Integration Drives Innovation for Haggen

iWay Unites Best-of-Breed Applications for Leading Grocery Retailer

In the retail grocery industry, where large chains and big-box stores leverage enormous purchasing power to keep prices low and selection high, how can a privately owned regional retailer survive? For Haggen, Inc. the answer lies in using information to deliver a customer-centric experience based not merely on price, but on value. You may think you've heard that line before, but ask yourself if your local grocer can provide a level of customer service on par with Haggen's loyalty program.

Picture this: You buy a candy bar at the grocery store and walk out to your car, unwrapping the treat and anticipating delight. But when you bite into the candy, you're not satisfied. You call the store's 800 number from your mobile device. Though only a few moments have passed since your purchase, the operator has a record of the transaction. She instantly credits your electronic wallet. You walk back in and buy a different candy bar using the credit in your account. That's merely one example of the many ways Haggen uses technology to offer a superior customer experience.

"Our ability to track data and retrieve it instantly is what makes our loyalty program and other services possible," says Harrison Lewis, vice president and CIO at Haggen. "To provide the level of customer service we strive for, the information has to be there. It has to be at a granular level, and it has to be current. That is why we chose iWay."

Haggen has been hailed as an innovator in the grocery business since its first store opened in 1933. It was the first store in the Northwestern U.S. to offer a self-service meat counter and was the first store in the U.S. to house an in-store Starbucks. Guests (as customers are known at Haggen) not only enjoy the highest-quality products, but also FTD Floral, Blockbuster Video, Market Street Café, and more – all in-store.

Today, with headquarters in Bellingham, Washington, Haggen has annual revenues that exceed $800 million and operates stores under the Haggen and TOP Food and Drug banners.

Lewis and his team of IT professionals united the company's information systems to create a pleasant and cohesive shopping experience.

"We invest heavily in technology to create an infrastructure that allows us to find business opportunities," Lewis says. "Our information systems enable us to listen to our guests about what services they want and need, and then respond. That's what drives our innovations."

Haggen's guests interact with touch points throughout the store and identify themselves at checkout. Haggen keeps track of transactions, with information stored in a Teradata data warehouse. Instant access to transaction data provides a level of customer care that extends far beyond an instant refund for a candy bar. For example, if a product is recalled, customers who purchased it are notified and their accounts are credited for the amount they paid. If an item goes on sale elsewhere within seven days after purchase, Haggen credits customers who purchased the item with the difference plus 1 percent and notifies them that they have the credit. Guests don't even have to ask; the credits are automatic.

"If we couldn't provide the accuracy and completeness of information to our guests, programs like these would be in jeopardy," Lewis says. "iWay is a key enabler of so many things for us. It is fundamental to the company and is driving all these programs."

Connecting a Smorgasbord of Information Systems

In addition to managing transactions, iWay connects many internal applications. In an era where soup-to-nuts ERP solutions are prevalent, Haggen instead favors a best-of-breed approach to information systems. Lewis and his team advocate choosing individual technology products that do the best job of supporting particular business processes. "We don't want one area of the business to be compromised for the sake of another," he explains.

Haggen uses Lawson for HR and payroll, Kronos for timekeeping, Retalix for merchandising, JD Edwards for financials, KSS Retail for price optimization, JDA for space planning, and also builds some of its own applications.

"We pick products that best meet our needs rather than attempting to customize a generic ERP suite and force fit our business into it," Lewis explains. "Because of this approach, integration is key."

Haggen needed a general-purpose integration solution flexible enough to combine information from all of these applications in a cohesive way. Lewis and his team chose to standardize on iWay as the integration broker that enables them to manage transactions, workflows, and business events among these systems.

For example, when Haggen needed to replicate Lawson HR and payroll data as part of a migration from an IBM AS/400 to a Microsoft Windows platform, developers used iWay to complete the project in just one month. Using iWay's pre-built integration components reduced costs by eliminating the need to write custom code. Lewis estimates it would have taken at least nine months using their previous hand-coded interfaces. iWay dramatically accelerated the development cycle with components/adapters that automatically handle all necessary formatting and error handling, enabling Haggen to configure rather then code the Lawson connection.

"With iWay, the quality is higher and the application is easier to test and maintain," Lewis says. "iWay understands both data models and knows where information needs to go and how it should be structured and formatted. If we make a change on one side, iWay knows how to make the corresponding change on the other side.

"iWay connects all of our applications, translates different types of data, and resolves dissimilarities in the data models," he continues. "We are very impressed with the richness of iWay adapters. It makes all of our best-of-breed applications appear as one big ERP system. We have complete visibility and control."

Going forward, iWay Service Manager will enable the team to create, compose, and manage reusable services rather than point-to-point connections. iWay has many ways to access data without asking the applications or modules to provide an extract. By helping Haggen leverage its diverse application investments, the integration software lays a foundation for both SOA and event-driven architecture.

Lewis is also impressed with the skills of iWay's consultants and account team. "They understand what we need and they help us leverage the product fully. Our developers are now very proficient with iWay and are using it to solve many kinds of technical problems."

Dynamic Pricing With All the Right Ingredients

TOP Food and Drug guests have access to their shopping histories through private accounts on TOP Food and Drug's Web site. They can use this information to build shopping lists based on previous purchases and advertised sales. If a customer's favorite item is discontinued, TOP Food and Drug notifies them, explains why, and suggests an alternative product.

Haggen also uses transactional data to achieve a level of price optimization that exceeds typical pricing methods. Traditionally, the grocery industry depends on rules-based pricing. Grocers begin with the cost of an item, consider the desired profit margin, and arrive at a retail price. But Haggen also considers what its guests value and uses this knowledge as a driver for price optimization.

"Using historical transaction data, we can determine the elasticity associated with price points at any given store," Lewis explains. "We always know what customers are buying and what they value, so we can focus on optimizing the price of those items to keep guests happy. We can make pricing decisions in a dynamic way, based on customer histories, our own profit margins, and what the traffic can bear at any point in any location."

The KSS Retail application gathers data from Haggen's various retail locations and transfers it to the data warehouse. iWay transforms that data and delivers it to the Retalix HQ pricing application in the format it needs for price generation and maintenance. "We don't need to create those interfaces and data transformations," Lewis says. "iWay sits in the middle and handles those connections for us."

Opening the B2B Express Lane

iWay supports critical business-to-business (B2B) processes for Haggen as well. For example, presale vendors who transmit orders and invoices interface electronically with Haggen's JD Edwards financial applications. iWay structures these EDI transactions and performs the necessary transformations. Similarly, spot-sale vendors depend on iWay to transmit orders and invoices.

"Whether we are interfacing with an external vendor or an internal application, iWay works the same," Lewis says. "Our large competitors are all using EDI. With iWay, we can connect to big vendors like American Greetings to stay competitive with the largest retail chains."

iWay not only translates the data, but also facilitates a B2B workflow. It processes both incoming and outgoing messages and knows which data goes in which fields based on standard EDI templates. This makes it easier for vendors to do business with Haggen-without burdening developers with complex integration projects to create the electronic interfaces.

Lewis gives high marks to iWay Software for its level of service and attentiveness. "They didn't just come in to sell us a product," he says. "They took time to understand where our business is going and how we can best leverage their technology. As we continue to innovate, I believe they will be right there with us."