JOANN Stores masters ship-from-store, pickup-in-store & curbside pickup during a pandemic

When Covid-related lockdowns began last spring, two things happened at JOANN Stores, one of the nation’s best-known retailers of fabric and craft supplies.

One was that the Hudson, Ohio-based retailer had to shut down around 400 of its 857 stores to in-store traffic. The second was that JOANN experienced a surge in online orders, driven not just by increased interest in crafting, but also home-bound consumers who pitched in to buy fabric and supplies to make much-needed PPE masks. “When half your stores are closed to traffic, the only option for the customer is to go online to place orders,” recalls Varadheesh Chennakrishnan, a supply chain veteran and the CIO and supply chain leader at JOANN. For several months, he adds, the company experienced daily online volumes that were roughly three times Black Friday—every day. That’s not a surge: It’s a tsunami.

Of course, JOANN isn’t the only retailer to have experienced a huge increase in online activity when its stores closed, or whose supply chain leader had to innovate to get all those orders out the door. But, in most instances, the surge fell back on distribution centers. What made JOANN’s story different is that before the pandemic, the retailer’s distribution centers and vendors filled less than 20% of online orders. Instead, the vast majority of JOANN’s ship-to-home e-commerce orders were fulfilled from about 105 stores located around the country; all stores offered buy-online/pick-up-in-store, or BOPIS.

But the systems in place, including a critical distributed order management system, or DOM, from IBM Sterling, didn’t then have the scale to handle the surge. What’s more, the number of stores equipped to ship from store, including equipment like handheld scanners and label printers, wasn’t sufficient to meet the new demand.

Capacity was further strained when JOANN launched its Make To Give campaign, providing support to home crafters who made needed PPE masks, a program that to date has resulted in more than 400 million masks being made with materials purchased from or donated by JOANN. What’s more, given government restrictions as well as the reluctance of some customers to shop in stores, JOANN needed to quickly roll out a curbside pickup option for customers.

“Initially, we limited the number of orders we could fill because we didn’t have enough capacity,” Chennakrishnan notes. “But customers wanted to shop. The only way to take on more demand was to add more stores capable of doing ship-from-store. And then we had to get innovative to do curbside pickup, something we weren’t already doing.”

What’s a company to do? This is the story about how a storied retailer worked with its solution providers, especially its DOM and Web shopping cart, to scale up to meet demand and then roll out a new service during a pandemic. These are capabilities that JOANN Stores expects will continue to be important long after we’re through the pandemic and provide the roadmap to in-store fulfillment going forward.

An associate scans and picks items from orders received on their handheld devices from an app developed by JOANN.

A 75-year history

The company now known as JOANN Stores was founded in 1943 when one German immigrant family invited another to sell fabric in their suburban Cleveland, Ohio, imported food store. A second store was opened in Cleveland in 1947 by Alma Zimmerman and Betty Rosskamm, daughters of the founding families. In 1951, the company was incorporated as Cleveland Fabric Shops, Inc. The name was later changed to Jo-Ann by merging two of Zimmerman’s and Rosskamm’s children’s names as the retailer expanded beyond Northeast Ohio. The chain went public in 1968, and was taken private in 2011.

From that single storefront in Cleveland, JOANN has grown into the nation’s leading fabric and craft retailer, with more than 850 stores across 49 states. The company says its goal is to help “every customer find their creative Happy Place,” serving as a convenient single stop for all of the supplies, guidance and inspiration needed to achieve any project or passion.

JOANN’s distribution network and direct-to-consumer e-commerce strategy was already in place in March 2019 when Chennakrishnan joined the fabric and crafts retailer from Ulta Beauty, where he was the senior vice president for applications and enterprise architecture.

The company had three distribution centers, one in Hudson, Ohio, its corporate headquarters, one in Alabama and a third in California. The DCs were designed for efficient carton handling to replenish stores.

When it came to e-commerce, the DCs and vendors played a supporting role, filling less than 20% of orders. “We seldom have eaches as part of our stock, unless it’s a large item that ships in its original packaging, like a sewing machine or a full bolt of fabric,” Chennakrishnan notes.

JOANN refers to these items as “slappers,” since all they have to do is slap a shipping label on them to get them out the door. Vendors play a similar role, including custom cuts of expensive fabrics that might not be available in stores.

Given the design of its distribution centers, it made sense to develop ship-from-store processes for the company’s e-commerce sales rather than retrofit its existing facilities or build new facilities.

For one, items were already stored at the unit level in the stores, eliminating the need to break cartons; for another, the e-commerce volumes were low and returns negligible. “It just made sense to fill orders from a place where inventory is already stored in the right unit of measure and is closer to the source of demand so we could get an order to the customer quickly,” he notes.

While all stores had buy-online-pickup-in-store capabilities, 105 stores were filling direct-to-consumer before Covid, including three “hub stores.” These were large format stores that filled orders on a 24/7 basis. During the day, associates picked hot orders for customers requesting expedited shipments and in-store pickup, but picking was limited so as not to interfere with shoppers. When the store closed, a dedicated team came in at night to process orders that hadn’t been completed during the day so they could go out the next morning.

Those high-volume stores could pick up to 1,000 orders a day, with the dedicated team picking 10 orders to a cart. The remaining stores processed much smaller volumes, with associates picking to a basket. In all instances, associates picked by order rather than batch picking.

