's pretty clear that the top quartile are very active in playing in all the areas that we are," Hartman said. "But it still amazes me how many chains still aren't even scanning today."
CSD: How is the industry doing in terms of standardizing technological efforts?
Scott Hartman: I think the technology community is making very good progress. There are a number of standards out there; the challenge is getting them into real world implementation. I think it's a case of where there are always people waiting for other folks to blaze that trail. The standards are out there and the larger audience is sort of waiting to follow behind. It's not in mass mode yet, but from the companies that are using the standards, we consistently hear about the amount of savings that they're getting.
CSD: What can be done to improve the concept of standardization?
Hartman: One of the things we're really focused on within PCATS is trying to write more information in what we call the C-language, which is for the CEO and the CFO.
We believe they are the guys making the decisions as to where to spend the money and resources, but part of what's missing is the ability to give them the explanations in their language, explaining exactly what the benefits are to going to the next level of implementing the standards. We're trying to work with the supplier community to develop more detailed documentation. Instead of saying, "This is great because it cuts down on the number of interfaces and you can use XML," we're trying to have things written in terms of ROI, language the decision-makers would understand—such as this is how you can save your managers time and effort or reduce turnover or training costs.
CSD: What are the key buzzwords in the industry in terms of technology today?
Hartman: RFID will continue to be a buzzword out there. Also, biopay—the use of a fingerprint or retina scan to pay. The challenge with biopay is that someone in the retail industry is going to need to show they can get over what I'll call consumer pushback on providing fingerprints and that type of information. It's probably going to take a big player out there to say this makes sense to get into. It's such an infrastructure change that until the systems are completely ready, nobody wants to spend until they know consumers will use it. Biopay is probably a couple years out, but I can certainly see it coming.
CSD: What impact has technology had on convenience store employees?
Hartman: I've said for a long time that our industry is probably the most complex technologically of any industry out there. What we do is throw a myriad of technological challenges at entry-level employees. I don't know what other type of business does that. We throw fast food at our employees; we throw lottery; we throw managing gas pumps and authorizations at the employees; we have them scanning; we have them using hand-held devices and things to place orders. In the past, so much of that was unintegrated, and you had to train them on every single device.
What some of the standards and integration efforts are about is cutting down the number of devices they need to be trained on and learn to use. For example, in stores there used to be a cash register and a gas console, where fuel sales were authorized. Today, it's pretty much an integrated solution where we authorize them on a cash register. Another example is electronic safes. With older safes, employees would drop money in and have to write down the amount; then the manager had to sort the money. Today, the electronic safes read the bills and know whom the employee is. This is where technology just makes the job easier all around and provides much more timely information.
CSD: Are you satisfied with the data you're getting these days? Is the industry getting good market basket analysis of the data?
Hartman: The whole market basket area is one that's on our agenda (at Rutter's) with our new POS to be able to get a better, more accurate, set of information, particularly in foodservice. With the current rollout of the Radiant kiosks, what we found is that what we thought was selling really wasn't necessarily because we were using a lot of PLUs. We'd have our sandwiches with a PLU on it, so it was easy for the clerks to ring up 6-inch sub, rather than ring up 6-inch roast beef or turkey sub. This is classically what folks will do where there's a speed-of-service issue. They may have just always been ringing up our Italian sub, which we sell the most of. So when we look at our data, we're going, "Oh, we don't sell many roast beef or turkey; we sell a few, and those few are where people entered the right information." Now, in a kiosk environment, the system records that a customer ordered a turkey. Now, you're information is about what you're actually selling. And what we're looking to do is tie that information back to all the other things in the store that people buy.
CSD: Are suppliers doing enough to help the industry adapt to some of the new technological standards, such as RFID?
Hartman: RFID is more of a technological hurdle, because it's not ready for prime time for our industry yet. It's more of a technological set of issues to get resolved than it is a supplier desire to do that. The challenge we run into is when we want to do things like electronic invoice exchange, which we do with about 20 key suppliers today. When we first started promoting that concept, the real hurdle was trying to explain what was considered a technical need, which was to electronically get their information to a salesperson calling on a retailer. There was a total disconnect, because the sales guy has nothing to do with the tech department back in his company. That's unfortunate, because I think that's one pl
ace where the supplier community can do a lot better. If they had folks that their salespeople could refer to when retailers ask, they could put them in contact. Some of the bigger suppliers are starting to do that, have contact people, but quite a few don't have anybody.