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INDEPENDENT POWER

DALLAS -- Independent retailers are seeking to leverage the power of technology as never before to compete with larger chains and alternative formats.The declining costs of hardware, the escalating range of software solutions and the growing recognition of the opportunity to understand and cater to customers directly are prompting massive changes in the independent arena.In a special report coinciding

DALLAS -- Independent retailers are seeking to leverage the power of technology as never before to compete with larger chains and alternative formats.

The declining costs of hardware, the escalating range of software solutions and the growing recognition of the opportunity to understand and cater to customers directly are prompting massive changes in the independent arena.

In a special report coinciding with the Retail Systems '96 conference and exposition here this week, SN profiled four independent operators committed to gaining a competitive edge in their markets, in large part by implementing new programs and advanced information systems solutions. They are:

Jack & Jill, Wheatland, Wyo., which is delving deeper into point-of-sale scan data to monitor product performance, especially of new items, more precisely and to better stock its shelves with items customers want to buy.

Food Giant, Bessemer, Ala., which is investing in flexible computer systems that can accommodate new programs in the future as quickly and inexpensively as possible. The retailer is also committed to rolling out programs that directly add value to the consumer.

Jax Markets, Anaheim, Calif., which is deploying a frequent shopper program, electronic payment and loss-prevention systems and a program to greatly reduce out-of-stocks to bolster its market standing.

Quillin's, La Crosse, Wis., which is implementing systems to streamline operations throughout the store, from front-end security and deli scales to corporate buying and pharmacy operations, all designed to enhance customer service and cut costs.

The opportunities for independent operators today to acquire and implement complex systems and compete with bigger chains are enormous.

"With the advancement of open architecture systems, it is easier for the smaller retailer to customize software to fit his own individual needs," said W.R. "Bill" MacAloney, president of Jax Markets.

Yet the challenges of selecting the right systems and forging a winning retail strategy are formidable. The flood of new software options is difficult to sort through, and determining when to invest in a new system, whose cost may change dramatically, can be as complicated as choosing which system to buy.

Below is a glimpse of how these four retailers are leveraging technology to protect their turf and build market share:

PROFILE: Jack & Jill

WHEATLAND, Wyo. -- The need for meaningful data that can be acted upon in a timely manner has never been more critical, especially for independent operators.

"The 'need to know' time is becoming shorter and shorter. You need to know movement. You need to know categories. You need to know profit by category for shelf management," said Mac McDowell, partner in the operation of a 9,000-square-foot Jack & Jill store here. "That used to be a luxury, but today it is vital."

McDowell said reports generated from point-of-sale scan data have become essential to his operation. The reports rank the top 100 products according to movement and sales generated and identify slow-moving merchandise.

The proliferation of new products coming on the market has necessitated a "one-in, one-out" policy, and scan data analysis yields the critical information to support those decisions, he said.

Jack & Jill's electronic frequent shopper program, in place since 1990, has accumulated substantial data that is used to develop promotional and merchandising programs.

"We know those who shop, those who don't and when they tend to shop," McDowell said, noting the data proves especially beneficial when planning in-store events and promotions as well as advertising campaigns.

Looking ahead, the store is considering how it might automate gift certificate redemption by moving from paper documents to stored value cards. Such a move would speed the transaction and enable shoppers to redeem certificates over the course of several store visits, if they wished, because the card's value is automatically updated as monies are spent.

Acknowledging that staying on top of developing technology is indeed a challenge for smaller operators, McDowell said it's not a valid excuse for falling behind.

"A lot of people don't enter the technological arena because they are afraid of being wrong. You're going to be wrong. You're going to make wrong decisions but by doing nothing, you might not realize how much money you risk losing in the long run," he said.

To ensure he's making sound technology investments, McDowell turns to outside help -- "What I call a 'tech junkie.' There's always somebody in your town who's a tech junkie. Find him. Befriend him and let him help you."

PROFILE: Food Giant

BESSEMER, Ala. -- Investments in flexible computer systems is the credo at Food Giant here, a six-store independent that already has upgraded computer hardware several times to take advantage of software enhancements.

From the point of sale to the back office, Food Giant has been able to expand functionality as new features become available because "I plan programs knowing that in six months, eight months, the cost of hardware will come down," said James Reach, who handles information systems.

Because applications are unified on an open architecture platform, stores need not be equipped with multiple computers, which reduces capital expenditures and maintenance costs, he said.

All technology initiatives must yield direct benefits to the customer, Reach noted.

At the front end of one of its stores, for example, the retailer has installed color video terminals to display information, such as running order totals, in a clear manner. The terminals are also used for promotional messages, developed internally or with vendors, that kick in when the point of sale is idle.

Reach said Food Giant is working closely with its wholesaler, Mitchell Grocery, Albertville, Ala., on several technology initiatives including electronic pricing programs.

Food Giant is also looking to collaborate with its wholesaler to introduce a frequent shopper program.

"I think the wholesaler has to give you support on some of these things because if independents fall by the wayside, then so do wholesalers," he said.

Other technologies Food Giant continues to evaluate include electronic shelf labels and data base analysis tools that would support category management decisions, Reach added. Such software would allow him to pose "what if" scenarios for shelf set changes and predict results in terms of sales and profitability.

PROFILE: Jax Markets

ANAHEIM, Calif. -- Frequent shopper programs, effective deployment of electronic payment systems and technologies designed to reduce losses due to shrink hold great potential for independent retailers seeking to up the ante in their markets.

Those three areas, along with category management and more efficient product ordering practices, will be critical to development, said W.R. "Bill" MacAloney, president of Jax Markets here.

"Frequent shopper programs were once only within reach of major chains with deep pockets to underwrite the expense, but the programs are now accessible to the independent retailer because the cost of capturing data has declined steeply," he said.

MacAloney, who also serves as chairman of Certified Grocers of California, the Los Angeles retailer-owned wholesaler servicing Jax Markets, emphasized that independent retailers are challenged to be selective about technology investments.

"The major concern with embarking on any technological project, for us, is return on investment and whether we have qualified people to carry the project through," he said. "We are not a chain that can afford to test certain technological projects and then discard them a few months later."

MacAloney said a key project currently under way will enhance efficiency of product ordering and reduce out-of-stock situations.

Another area of technology that he, as an independent retailer and as chairman of Certified, is intrigued by is source tagging.

PROFILE: Quillin's

LA CROSSE, Wis. -- Quillin's here is stepping up controls across several systems and departments -- from front-end security to deli scales and from corporate buying to pharmacy operations.

The eight-store independent is investing in a wide range of systems to ensure consistent operational practices that enhance customer service and yield better efficiency and cost savings.

For example, new exception-based cashier monitoring software has been installed to analyze point-of-sale transactions and identify suspicious activities, said Phil Quillin, president. Other controls now being put in place will ensure consistent pricing across deli scales in all stores. "It's difficult to communicate to the customer why a product is $1.39 at one store and $1.29 at another," Quillin said.

Consistent pricing is also due to arrive at Quillin's pharmacies through a new software program that also will streamline communications with vendors and provide customers with detailed information about their prescriptions. He stressed that wholesaler support of retailer technology projects is essential and Quillin's is working with Fleming on several initiatives, including a perpetual inventory system.

Perhaps in the future, the Internet will come into play as well, Quillin added.