Bonfare Markets is undergoing a quiet revolution, as its franchised convenience stores make the transition from manual recordkeeping to point-of-sale systems and inventory management programs.

The Milpitas, Calif.-based company has 30 stores, all but two of which are franchised. Ten of those stores have installed a new management technology system called XProtean, which was designed to meet the specific needs of small-format retailers like convenience stores, fast-food restaurants and mom-and-pop grocery stores.

“We are now able to control inventory and we’re no longer getting mixed pricing from different clerks because everything is scanned,” says Danny Arcayena, regional manager for Bonfare Markets and a franchisee for 11 years.

“Before we installed the system, some vendors offered scan-back sale pricing but we couldn’t get those rebates because we weren’t scanning. And we’ve now got automatic controls on purchase behavior for alcohol and tobacco. The associates get a prompt on the screen reminding them to check IDs.”

When Jag Kapoor went looking for a system that would be appropriate for the hundreds of convenience and grocery stores he operated in California (including Bonfare Markets, of which he continues to be a minority owner), he learned that the existing options were geared toward larger retail operators that were beyond the economic reach of most small-format stores.

Kapoor created the XProtean system for his own stores, but quickly grasped the system’s potential to make millions of small retailers more efficient and more profitable.

One store at a time
XProtean is now an independent company. “When we want to sell to one of Jag’s stores, we are selling to them as an independent client,” says Vikas Jain, executive vice president of business development and corporate marketing for XProtean, which also is based in Milpitas. “We have to convince them one at a time that we are good for their business.”

XProtean provides small-format stores with POS systems, inventory management, payment processing, merchandise management, loyalty programs, and marketing and promotional programs, and it’s positioned to be affordable and easy to use.

The total cost of ownership for the XProtean system is about half of those geared toward larger retail operators, Jain says, adding that the company doesn’t charge a lot of additional fees. And that typical cost may be further reduced if the retailer already has some of the hardware required by the new system.

“Right off the bat, we have anecdotal evidence that XProtean brings an improvement of about 5 to 10 percent in gross margins,” Jain says. But there are other components that are not being captured in those improved margins. The training time for the new system is just a couple of hours, and in a small business environment that’s important because of employee turnover.

“I don’t think anyone is serving the small business guy from this perspective,” he continues. “We have competitors who rarely talk to anyone with less than 100 stores, and there are others offering systems for small shops that don’t offer the same functionality we do.”

At the moment, XProtean is exclusively focused on the U.S. market, but the company has plans to move into countries like Russia, India, Brazil and South Africa in the next few years.

At Bonfare Markets, meanwhile, Arcayena has high expectations: he believes the XProtean system “is really going to help us grow our business, profit-wise. It will also help us control our margins and inventory, and give us a sense of where we can grow in individual departments and in stores.”