Oil companies aren’t the only ones looking to make a profit off of high petroleum prices.
Tustin’s J2 Retail Systems Inc. is looking to capitalize on them by selling cash register computers to gas station operators.
BP PLC, Royal Dutch Shell PLC, Chevron Corp.’s Texaco and other big oil companies are requiring their franchisees to become more efficient by upgrading convenience store checkouts with computers and specialized software.
It could be a tough sell: The marching orders come as gas station operators are feeling squeezed by higher gas prices. They too are paying more for the gas they sell with little room for markups.
“The big driver in the convenience store market is that oil companies put forth an end-of-life mandate that says all the equipment that is installed currently needs to upgraded to a PC with a Pentium processor and the newest software,” J2 Chief Executive Alex Nelson said.
If station owners don’t upgrade, they’ll have to pay more for gas from the oil companies, according to Nelson.
J2 Retail, a unit of Britain’s J2 Retail Systems Ltd., designs and supports touch screen computers locally. It also does sales, marketing and loads software for customers in North and South America out of its Tustin office.
The computers are made in Taiwan.
Small, touch screen PCs commonly are used at cash register checkouts in fast food chains, hotels, casinos, cruise ships and movie theaters. Servers and bartenders at restaurants use them to enter food orders and keep track of tabs.
More sophisticated models track inventory and can place orders when supplies run low.
For gas stations, J2 Retail is looking to team up with software makers that create specialized programs.
“There are dealers that will go and resell to the top gas stations in an area,” Nelson said. “We would be selling to the people who make software specifically for convenience stores.”
Some of the bigger players in that area are Israel’s Retalix Ltd., Greensboro, N.C.-based Gilbarco Inc. and Texas-based Dresser Inc.
Second Run
Nelson, 52, is on his second go-round running J2.
In 1995, Nelson and two other partners started J2’s Irvine-based predecessor, Javelin Systems Inc., which also made touch screen PCs.
He moved to Britain in 1997 to start and run the company’s European operations.
Javelin went public in 1996 and grew to a peak market value of about $300 million.
It counted some of the biggest fast food chains, including McDonald’s Corp., Taco Bell Corp. and Dunkin’ Brands Inc.’s Baskin-Robbins, as customers.
Nelson and cofounders retired in 1999, just before the company started to see trouble. It made several moves to raise cash and changed its name to Aspeon Inc., a holding company for Javelin and another line of business.
In 2001, Nelson came out of retirement to help do a management-led buyout of Javelin.
As a result of the buyout, Javelin Holdings International Ltd. and its European unit were combined to form J2 Retail Systems, with primary operations in Britain.
In 2004, Nelson moved back to the U.S. to set up a North American headquarters for J2 and staffed the small office of 15 with former Javelin workers.
By staying in Europe for a few years, “we missed the wringing out of the dot-com companies” in the U.S., Nelson said. “Our end markets are the same ones we served in 1995.”
The company has some 30,000 touch screen computers installed in the Americas, he said.
Local customers include Irvine’s Atrium Hotel, Huntington Beach’s BJ’s Restaurants Inc., Newport Beach’s Ruby’s Diner Inc. and the Fullerton School District.
The company’s U.S. operation is eyeing about $10 million in sales next year and expects revenue to grow at about 25% a year, Nelson said.
Updating
Just like its gas station customers, J2 Retail’s pitch to stores focuses on upgrading old or obsolete cash register systems.
About 60% of big retailers have very old technology, according to Nelson.
During times of slower consumer spending, upgrading can help retailers stay competitive.
“A lot of the retail industry is being hit hard, no question,” he said. “But they are also trying at this time to differentiate from their competitors. My technology isn’t dependent on new stores, because retailers aren’t building them now. It’s dependent on upgrades.”
Touch screen computers also are finding new uses far from the checkout counter.
Some are used in interactive displays and others are built into stand-alone kiosks where shoppers can search and print gift registries.
J2 Retail’s also attracted hospitals as customers, which use their products to order prescription drug stocks for different departments.
“The concept is that touch is fast,” Nelson said. “It’s menu-driven so it reduces errors and increases efficiencies.”
Nelson said he’s looking to grow J2 Retail’s U.S. sales to about $30 million a year before considering his next move, which could involve selling the company to an Asian competitor and taking a second stab at retirement.
