Case Study #2: Regional Multi-Site Retail Store Group

Cutting costs in retail with VoIP

The retail business is one of the most intensely competitive industries there is, and smaller shops and chains in particular face intense competition from big-box stores. Staying competitive requires attention on several fronts—driving new customers, offering competitive prices, gaining favorable wholesale arrangements, and keeping overall expenses as low as possible.

On the latter front, a retail outlet has many cost centers, and expenses can become a drain on business and may keep margins slim. Moving towards a more automated back office can help improve productivity, reduce manpower and cut costs, and one big way to do this is with a modern telecommunications system.

The challenge

A regional clothing store with its flagship operation in Denver, and three additional large stores and six smaller ones, recognized the need to cut telecom costs. Long-distance fees were substantial, and telecom was becoming a major cost center and a drain on profits. Their existing, disjointed telecom environment was lacking in features and connectivity, with each location having its own system—and as a result, calls between store locations resulted in a large number of unnecessary toll charges. The store's management realized that VoIP technology would be able to do two things for them: First, it would allow them to more efficiently connect together all of their ten locations, and second, it would help them reduce their long distance fees.

The solution

We determined that the current configuration contained several inefficiencies, and toll charges between store locations could be eliminated by implementing a unified VoIP system. In this day and age, it is completely unnecessary for a multi-site operation of any type to incur long distance fees simply for making calls between their own locations.

We implemented an Avaya IP Office 500 network, with the main unit installed at the flagship Denver store. Instead of the old model of independent phone systems for each location, we extended the VoIP system with IPO slave units in each of the additional three large store locations. The six small retail outlets were also joined with the rest through a Virtual Private Network (VPN), and two IP phones were installed at each of the six small outlets.

The entire system unified all locations via an Internet connection. Value-added services that were previously unavailable were also delivered to all locations through the central IP PBX. We installed an eight-port voicemail PRO at headquarters, and in so doing we were able to create a centralized auto-attendant and voicemail service and deliver it to all locations transparently. In addition, the central IP PBX also offered other value-added features, including call recording for both inbound and outbound calls. The recording feature, though not one of the primary goals, proved to be quite valuable to the retailer by allowing for monitoring of external calls, and for use in customer service coaching.

The cost

The initial capital cost for the equipment was $47,689, which was quickly regained through monthly cost savings. The high long distance tariffs that were previously incurred on a monthly basis were almost completely eliminated. Additional savings were realized by eliminating the separate ISDN network that was being used to connect Point of Sale equipment for each location; it was now possible to combine the POS network with the telecom network. Monthly service fees after installation totaled $2,160, which provided a large monthly savings of $4,800 a month of phone and data service, and $3,600 a month in long distance fees. The retailer recognized an immediate monthly total savings of $8,400, which allowed them to completely pay for the new system after just six months.