Broad appeal
A wide range of options are available for those companies looking to upgrade their level of store connectivity

by Mark Ward Sr

Though high-speed credit-card processing is often touted as the “killer application” for broadband connectivity, both independent and integrated fuel retailers cite a variety of reasons for upgrading their networks.

Walters-Dimmick Petroleum, which operates 55 convenience-store locations and supplies 45 dealers from its headquarters in Marshall, Mich., wanted to satisfy store managers fed up with taking 20 minutes to download their daily pricebooks. Lassus Brothers Oil of Fort Wayne, Ind., sought a secure communication system in the event of an emergency, a key concern for a company that operates a tank farm and truck fleet to supply its 37 retail locations and 30 dealers. And Maverik Inc., a Utah-based operator of 175 fuel and c-store sites, coveted the ability to monitor and change gasoline prices on an hourly basis.

Integrated oil companies also have their reasons for upgrading to broadband. Sinclair Oil Corporation, Salt Lake City, only operates 2 percent of its 2,500 branded retail locations, while the other 98 percent are run by a broad mix of distributors in 22 states. And San Antonio-based Valero Energy, which entered retailing four years ago after acquiring another large chain, now faces the challenge of dealing with a mixed bag of inherited technologies at 1,000 company-operated stores and throughout a dealer network of 3,000 locations in 34 states. Both companies sought a system able to provide a standard networking solution and yet be flexible enough to meet the varied needs of individual markets.

Upgraded Downloads
As a Shell jobber, said Walters-Dimmick retail systems administrator Dale Williams, “We already had a satellite system from Shell for high-speed credit-card transactions.” But with its chain of Shell Marts widely dispersed through parts of three Midwestern states, he explained, “using a dial-up connection between our central office and our stores was getting to be really frustrating for managers.”

Since dial-up access shared a phone line with other devices, perhaps a fax machine and a secondary backup for credit-card transactions, “stores managers couldn’t surf the Internet,” Williams recalls. “So a lot of our managers didn’t check their e-mail on a regular basis and might miss critical information from the central office.” Similarly, pricebooks took 15 or 20 minutes to download, not only frustrating store managers but also losing some data in the process.

With a chain of 55 c-stores, including 22 quick-serve restaurants and 17 car washes, missed information was a problem Walters-Dimmick believed it could no longer afford.

As the company explored its options for a broadband connection, said Williams, “We heard rumors that Shell was considering a new networking solution. But since we didn’t know what Shell might eventually do, we decided that using the same system as Shell was not a priority for us.” After receiving several proposals the company settled on a local vendor, C-store Connect, which offered a solution from New Edge Networks of Vancouver, Wash.

“C-store Connect monitors all connections for us, as well as pushes down anti-virus updates and spam-control software through a checkpoint firewall installed at each location,” he explained. Since Walters-Dimmick outlets serve middle and western Michigan, northwest Ohio and northeast Indiana, “DSL isn’t available at all our stores,” he noted. “So we have some sites with cable and some with wireless connections, as well as DSL, all integrated for us by our vendor.”

Hiring an outside vendor to manage its network “means the solution costs a little more,” Williams reported, “but we also got the stability of negotiating an across-the-board price for all of our locations, no matter what type of connection each store may have.”

He considered alternate solutions whereby his company’s data would be “aggregated” and first routed through a vendor’s own private network. Such systems can be helpful, he believed, for running credit-card transactions since the network provider is certified to format data according to credit firms’ specifications. But Walters-Dimmick already had a satellite-based transaction solution from Shell.
Since stores started switching to broadband in June 2005, managers can download pricebooks in 15 to 20 seconds and check e-mail without tying up phone lines. Executives can quickly download daily sales reports from each site, as POS devices are connected to back-office computers, which in turn are connected by broadband to company headquarters through a virtual private network. And Walters-Dimmick is investigating other applications, such as Internet faxing, check verification, customer loyalty programs and switching its ATMs from dial-up to DSL connections.

“The expense of converting to broadband requires us to find ways of cost-justifying the system, which is all about eliminating phone lines,” Williams explained. “But we also get value that can’t be quantified, such as making our store managers better informed and less frustrated. So when we upgraded to broadband last year, we did it mainly to improve store communication. But now, as we find new applications, everybody likes it.”

