Most chains see technology as a key part of any "store of the future" scenario, and indeed invest substantial sums on the latest systems for point-of-sale, wireless networks, computer-assisted ordering, and the like. But where does that leave independents, especially those who compete directly with the chains?
nts continue to be viable players," said John R. Keeley, vice president of information technology for Bozzuto's.
Viability is becoming more challenging for everyone in New England as Wal-Mart, noted for its technology excellence and supply chain efficiencies, makes inroads in the market. In helping independents apply the latest technology, Bozzuto's sees itself as "a resource for independents to ask questions about IT in retail, Keeley told SN in a recent interview at the company's central Connecticut headquarters, attached to its 975,000-square-foot distribution facilities.. "We want them to think of us as their IT department."
Bozzuto's efforts have not been overlooked. In March, IGA named the wholesaler the 2002 IGA Distribution Company of the Year and recipient of the IGA President's Cup in recognition of its commitment to excellence and overall performance.
As head of IT for Bozzuto's, Keeley is responsible for assisting retail customers with their in-store systems, as well as applying best-of-breed applications and support systems to Bozzuto's main function: supplying and replenishing products.
Keeley's right-hand man for retail support is Ron Dugan, director, retail technology systems and services. "We know the [technology] players in the market, and we know the retailer's requirements, so we see which products match those requirements andadvise the retailer accordingly," said Dugan. "Then it's the retailer's decision to pick and choose."
If Bozzuto's perceives a void in the marketplace, or if a system is too costly or lacks important functionality for its retailers, Bozzuto's will develop the application itself. One example of that, noted Dugan, is a frame-relay network the wholesaler developed so that its independents could afford "chain-like" benefits when processing debit and credit transactions -- something the stores "couldn't do themselves," he said.
Bozzuto's frame-relay network is connected to electronic transaction processor Concord EFS, Memphis, Tenn. By going through a single processor, Bozzuto's has been able to reduce the per-transaction charges its retailers pay, as well as increase the processing speed in the checkout lane. "Previously, we used a dial-up system," noted Dugan.
One way retailers can help pay for frame-relay services is to use them for other applications, such as receiving pricing information from Bozzuto's. Bozzuto's corporate stores are employing frame relay in this way. "This helps reduce labor at the store for item/price changes," said Dugan.
Bozzuto's is also supporting efforts by some of its retailers to invest in electronic shelf labels (ESLs), small wireless LCD modules that attach to the shelf edge and display prices electronically. Prices are controlled centrally by the same system that supports the POS, ensuring consistency between the shelf and the scanner.
The cost of the labels -- about $7 to $8 each, adding up to between $75,000 and $100,000 per store -- has kept many retailers from installing the technology. However, in Bozzuto's home state of Connecticut, a state law that exempts retailers whose stores are equipped with ESLs from having to item-price products makes the system substantially more attractive, and many chains and independents have invested in it. Indeed, Connecticut has become the ESL capital of the nation.
Some independents like ESLs not for just the labor savings but also for the pricing consistency and integrity the system affords (see story on Bethel Food Market, below). Others, said Dugan, like it for the "image" it projects of being at the cutting edge of technology.
Another consideration with ESLs is the change in the marketplace occurring in recent years, noted Dugan. One vendor was bought out, ending its offering, while another redid its ESL platform three years ago. "It's a big investment for a store, and the retailers want to be sure the technology will be around for four or five years," he said.
Gary Dalton, director of product management for RealPrice, NCR's ESL division, explained that NCR needed to redesign its RF (radio frequency) protocol for its ESL system in 2000 in order to co-exist with 802.11 RF devices and become certified by companies like Symbol and Cisco to operate in the same environment without interference. He pointed out that RealPrice has now been on the market for three years.
In all areas, Bozzuto's works to position its retailers with a "plan to get to the next level and not be locked into current technology," said Dugan. In the area of networks, for example, retailers need to be able to accommodate the higher-bandwidth multi-media applications coming down the pike.
Bozzuto's is increasingly leveraging Web-based technologies to support its wholesale and retail activities. One important new initiative is a Web portal under development that will enable the wholesaler to post special deals, or "opportunity buys," on a secure site that retail customers will be able to access at any time. "With the portal, retailers will be able to take advantage of deals they otherwise might not see," sid Keeley.
Bozzuto's recently demonstrated the portal at the recent Independent Retailer Conference, sponsored by Bozzuto's and held at the Foxwoods Resor Casino. Keeley declined to pinpoint the date the portal would be launched.
Looking ahead, Dugan is expecting to see a number of new POS technologies used in Bozzuto's independents, including wireless, self-checkout and multi-media. He also anticipates a shortening of supply chain communications. "People now share information on a weekly or daily basis, but that will shrink down to hourly," he said. "If you're out of something and you need it, you'll get on a device and see if it's available."
Retailers will also have a better handle on out-of-stocks, Dugan said. "If you expect to sell 18 pieces in an hour and you sell five, that event will drive a message from the front end."
Bozzuto's is also hard at work on a number of new supply chain initiatives. Keeley said that the wholesaler is re-evaluating whether to join UCCnet, the data synchronization and data registry service of the Uniform Code Council, Lawrenceville, N.J., which has been spearheading an industry effort to improve data synchronization between food distributors and manufacturers. Wholesaler members of UCCnet include Supervalu and Unified Western Grocers.
In its warehouse, Bozzuto's is using a warehouse management system from Aquitec, Chicago; slotting software from Manhattan Associates, Atlanta;Core Business Systems from IDS, Omaha, and FMS, Baltimore Its transportation to stores is helped by Roadnet 5000 Routing Software from UPS Logistics Group, Baltimore, and a global positioning system from Xata Corp., Minneapolis.
Bozzuto's has also begun participating in a Web-based collaborative logistics network hosted by Elogex, Charlotte, N.C., to help it better manage freight headed for its distribution center. Like UCCnet, Keeley noted, the more users Elogex signs up, the more effective it becomes. Other users can range from third-party freight carriers to CPG manufacturers and potentially other grocery distributors, according to Elogex.
Under the Elogex system, Bozzuto's can electronically tender loads to potential carriers in the Elogex network, and those carriers can obtain appointments via the Web. Billing and payment are also automated. Bozzuto's expects that Elogex will enable it to handle more of its own DC-bound deliveries, thereby improving service to its customers and reducing freight costs.
"Web-enabled computing and collaboration is a fundamental direction throughout the supply chain," observed Keeley. "And we intend to embrace and pursue those business solutions and benefits."
