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Closeout Chain's Collaborative Efforts Go Beyond The Web

In the closeout business, knowing how to keep a particular type of merchandise from a specific supplier on the shelves isn't a high priority.
InformationWeek 500 - retail: General MerchandisingIn the closeout business, or what Steven Bromet calls the "garage sale of the retail industry," knowing how to keep a particular type of merchandise from a specific supplier on the shelves isn't a high priority.

"If you're shopping in one of the marts," says Bromet, senior VP and CIO of Big Lots Inc., referring to competitors Wal-Mart Stores Inc. and Kmart Corp., "they're going to have the same thing in stores day in and day out, 52 weeks a year. Because we're in the closeout business, you never know what we're going to have."

The nature of his business-selling leftovers and mistakes of everything from living-room furniture to cans of potato chips-means the company has on-again, off-again relationships with a lot of suppliers, thus limiting Bromet's ability to infuse the Internet into those relationships. He deals with thousands of vendors a year, but only for two or three transactions for most of them. American Greetings Corp. and Coca-Cola Inc. are exceptions, and with them Big Lots depends on electronic data interchange.

But for most collaborative relationships, Bromet relies on an electronic allocation and merchandising system-developed in-house-that's flexible enough to accommodate ever-changing vendor demands. For example, some vendors may not want their products advertised as being on sale at Big Lots-or they may not want their own employees to see them available at a lower price in a given area, so they'll ask that the products not be sold there. "The systems have to be nimble enough," he says. "Our systems allow that."

That takes close communication among Big Lots' 1,300 stores. To do that, the company has embarked on it biggest IT project this year, expected to be completed by mid-October: installing a frame relay network-a high-speed packet-switching protocol used in wide area networks-between its Columbus, Ohio, headquarters and its stores that replaces a dial-up connection. The new network will mean faster credit-card transactions by 10 seconds, Lotus Notes for all stores, and the ability to conduct basket analysis of sales data.

During the next two years, Big Lots will install two kiosks in each of its stores, beginning early next year with back-office units for employees to enroll in human-resources benefits programs, check their 401(k) accounts, and receive job training. In about 12 months, Bromet expects to test customer kiosks that would let shoppers buy items not in the store, things such as high-end tools and furniture. "Because we're a closeout company, our merchandise mix is always changing," he says, "but we do know a little in advance what's coming, so we can use the kiosk to tell customers what will be in next week's truck."

At the kiosk, customers can also access for E-mail and advertising circulars and search for different merchandise or even job opportunities.

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