Secure Communications
Three years ago, Lassus Brothers Oil had just implemented an e-mail network for its 37 company stores in metro Fort Wayne and throughout small towns in Indiana and northwest Ohio. The improvement in store communication then got the company thinking about communicating in an emergency. “We didn’t want our whole business to go down if our central office was ever knocked out,” explained Gregory Smith, director of management information systems.

Because our stores are so spread out,” Smith added, “everybody said it would be expensive and require the purchase of satellite equipment.” Yet the desire to have a secure communication system in the event of an emergency continued to be a priority, so that by 2004 Lassus Brothers settled on a managed network provided through Abierto Networks LLC of Exeter, N.H.

Having an integrated, rather than aggregated, solution appealed to Smith. The latter, he explained, “puts all our data in one central site” and thus foregoes the redundancy needed to stay in business during an emergency. Instead, the integrated solution employs the best connections available at each store site — whether DSL, ADSL or wireless — and blends them into a network. Lassus Brothers then uses mirrored servers to provide the desired redundancy.

Smith acknowledged his company upgraded to broadband primarily due to its disaster concerns “and now that we’ve got it installed, we’re in the process of cost-justifying it.” About two-thirds of its locations sell BP fuel, while the remainder sell Lassus Brothers’ own “Handy Dandy” private brand. The chain is in transition today, with about half of its stores up for sale. At present, its units range from kiosks to a 5,000-square-foot mega-store. Over time the company and its “Handy Dandy Food Stores” are committed to going in the direction of larger facilities.

Before switching to broadband communication, stores typically maintained six to eight phone lines. “Now, every phone line we eliminate helps us cost-justify the system,” Smith said.

Transactions using Lassus Brothers’ proprietary consumer and fleet-fueling card now go over the Abierto network, as does fuel monitoring, ATM transactions, video surveillance, and a company Intranet used to transmit e-mails, pricebooks and more.
“We save a lot of money by eliminating paper and delivery charges for sending out everything from employee insurance information to staff training materials,” Smith affirmed.

For other retailers who are contemplating an upgrade to broadband, he has some simple advice: “If you haven’t done broadband before, you need to learn about it so that you know what you’re doing — and then be prepared to spend more than you thought.”

Enterprise-Wide Solution
At Maverik Inc., CIO Lynn Call said, “I’ve been pursuing a wide area network for the last four years. But since many of our stores are rural, terrestrial lines would be cost-prohibitive. Also, with any solution we decided on, I wanted to roll it out enterprise-wide. But we have only a small IT staff.”

Call’s company operates 175 gasoline and c-store sites with metro locations in Salt Lake City (its home base) and Boise, Idaho, plus rural sites across Arizona, Colorado, Idaho, Montana, Utah and Wyoming. All Maverik Country Stores sell the private Maverik fuel brand and the chain also provides a proprietary bakery, deli and sandwich foodservice program. Stores range in size from 1,600 square feet and four MPDs, up to 4,500 square feet and 12 MPDs.

The company average is about 3,500 square feet. So the size and scope of Maverik’s retail activity demanded an improved communication network. “We wanted to be able to change gasoline prices, send out pricebooks and monitor our tanks, as well as process credit cards at high speed,” said Call.

“Two years ago, we were too small for the major satellite companies,” Call noted. But then Hughes Network Systems of Germantown, Md., providers of the DIRECWAY broadband satellite service, launched a local reseller program. Thus Maverik, in May 2005, signed with packetPointe Communications of Salt Lake City to implement the Hughes wide area network solution.

Retail fuel prices, which Maverik previously could monitor only once a day, can now be polled once an hour over the network. Faster responses mean fewer sales dollars are lost when prices increase and fewer customers lost when prices decrease. Tank inventories can also be checked hourly, so that Maverik can utilize its central dispatching capabilities to ensure timely deliveries of needed fuel supplies. A gift-card program was introduced via the network in time for the 2005 holiday season, and a check-verification program has been implemented.

“We’re also replacing many of our client-based software systems at each store and porting them over to our company Intranet,” continued Call, “which will allow us to get data faster and manage the software from a central point. The satellite system lets us use our company Intranet as our primary means of collecting and distributing data, which is a huge benefit to us.”

