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How IT Shapes 'Store of the Future' for Retailer Family Dollar

Family Dollar Stores needed to expand its stores, products and more. Here's how business and IT together crafted a vision of the future and began a big IT revamp, including a lean, new way to send business intelligence to store managers.

By Laurianne McLaughlin

November 14, 2007 — CIO — "Everybody knows retail IT is lean," says Josh Jewett, CIO of Family Dollar Stores, a discount retail chain of more than 6,400 stores in 44 states, competing wih the likes of Dollar Tree and Walgreens.

Indeed. Yet in this competitive business with historically tight margins, Family Dollar's business and IT sides have come together to do a major revamp of the company's IT. This includes a portal project that delivers daily business intelligence (BI) data—including sales trends—to store managers using a lean communications pipe for data (64Kbps frame relay lines). Those store managers used to wait for paper reports via snail mail. Also on the revamp menu: Replacement of the point-of-sale system—the sacred cow that retail industry IT departments rarely advocate touching.

What's the secret to making an IT overhaul on this scale work? Alignment.

The changes began when IT and the business side crafted a vision of the company's "Store of the Future" and then designed the technology framework that would be necessary to support it. So far, IT's keys to successful execution have been tight partnerships with the business, strong executive support, a flexible consulting partner and a commitment to learning new IT skills as you go along, Jewett says.

Keep in mind, Family Dollar implementing a portal project isn’t revolutionary, says Paula Rosenblum, an analyst and managing partner with Retail Systems Research, noting that in discount retail segments like party supplies, where she worked, business intelligence portals were common seven years ago.

A Common Headache for Retailers

To be fair, no one company in Family Dollar's market segment stands out for being an IT guru, Rosenblum says, with the possible exception of Big Lots, which has done some innovative work with initial allocation of merchandise to stores (getting the right product to the right store in the first place, to avoid costly store-to-store product transfers that aren’t selling well in a particular locale), she says.

But what's intriguing about Family Dollar and its discount store peers is the stunning volume of data with which they grapple, she says. "These guys are mashing up some serious amounts of data," Rosenblum says, due to the sheer number of product SKUs in the stores. And due to the commodity nature of the products, "You need the ability to make intelligence out of it pretty quickly. You don't want to wait and see if a product will do better tomorrow."

 

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