Case Study: Family Dollar Optimizes POS System With Embedded Apps

By Amanda Ferrante

While many other retailers are struggling, business is good at Family Dollar. The 6,700 store value chain is adding stores and posting increases in the 3% range. Not resting on its laurels, the company understands that competition means constant improvement to the in-store customer experience. The check out process is one of the latest areas where the chain chose to make an impact on that experience.

In early 2008, Family Dollar’s POS devices accepted only cash, checks, PIN debit, and electronic benefits transfer (EBT) cash. To remain competitive in the retail sector, Family Dollar wanted to expand its tender types to include signature debit, credit, and government-subsidized EBT programs such as USDA Food Stamps. The legacy systems in place could not support the complexities of these programs and required an overhaul of the application architecture and technical foundation.

Until recently, Family Dollar’s 16,000 checkouts were mainly equipped with aging POS terminals running proprietary application software. The single-threaded operating system meant that only one application could run at a time, while the 640k memory limit and outdated interface requirements restricted the addition of new retail application packages. Connectivity between stores and the corporate office was limited to a one-way, daily dial-up communication of summarized transactions with some capability for messaging.

“These initiatives were focused on providing avenues for new revenue growth, increasing employee efficiency and efficacy, and improving inventory management,” says Paul Rossi, Director of Customer Services for Family Dollar. “We also wanted to provide faster customer throughput and better customer service, as well as to create scalable, secure, flexible systems to support future growth and enhancements.”

Leveraging Assets
The technical tipping point came when Family Dollar decided to implement SAP Transactionware General Merchandise (SAP GM), SAP/Triversity's client/server point-of-sale application, which integrates with DOS, Linux, and Windows XP. Due to the extensive size of the rollout, new technology had to co-exist within the current environment. With 1,500-2,000 newer DOS-based POS terminals recently purchased, ROI for the new system was a pressing issue.

The answer for Family Dollar was Windows Embedded for Point of Service, a powerful operating system built for retail that offers a small footprint, extensive USB peripheral support, and POS for .NET™ designed to connect people, information, and peripherals in a familiar and standardized way. Development of the POS device itself was led by Toshiba TEC, which was able to leverage its Windows XP Professional experience, combined with Microsoft Retail Group support, to speed development of the Windows Embedded device.

Windows Embedded for Point of Service also could be “locked down” to prevent employees from installing unauthorized applications, surfing the web or downloading suspicious files. This was critical because the POS devices not only performed a mission-critical business function, but they also captured sensitive customer information.

Within three months, the new POS terminal was integrated with key peripherals using industry standards like OPOS, Unified Point of Service (UPOS), and POS for .NET, another retailer focused feature of Windows Embedded. After six months, the new checkout devices were being tested in stores. The entire project, including enterprise integrations, took less than a year from concept to deployment.

To date, Family Dollar and Toshiba have replaced or upgraded nearly 4,500 POS terminals in the field using a rotating installation method—DOS POS terminals removed from one group of stores are re-imaged with Windows Embedded to support the next group of stores.

Improving the Front and Back Ends
The POS equipment now includes a movable POS and PC keyboard, portable data collection device and the Personal Identification Number (PIN) pad for tender types—all connected through Windows Embedded for Point of Service. Family Dollar can now accept an expanded range of tender types like food stamps and credit cards. Additionally, reducing the total number of required registers reduced support costs and increased space for merchandise in the store.

The customer experience has improved dramatically. Customers now see a full-color presentation screen on a 15-inch flat panel display. They can view the rolling receipt, as well as promotions and advertisements. Lane efficiencies have been gained by eliminating older equipment and optimizing the use of the cash register as a multitasking device.

Reductions in shrinkage were also measured and attributed to enhanced functionality within the Point of Sale system and increased presence "up front" by store associates. Hardware and maintenance costs were reduced by eliminating the need for other back office computing equipment in the stores. Employee satisfaction has also increased. Family Dollar’s manager retention level is now higher. Employees are able to stay in touch with what’s happening at headquarters, like job openings, benefits and corporate emails.

The new POS terminal can communicate with the portable data collection terminals (PDTs) used for product cycle counts, price checks, and other barcode applications. Store managers upload the data to corporate back office systems through the POS terminal, and can even make data corrections on a Store Manager Portal page.