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Solution Overview Organization Profile From two Anchorage locations, Alaska Spa sells and installs hot tubs, gazebos, and decks in a state twice as big as Texas. The store also stocks 6,400 stock-keeping units (SKUs) of outdoor furniture and spa, bath, and body accessories. Business Situation Owners Jerry and Rhonda Richie found it nearly impossible to control runaway discounting, expensive errors at the point of sale (POS), and an expensive inventory. Solution Microsoft® Business Solutions Retail Management System ties together wide-ranging company operations with tightly controlled discount schedules, fast and reliable data reporting, and error-free POS. Benefits - System paid for itself in six months - 80 percent savings in reorder time - Customized security for discounting - Constant vendor comparisons boost profits - Fast and error-free point of sale - Remote tech support Hardware - New West technologies servers, workstations, and POS terminals - Epson printers - CashBasis cash drawers - Symbol barcode scanners - ID TECH card readers - VeriFone pin pads - Cisco wireless access points - Symbol Pocket PCs Third Party Software - New West Mobile Suite 3.1 - RealVNC - Intuit Quickbooks Pro Software and Services - Microsoft Dynamics RMS - Microsoft Exchange Server 2003 - Microsoft Host Integration Server 2000 - Microsoft Office Excel 2003 - Microsoft Small Business Server 2000 - Microsoft SQL Server 2000 - Microsoft Windows 2000 Professional Vertical Industries - Hard Lines Retailing Country/Region - United States

Retail Management System Helps Spa Dealer Plug Cash Drains and Clean Up

Alaska Spa, which sells and installs hot tubs across the half-million square miles of the State of Alaska, requires tight management of its stock, pricing, and customer needs. "My priorities were inventory and point of sale control," says co-owner Jerry Richie. "Staff would over-discount, and mistakes were made at registers. Once that money is gone, it's not coming back." Then, through Microsoft partner New West Technologies, Richie found Microsoft Business Solutions Retail Management System. "It paid for itself within six months," Richie says, "by telling us what was selling, helping us move dead inventory, and exposing shrinkage. I save or make U.S.$2,000 a month at the counter alone!" Using customizable reports, Richie compares vendors' prices, targets direct mail to clients, and saves time at every turn by using the many features that come with Microsoft Retail Management System.

BUSINESS SITUATION

With two stores averaging 3,900 square feet each, and 9,000 square feet of indoor and outdoor storage at the main store, Anchorage-based Alaska Spa has room for stock, but not for error. The rapidly growing company sells and installs gazebos, pre-cut spa decks, planters, step-ups, stools, and even towel trees. The stores and Web site also carry a full range of bath and body accessories. Total sales in 2003 exceeded U.S.$3 million.

LOSING MONEY
Co-owner Jerry Richie knew, however, that money was draining away. "Besides controlling what happens at my registers, watching inventory was my top priority," he says. "By not keeping a tight watch on your stock, you lose a lot of money in a hurry."

One typical dollar drain was unauthorized discounts by eager staff. And, sometimes, a salesperson's buddy might get the ultimate discount. "I needed to tightly control sales and merchandise at the front counter so our people wouldn't give away the store," says Richie. "We allow our salespeople to discount wisely, but not foolishly. Our previous system was too lenient. We needed a way to restrict bottom-line information to just senior employees and prevent unauthorized voiding of sales."

Human error was another factor. "Under our old retail system, a customer could put something ‘on account,' even when there wasn't an account there," says Richie. "The year before we got rid of the old one, we found $50,000 in on-account sales we couldn't collect!"

POTENTIAL INCOME SLIPS AWAY
Missing potential income was another way Alaska Spa lost money—the most critical area being the customer database. "We know it costs us $280 in advertising to attract each new customer, but we had no way to plumb their sales histories to bring them back to aftermarket," Richie says. "Industry wisdom says the average hot tub needs a new cover every few years. Yet we couldn't we contact our old clients!"

Point of sale (POS) was another area in desperate need of help. "We needed rapid and reliable POS software that would process credit cards quickly and not crash," says Richie. "We didn't want customers leaving due to long waits. But the POS systems that were within our financial grasp were all junk, and I couldn't afford the ones I wanted."

When Alaska Spa decided it had to overhaul its business systems, the integrity of the solution developer was an important consideration. "When some databases crash, they make you wait days for service, then charge you to fix their bad code. I may sell spas, but I won't get soaked!"
 

When you reach the point of hiring an extra person, spend the money on software and integration instead. And you don't need to look any further than Microsoft Retail Management System.... Jerry Richie Co-owner, Alaska Spa

SOLUTION

In 1999, after a year of searching, Richie found Microsoft® Certified Business Solutions Partner New West Technologies of Portland, Oregon. "I flew there to meet them and we tried it out on-site," he says. "New West was so different from others I had spoken to. Dan's team has depth, responsibility, and fast response."

In an uncertain business environment, Richie found QuickSell able to weather any storm. "We had grown to three stores in Alaska and two in Oregon," he says, "but we downsized when the Oregon stores didn't perform as expected. We upsized, then downsized, and the system didn't complain once."

THE ADVANTAGES OF UPGRADES
When Microsoft Corporation acquired QuickSell in summer 2002, Richie says the transition was seamless. "We only noticed improvements. We licensed Microsoft® [Business Solutions] Retail Management System to optimize the path of visibility and control we were already on, and it has really helped us hit goals."

