Susser's Tech Successes
Stripes chain sees improvements in communication, labor, store shortages
CORPUS CHRISTI, Texas -- Two years of technology upgrades have given Susser Holdings Corp., dba Stripes Convenience Stores, plenty to crow about in terms of labor, communication and merchandising improvements. And it's not done yet, with several more projects still in the works.
"We are continuing to look at new ways to improve speed of service, and we have several technology projects under way to help on this front," Steve DeSutter, president and CEO of the company's retail division, said on a recent earnings call with analysts.
The first of such efforts, begun in 2011, entails improving the chain's store communications network.
"Expected to be completed in the first quarter of this year, our new network will allow us to dramatically improve communications uptime, especially for our debit and credit-card devices in the stores." DeSutter said. "We've already seen an improvement and are now achieving run rates at or better than 99.9% in the converted stores."
Among the improvements to reach that number: "We've tried to move from anything in the ground to everything up in the air. So we've converted from DSL and cable modems technologies to satellite with mobile phone backups to improve reliability."
Other initiatives include a major upgrade to the company's payroll and human-resource systems using applications from PeopleSoft.
"We also continue to refine our labor scheduling processes and technology tools to help us achieve greater productivity and at the same time, improve customer service, especially at peak sales periods," DeSutter said.
These efforts come on top of two years of IT implementations that focused on labor scheduling.
Since early 2010, "we were able to reduce our labor ratio to merchandise sales by over 50 basis points by the end of 2010," DeSutter said. "In 2011, we were able to take another 40 basis points out of the labor line to a ratio of 18.2% for the year."
Admitting the chain is running pretty lean, DeSutter said he still would like to see more improvement. "We've gotten really efficient," he said, "but we think there's a little bit more there to pick. … Because labor is such a big component of our overall operating expense, these improvements make a significant contribution to our profitability."
More colorfully, CEO Sam Susser added, "We had a lot of low-hanging fruit, and we picked baskets of it over the last three years. We hope to get a little more this year, but we're running very efficiently."
Another achievement for the chain was in store shortages.
"As a percentage of merchandise sales, shortages improved by over 20 basis points from 2010," DeSutter reported. "This is mainly the result of our investment in technology and is the fourth consecutive year that we've improved the shortage ratio."
But the execs admit there's more work to be done on that end.
"I'm very interested in trying to figure out ways to measure and better manage out-of-stocks in the stores: Why a certain product may not be selling, whether it's an out-of-stock or maintenance issues. We don't quite have to code cracked on that one yet, but I think there's a real opportunity for us to add to sales in the coming years if we can move to more data and exception management."
Finally, "store maintenance expense is another area where we've made some traction," he said. "Maintenance expense had crept up in 2010 and the first part of 2011. But with additional management focus and continued development of our systems, we were able to reduce maintenance as a percentage of merchandise sales by 40 basis points for 2011 compared to the prior year."
Corpus Christi, Texas-based Susser Holdings Corp. is a third-generation, family-led business with approximately 1,100 company-operated or contracted locations. The company operates more than 540 c-stores in Texas, New Mexico and Oklahoma under the Stripes banner.