Off the Grid
With more than 7,200 stores in 45 states, one would think that Family Dollar had already encountered just about any obstacle that could occur when opening new locations. But though the company could lease, build out and stock a 7,000-sq.-ft. store quickly, fulfilling technological needs could be difficult: Because many locations are in remote areas, connecting the stores to a centralized location was challenging.
Those difficulties translated into expensive solutions, like copper-based frame relay circuits to connect the POS system and other functions of the wireless area network (WAN). It also meant waiting on the local telecom to provide the technology to the store, which could take months.
It also meant difficult decisions. Family Dollar could choose to “open the store with full functionality, or ... with only a subset of functionality,” says John Schoonover, the Charlotte, N.C.-based discounter’s network engineering manager.
Family Dollar began exploring wireless options; at the same time, Cisco was developing a wireless interface card to work with its Integrated Service Routers (ISR). The ISRs, already deployed in Family Dollar stores, provided flexibility in terms of modules that could be used, like video or Wi-Fi services for shoppers.
During the beta testing phase, Family Dollar was able to use the WAN to connect to its centralized data system via cellular technology — a cheaper and quicker solution than frame relay. It also has provided more site selection flexibility, Schoonover says.
New expectations from customers
Family Dollar had its own challenges related to technology demands, especially with its aggressive growth plans and high-volume/small-ticket transactions. But all retailers face a changing landscape when it comes to meeting consumer expectations, says Kathy Kyllonen, Cisco’s senior executive director of business transformation.
“Consumers today expect the same shopping experience and access to products, information and expertise whether they are in the store, online or on their smart device,” Kyllonen says. “The retailers we work with are responding to these consumer demands by providing wireless access for their shoppers, mobile applications for their guests and employees [and] interactive video and signage, among other things.”
All of those demands are “putting stress on the amount of bandwidth required,” Kyllonen says, comparing the average retail modem speed (1.5 megabytes per second) — with that of a typical home user, which is four times faster on average. “Retailers are very challenged with providing more at a lower cost.”
Tapping into the cellular network allowed Family Dollar to connect its stores to a central location through a local provider’s 3G or 4G wireless network— a significantly less expensive alternative than the T1 line provided by the frame relay circuit.
“Reliable and cost-effective WAN connectivity is just one aspect of what the retailer is trying to solve,” Kyllonen says. “They’re trying to analyze what the consumers are expecting today and how the retailer can leverage technology to provide the rich experience. Technology isn’t going away ... it’s accelerating into merchandising, displays and other environments.”
The need for speed
Other retailers, including seasonal pop-up stores, also need rapid deployment, Kyllonen says. “If you continue down the traditional path, by the time the season is over, you might not have all the application functionality needed,” she says. “This also allows a store to react to the market, to implement business applications within days or weeks vs. months. It’s a huge competitive advantage.”
Kyllonen also mentions a grocer that is using Cisco’s Lean Retail architecture in 2,000 locations. “They deployed it to centralize the store applications, collaboration and video services,” she says. “They use frame relay as their primary network connectivity and 3G/4G as a backup.
“Retailers always are concerned about what happens if the network goes down,” Kyllonen says. “Is the data secure? ... [the grocer has] two paths into the store so that they have redundant network connections, as well as data security that is compliant with the PCI requirements. It reduces the operational costs and complexity at the store level and improves the speed of new application deployments that are needed in the store.”
Another specialty retailer is using what Cisco terms “Store in a Box” to provide Wi-Fi to customers, manage digital signage and use video surveillance in high-value departments. “Their goal was to ... improve the shopper experience while at the same time reducing overall operational costs,” Kyllonen says. “It is centrally managed so they can do this across 800 stores very quickly and efficiently.”
Not a cure-all
Tapping into the 3G/4G networks is not a perfect solution. “Cellular technology is ‘best effort,’” Schoonover says. “As a result, we can’t enjoy service-level agreements similar to what we do with other WAN technologies. That being said, we have greater flexibility in site selection and technology selection. We also have a robust backup solution in cellular in certain sites.”
What cellular service has yet to provide is guaranteed bandwidth. If a high volume of customers are using smartphones in the area, the bandwidth may become taxed. That’s why in some cases, Family Dollar uses the cell service as a backup; in those instances, the wireless network can transmit mission-critical data while the wired network is down — and distinguish which data needs to be sent.
“In addition to meeting the grand opening dates with cellular, we leverage the technology in situations where there is a chronic provider infrastructure issue that affects the store’s primary, non-cellular WAN,” Schoonover says.
Family Dollar has some of its stores on a cellular plan out of necessity and others because the local cellular networks have become reliable enough to convert. It brings a tremendous cost savings; in some cases, the frame relay circuits are leased for as much as $400 monthly per location. Some of the stores may be grouped into a single cell plan, providing additional savings. Because the cell-based WAN does not require any wiring inside the stores, it also has provided a better way to manage the technology. Any issues with the connection are the responsibility of the cell service provider, not the company’s technicians.
“The smart mobile device has changed the landscape in retail stores for the foreseeable future,” Kyllonen says. “Retailers are scrambling to respond through technology to get the customer in the store, increase loyalty and convert shoppers into buyers.”