Circuit City To Upgrade Point-Of-Sale Systems

IBM to replace retailer's custom systems with off-the-shelf hardware and software

Paul McDougall, Editor At Large, InformationWeek

August 13, 2004

3 Min Read

Circuit City Stores Inc. has tapped IBM to help it revamp its in-store, point-of-sale systems and explore innovative technologies such as wireless checkout devices. The electronics retailer's objective is to lower its point-of-sale costs by moving from custom systems to off-the-shelf hardware and software.

Retailer's IT staff will focus on business objectives, CIO Jones says.

"Point-of-sale isn't a competitive advantage for us," says CIO Michael Jones, who says he'd rather see his IT staffers focused more on data mining and inventory forecasting, among other things.

Circuit City, which posted a loss from continuing operations of $5.2 million in the quarter ended May 31, hasn't yet determined how much it will save by moving to the new systems, Jones says. Terms of the deal with IBM weren't disclosed.

With the help of IBM, Circuit City plans to roll out the point-of-sale systems at more than 600 stores beginning next spring with an eye to finishing the installation by February 2006. The systems will be based on IBM's SurePOS 300 systems and will run on the Linux operating system. They also will include software from retail software specialist 360Commerce Inc. Circuit City has used a custom version of 360Commerce's software since 1999 but will move to the vendor's standard offering. "We want to be less customized," Jones says.

Circuit City wants to move to the standard 360Commerce offering without losing some of the custom functions it built into the program--such as Express Pickup technology that lets online shoppers pick up merchandise at brick-and-mortar locations--so it's essentially giving the enhancements it created to 360Commerce. "It will then be available to everyone," Jones says. The point-of-sale systems will be linked to an enhanced enterprise data warehouse that IBM is building for Circuit City using DB2 database software and pSeries eServers.

IBM also will be implementing business-integration software from Yantra Corp. to let Circuit City connect its Web-commerce systems with in-store systems and business partners' order and fulfillment systems. That will let Circuit City more easily build collaborative relationships such as the one it has with Inc., which lets shoppers buy Circuit City items through a gateway on Amazon's Web site, Jones says. "Yantra provides a wonderful opportunity to expand those kinds of programs," he adds.

Such collaborative initiatives will increase in importance as more consumers use the Web to research and shop for big-ticket items such as flat-screen televisions, says Howard Tubin, an analyst at Cathay Financial. "It's another way to drive eyeballs to Circuit City products," he says.

The retailer also is evaluating IBM's wireless point-of-sale offerings to see if it can reduce customer checkout times. Under one scenario, Jones envisions staffers equipped with handhelds processing customer purchases while they are standing in line.

Circuit City has been under pressure to improve its operations to stanch market-share losses to No. 1 electronics retailer Best Buy Co., which is solidly profitable. It won't be easy, as Best Buy has been enhancing its technology infrastructure. Best Buy implemented Yantra's business-integration software in 2002 and has a number of other initiatives under way. Still, Jones is confident that Circuit City's move to standardized point-of-sale technology will position the company to be more competitive. Says Jones, "We'll be able to devote more resources to retailing, which is the business we're in."

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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