One such improvement is compatibility with external software. "Everything meshes perfectly," says Richie. "We have a Headquarters program that my bookkeeper and I use to watch both stores so we can change prices or discounts." Headquarters is the enterprise level of Microsoft Retail Management System that gives retailers chainwide oversight.

"We use Intuit QuickBooks Pro for accounting, and Microsoft Business Solutions CRM for tasks and service," Richie says. "The compatibility of Microsoft Retail Management [System] with USPS shipping software has really sped our mail-outs."

Rapid credit card transactions have been another area of improvement. "Now, you can run credit cards online with no reconciliation problems at the end of the day."
 

After all that we've done, it's never crashed, and our database is perfect through all these years, even though it's grown 20 to 30 times bigger. Jerry Richie Co-owner, Alaska Spa

BETTER SECURITY EQUALS RETAINED CASH
Security is vastly tighter, saving money and inventory confusion. "The restrictions and permissions in this program are very detailed," says Richie. "You can limit what employees see, run, report on—even what buttons they can push," Richie says. "New employees can only give standard discounts. Later, we can raise their security level and permissions."

Indiscriminate voiding of transactions is a thing of the past. "Only two people can void sales," he explains. "Others can zero something out if a customer reconsiders, but the sale and the zeroing out remain on record. Now my managers and I have the whole trail. No transaction just disappears!"

Back-office and bookkeeping tasks are easier. "We don't have to go through individual receipts, calculating things painfully, looking for individual items or transactions. It's all automatic! We find what we need—often, literally in seconds."

UNEXPECTED BENEFITS
Richie was surprised at the extra features in Microsoft Retail Management System. "We didn't realize how fast we could train eight people, its depth of reporting, and the new tools it keeps showing us," says Richie. "When I need anything, I call New West and they show me the solution in the system."

Richie continues, "Systems from New West were always stable, and now they're more so. QuickSell didn't crash, and Microsoft Retail Management System doesn't. When we need support, New West uses RealVNC and terminal services to log on remotely from 2,000 miles away to tweak the system or show us the steps. It's like they're here."

Even the POS now generates new money. "NetDisplay lets us show the customer upsells, discounts, and promotions," says Richie. NetDisplay is a feature of Microsoft Retail Management System that allows a retailer to set up a separate customer-facing screen to show the customary items and prices, but also text and graphics selections from the database or a chosen Web site. "The lady I just served came in for spa supplies. But NetDisplay showed her bath and body items on special, so she spent another $40."
 

The payback on Microsoft Retail Management System is so quick, even the smallest retailer can afford it because of the power tools it gives them. Jerry Richie Co-owner, Alaska Spa

BENEFITS

"The payback on Microsoft Retail Management System is so quick, even the smallest retailer can afford it because of the power tools it gives them," Richie says. "One retailer I know installed a $65,000 system, yet mine runs reports he can't—unless he pays another $15,000 for modules and special services. We paid way less."

FAST, ACCURATE REPORTS
Because of the distances involved, and the size of hot tubs, logistics influence many sales. "We might fly in, or boat in, an entire installation," says Richie, "so accuracy in our ordering, vendor price comparisons, purchasing, and shipping costs are crucial," says Richie. "Materials and transportation costs are so huge, we could lose our shirt on one bad number. Knowing what's in stock, how long getting it will take, and how difficult the delivery and installation will be has helped us retain money and save days. And because we are so accurate about inventory, reordering time is down 80 percent."

Vendor comparisons save significantly in restocking expenses. "We constantly shop for the best prices on bath and body products among 10 to 15 vendors," says Richie. When you sell a few thousand, every dime adds up. With Microsoft Retail Management System, you can even compare the vendors' freight rates, or employee productivity!"

CUSTOMER DATABASE INCREASES SALES
"Microsoft Retail Management System tells us our most—and least—active customers," Richie explains, "so we can analyze why each one falls into that category. A recent mailing brought back a lot of inactive customers." Richie has also found great use for detailed purchasing and service histories of those customers. "Customer information goes from the POS to [Microsoft Office] Excel [2003] to Microsoft CRM. Then we import back what we need. It's easy to see which service jobs are late."

Checkout capabilities have enhanced customer service. "The POS is so much faster that, without slowing lines, you quietly build your database of who buys what, so we can better service their needs," says Richie.
 

Microsoft gives you the best price for the most tools that you can find. And they price them for the small business. If it's not Microsoft, it doesn't live on our system. Jerry Richie Co-owner, Alaska Spa

A BRIGHT FUTURE

Alaska Spa couldn't be happier with Microsoft Business Solutions Retail Management System. "After all that we've done," says Richie, "it's never crashed, and our database is perfect through all these years, even though it's grown 20 to 30 times bigger. Microsoft gives you the best price for the most tools that you can find. And they price them for the small business. If it's not Microsoft, it doesn't live on our system."

In 2005, Richie plans to open a bath-and-body-products shop in a mall and expand the online side of the business. "Web sales have tripled every month for eight months," says Richie. "Our 10 Web sales a day should be two or three times that in a year," he says.

When asked what advice he would give those looking for a retail management system, Richie is decisive. "When you reach the point of hiring an extra person, spend the money on software and integration instead. And you don't need to look any further than Microsoft Retail Management System unless you have time to waste.

"You couldn't give me a different retail program," Richie says. "Meet your Microsoft partner, check references, ask all your questions, and be sure they're willing to answer them."

"These days, I have a lot more time to spend with my family and go salmon and trout fishing in the summer," he smiles. "I use Microsoft to buy myself some time off."