Scaling for a pandemic

That was the world as it was prior to March 2020. Then came the pandemic. In short order, JOANN had to close an estimated 400 stores to foot traffic.

According to Chennakrishnan, JOANN did what it could to keep stores open. “We worked with local governments to get exemptions because we were a supplier of essential products that you needed to make PPE,” Chennakrishnan says. “And, our customers wanted to shop.”

The result was a hodgepodge of operating procedures, with some states declaring the retailer essential; some saying no; some saying yes, then no; and some permitting JOANN to operate with reduced hours and reduced capacity. With many stores closed, and consumers reluctant to venture out, online orders exploded.

An associate sorts items into bags for pickup-in-store and curbside pickup orders. The bags are then staged on a cart.

The surge was accompanied by shortages of some essential supplies, such as elastic and fabric used to make masks. “There were a lot of late-night calls to suppliers in India, Pakistan, China and other Southeast Asia countries,” Chennakrishnan recalls. “We can suggest substitutions for different types of fabric, but there are no substitutions for elastic. We had to do some air lifts, and we changed the way we sold it. Instead of packages with 12 inches of elastic, we bought rolls and sold it by the yard.”

The shortages—and the rapid increase in e-commerce orders during the pandemic shutdown—coincided with the launch of JOANN’s Make To Give campaign, with a goal of making 100 million masks to support frontline healthcare workers and those most at risk due to supply shortages. The retailer featured free tools and resources on its website for anyone interested in making masks at home. And, it was a success: To date, it has far exceeded the original goal, logging well more than 400 million masks.

JOANN’s response to the surge was a quick pivot. One of the first steps, according to Chennakrishnan, was to more than double the number of stores capable of doing ship-from-store to about 250. The number of “hub stores” was expanded from three to seven. That led to a scramble for Zebra handheld scanners and label printers.

With manufacturing in China, there were issues getting equipment. “We worked with multiple vendors to get what we needed,” Chennakrishnan recalls. There was another hunt for corrugated boxes. “Normally, we’d just order what we need online as we needed it,” he says. “But with everyone buying everything online there was a shortage of corrugated.”

What’s more, while JOANN already had processes in place for order-online, pickup-in-store; a number of states were allowing curbside pickup, even if customers weren’t allowed inside the stores. That meant quickly developing a process for this new service offering.

Addressing the stores was the analog side of the ramp up. There was also a digital side: How do your IT systems handle all the additional traffic on the front end; decide how best to allocate the orders; and then manage the pick, pack and ship process?

Chennakrishnan’s team worked closely with its solution providers to ramp up its digital capacity. Those included Salesforce, which provides the front end to the e-commerce solution, and the distributed order management system, or DOM, from IBM Sterling, which is the backbone of JOANN’s e-fulfillment solution.

“DOM is our system of record for inventory position by store and by item in something that is close to real time,” Chennakrishnan says. “When you browse online, it will automatically go to your nearby store to see if it has that product in stock. Then, you have the option to pick up in store or ship to home. If you choose ship to home, it goes to the broader network.” (See p. 24 for more on how JOANN fills orders from its stores.)

Chennakrishnan notes that because its DOM is Cloud-based rather than on-site at JOANN, IBM Sterling was able to add resources and scale up to handle the additional volume and traffic. The solution provider was able to troubleshoot performance issues “and uncovered things that were probably always there but never presented a problem because we didn’t have the volume,” he adds.

In the months following that initial surge, order volume tapered off, relatively speaking. However, volume was still two to three times the normal volume for the time of the year. “Customers prefer online shopping more than they did last year,” Chennakrishnan says. “We believe that’s the steady state and the new normal now.”

Using a special app, JOANN associates are alerted when a curbside delivery customer is in the parking lot ready for their order.

To that end, JOANN is focused on beefing up its brick-and-mortar fulfillment processes. One initiative is to get more granular information about inventory and its location in the stores to streamline picking while customers are shopping. A solution rolling out to the hub stores will show the shelf location and number of items at that location for orders that need to be picked.

“We created a homegrown solution that provides better visibility to the products within the store,” Chennakrishnan says. “Associates are now given a physical location within the store and how many items they can expect at that location. It’s like a mini-warehouse management system (WMS).” That, along with enhanced sourcing logic, is leading to better order fill rates.

The second is to refine the curbside pickup process. The initial solution was utilitarian: Signs were put up in store parking lots advertising a store phone number customers could call for their pickup. But you can only have so many telephone lines going into the store. In recent months, JOANN has rolled out a geo-positioning enabled technology for a seamless yet scalable contactless curbside pickup solution.

The system allows store personnel to see that the customer is on the way, expected time of arrival and in the parking lot waiting for a pickup. “It provides a seamless experience for the store and the customer,” Chennakrishnan notes.

Last to come is a platform for last-mile delivery, especially for delivery from the store to a local area. “We’re talking to a number of last-mile service providers and trying to understand their capabilities. But there’s also a cost of providing that service, and we don’t want to upcharge the customer,” he says. “This is something we’re working on, but is unlikely to happen in the next few months.”

No one would choose to live through a pandemic, but the changes at JOANN are paving the way the retailer will serve its customers in the future. “I truly believe our new platform and capabilities make it easier and better for customers to shop the way they want, whether that’s in the store, online or on their mobile device,” Chennakrishnan says.