Converting from dial-up to broadband has also boosted the speed of credit-card authorizations. Transactions that formerly took 18 to 24 seconds now require only four or five seconds, which is more convenient for customers and enhances Maverik’s reputation as a preferred fuel retailer. “We’ve seen an increase in traffic,” reported Call, “and we’re also saving between $300,000 and $400,000 a year on credit fees” by cutting out monthly toll charges associated with dial-up credit-card processing.

Standardized Flexibility
For Sinclair Oil, finding the right broadband technology was a process of trial and error. “About three years ago we started with an IP (Internet protocol) satellite solution, but it didn’t meet our needs,” explained Russell Gibson, manager of Sinclair’s marketing, technical services and credit-card department. “We saw limitations in the satellite system we were using, since it tended to clog up and get really slow when everyone was trying to download data at the end of the day. Also, satellite repairs were more than we expected.”

Gibson tried different solutions, but his search for an answer was slowed “because vendor companies would get bought out or go out of business.” He was also challenged by the fact that, since 98 percent of Sinclair’s 2,500 branded outlets are not company-owned, “all of our distributors wanted something different to come through the broadband pipe, from video surveillance to Internet cafes.” Satellite technology carried the additional drawback of requiring about a $5,500 investment per store in receiving equipment, which Sinclair purchases and then leases to stations.

In 2004, Gibson decided to try a technology from Datawire, an Atlanta-based network provider for the petroleum industry and other retail sectors. Sinclair distributors could connect their various devices — even those not built to accept Internet protocols — into a Datawire product called MicroNode, providing instant “plug-and-play” conversion to broadband. Card transactions and store data are then centrally routed through Datawire’s secure private network.

About 10 percent of Sinclair outlets have so far adopted the Datawire solution “and many others are now converting,” Gibson reported, while about 25 percent still have satellite.

Gibson runs a help desk for Sinclair distributors and station managers. His office receives about a half-dozen calls per day, and up to 100 when it snows, regarding satellite equipment problems. Some 10 percent of those calls require a technician to be dispatched — Sinclair is active in 22 states but most dominant in 12 — for onsite repairs. By contrast, he reported only a single MicroNode failure in the past two years, “and that was due to a direct lightning strike!” The Datawire solution also eliminates an average satellite cost of $75 per month, per store, and boosts transaction speeds by about two seconds, he said.

“Broadband networking also has upstream and midstream applications for Sinclair,” Gibson continued, as the company benefits from high-speed communication at its three refineries and for its transportation services and wholesale operations. “The technology can let us monitor fuel tanks and make just-in-time deliveries to our locations.”

Setting a Standard
Valero Energy faced a similar problem, needing a broadband solution that could work across a branded wholesale network of some 3,000 sites. But, unlike Sinclair, the company opted for satellite connectivity.

“Back in 2002 when we entered the wholesale and retail business on a large scale,” explained Ken Applegate, vice president of wholesale marketing, “the wholesale network didn’t have any broadband.”

Having acquired the former Ultramar Diamond Shamrock chain, whose wholesale locations were largely in need of modernization, “we had to rationalize our operation and decide on the standards, including equipment standards, for our sites,” he said.
Valero looked at its competitors’ standards, then took into account the unique needs of its own operations. “We had urban sites, but we also had a lot of rural sites,” Applegate pointed out, “and we felt it was essential that, regardless of location, all of our sites needed the speed of broadband for pump transactions.”

Yet commercial-quality DSL was not available at all Valero locations, especially those in rural markets. Thus Valero turned to satellite connectivity. The company adopted as its standard the satellite equipment and services of Spacenet, a network provider based in McLean, Va.

Valero’s store standards “have been in place for about three years,” Applegate reported. As such, the company has weeded out “perhaps 500 to 600 stores that didn’t meet our standards, though we’ve added a lot more locations than that,” he noted. With technology standards in place for the past year, Valero is focused on implementing the satellite system network-wide. By July, all premier-branded Valero sites will be converted to the Spacenet platform.

“We’ve got to get all of our wholesale network on the satellite, before we move into other applications, like pushing data out to the stores, such as training programs and POS software,” Applegate believed. “But our job is to serve our distributors. So it’s the applications they want which will drive the applications we’ll implement.”