It's the year of the computer

By Robert C. Vereen Senior Vice President/Director Home Center Institute

R a number of years, experts have been predicting the impact of computers on retailing, and most of the industry has been waiting for realism to match prophesy.

It is our belief that the long-awaited impact computers will begin to be felt 1985.

Computers are not going to be widely used at all, by any means, but the rapid reduction in prices, coupled with the surge of new turnkey computer systems companies coming into the field, means that point of sale systems are becoming affordable for a great many retailers.

And perhaps even more important, the performance improvements being achieved by computer pioneers are breathtaking in their scope.

The hardlines business traditionally has been a slow-turn kind of business, and the industry accepted it. A hardlines retailer who achieved four turns a year considered that good-reaching the industry average. But now computerized retailers who are able to identify their fast-selling items as well as their slow-sellers are turning inventories five, six or more times a year.

Returns on overall investment and the growing use of GMROI (gross margin return on inventory investment) indicate that no retailer should be happy with what had been considered an industry norm.

Research conducted bv the Home

Center Institute and the National Retail Hardware Association into product movement foretells tremendous changes at every level of the trade.

It will start at the retail level as an increasing number of retailers find out from their own data which items sell at what rate; which don't, and which are the major sales and profit contributors to the business.

For wholesalers, this means that traditional buyrng practices by retailers will be put under the microscope. Is it smart to buy as many items in drop-shipment quantity as had been done? Are some items selling so fast that they should be always bought direct or on drop-shipment? On how many items should order-points be reduced?

For manufacturers, the implica- tions will be even more severe. Computerized retailers who know product movement at the item level will no longer blissfully accept factory-designated quantities of items in deals and assortments if those quantities do not coincide with their own sales experience. Wholesaler markets and buying shows, always evaluated on sales per-

Story at a Glance

Point of sale systems become affordable. . .close product movement tracking now pos. sible with computer. ..tremen. dous change at all levels.

formance, will play a less important role for those products that are found to be slow-selling in many stores, while they will grow in importance for the "A" or best-selling lines.

Factor packs on regular shelfgoods will be undei attack as well when retailers begin rebuying in smaller quantities pegged more to the real rate of sale. Wholesalers will find it necessary to repack more so they will demand changes in factory shipping quantities, even though some additional upcharges may be required.

The lonely voice in the wilderness of the computerized retailer of the past has become a quartet this year and will become a small chorus in 1985.

And another Mormon Tabernacle Choir in the vears to come.