How do you move a drug store chain with more than 400 franchised locations into the future of retail?
That was the question the Longueuil, Que.-based The Jean Coutu Group (PJC) Inc. was forced to contemplate. The drug store chain has more than 400 stores in Quebec, New Brunswick and Ontario. All of these operations are franchised, which makes them unique compared to other well-known pharmacy shops in Canada.
The issue at hand for Jean Coutu locations is how do they earn the most sales dollars per square-foot based on high volume prescriptions and refills, says Alain Boudreault, vice president and chief information officer of Jean Coutu.
“The relationship we have with the franchises is very tight so the technology environment in the stores will be standardized as if we were working as a corporate store network. But, we are dealing with some real entrepreneurs in each store and they have good opinions, but the operation will be standard,” Boudreault said.
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Another factor that is forcing Boudreault hand is the 24 year-old legacy application that currently runs Jean Coutu’s POS and back office. The old system was customizable, but as the company added on to the system it became way too complex to maintain.
This legacy technology also prevents Jean Coutu from scaling upwards. “This system makes it difficult to introduce new mobile and multi-channel technology. It became the main driver to start looking for a new solution.”
And, that new solution is Microsoft Dynamics for Retail. Jean Coutu selected Dynamics to run its entire retail operations, from its headquarters to point-of-sale (POS) devices.
Dynamics is to be deployed, in phases, to more than 400 stores, 3,000 POS systems and 11,500 devices. Boudreault told CDN that the solution provider UXC Eclipse of Calgary and New York will start with two pilot stores and then ramp up the others in about 24 months. This project will impact a total of 19,000 employees at Jean Coutu.
Dave Weiner, the North American CEO of UXC Eclipse, said the biggest difference Jean Coutu will get with Dynamics is that it will enable them to use multi-channel.
Weiner explains multi-channel or omni-channel as it’s known in the U.S. as a single system and database master that can connect all the channels for retailers such as the cash register, mobile POS, call centre, e-commerce and apps. All those channels will be fed into one database.
With multi-channel, a retailer will have the ability to view a single system so when a price gets changed it can happen automatically online and in-store.
“The legacy system overhaul was an incredible maturing process for the company. Jean Coutu has an impressive internal IT staff that was able to maintain that system for so many years. They are now looking to modernize their retail environment to a single platform that will allow them to easily customize and configure,” Weiner said.
Jean Coutu customers can now use mobile coupons for example. This, Boudreault, said was impossible to implement in stores before. As for the employees, training becomes much faster for cashiers as well as those workers in the back office.
In terms of return on investment, Boudreault said each franchise owner will now have accurate comprehensive tools for managing their stories. It will also limit the number of reports they have to do and get better in-store analysis that are graphical.
“In retail you have to always look at your labour dollars per sales dollars ratio. That is how you know you are managing labour costs well. The main expense is cost of goods sold and then it’s labour. So workforce management from Dynamics will be very important. Now franchisers have an idea of their costs,” he added.
According to Weiner, Dynamics enables retailers to have reporting across the entire business. “They are going to know what is selling and when,” he said.
UXC’s revenue model is predominantly based on professional services. Weiner says that the company’s tag line is “intelligent solutions – old fashion service.” The company has a team of retail experts as consultants who bill out to the customer. The solution provider does make some revenue from the sale of the software, but Weiner said it’s a small part of the model.