Last updated on July 29th, 2024
Jim McCaffrey III and his son, Jim McCaffrey IV, opened their first food market in Yardley, Pennsylvania, in 1986. Today, there are six McCaffrey’s Food Markets across southeast Pennsylvania and central New Jersey.
McCaffrey’s has more than 60,000 different items on its shelves at any given time and more than 100,000 in its point-of-sale (POS) system. Additionally, the system takes in more than 1,000 new items each month. Keeping up with product taxability and government-assistance eligibility—both of which vary by state and are always changing—was becoming an expensive guessing game.
“We want to do the right thing,” said Ben Norton, who is in charge of retail technology for McCaffrey’s. “We want to make sure our customers are taxed—or not taxed—correctly. But it was really a guessing game for our small team.”
Managing tens of thousands of items that are constantly changing as well as manage changing taxability rates is difficult enough. But to manage all of that also across two states, the chances of guessing wrong are not insignificant. McCaffrey’s got hit with a fine when a state auditor discovered mistakes in their sales tax calculations.
“We decided to finetune the process,” said Norton, “and to automate it as much as possible.”
Avalara MatrixMaster offers solutions for taxability problems like McCaffrey’s. Retail businesses that need to track and apply thousands of sales tax rates based on individual SKUs can leverage the MatrixMaster database of more than 17 million codes and apply the correct rate for each product in each jurisdiction at the time of sale. In the case of McCaffrey’s, this exchange happens monthly.
“We automatically prepare a file of newly added items and submit it to Avalara’s FTP site,” said Norton. “We take the return file and update our internal database, which automatically updates our POS system. The whole process takes just a couple of days every month, and 98 percent of that time is the experts’ item-by-item review.”
McCaffrey’s customized MatrixMaster to determine each product’s eligibility for government-assistance programs such as Women Infants & Children (WIC) and Supplemental Nutrition Assistance Program (SNAP).
“Those regulations change all the time, often without notification,” said Norton. “Avalara helps us keep up with that as well.”
“MatrixMaster allows us to be fast and accurate with the staff that we have,” said Norton. “We’re a small team, and any time we can automate something, we take a task off of somebody’s plate so they can focus on more important things. Without MatrixMaster, we’d still be guessing item by item.”
Norton also appreciates the relationship he has built with his Avalara account manager. “I can contact her at any time,” he said. “For example, New Jersey changed tax codes the past two years, and she helped us identify and implement the necessary changes in advance so that we were compliant on the day the rate changes took effect.”
This combination of accuracy and efficiency has made a big difference for McCaffrey’s. “We are going through another audit right now,” said Norton, “and with Avalara we’re able to provide solid answers to every question from the auditor. No more guessing—we are absolutely more confident with Avalara.”
