TORONTO -- The strategic role of technology for driving profits and frustration over the reluctance of retailers to share critical scan data were two key points raised by Allister P. Graham, chairman and chief executive officer of Oshawa Group, Etobicoke, Ontario, during a keynote address here.
"I am compelled here to indicate that technological advances producing more accurate point-of-sale data are obviously as critical to the supply community as it is to retailers," Graham said at the Canadian Council of Grocery Distributors annual conference early this month.
"Yet reluctance to share this data, whether through third-party arrangements or directly, is but one more anachronism, indicative of our confrontational relationship, which needs fresh examination," he said.
Instead of proceeding down the well-worn confrontational path on which all sides stand to lose, the industry must work more closely together to cash in on the potential benefits of today's available technology.
In fact, he said, much of the success of the industry's vaunted Efficient Consumer Response initiative hinges on the ability of retailers, wholesalers and manufacturers to take the technological steps to create a more efficient and profitable system.
"With respect to enhancing operating efficiency, technology is a central and essential ingredient. Many of us are finding now, as we pursue the world of ECR, that the first step is to be able to speak to the supply community technologically through electronic data interchange in a way that is error-free and covers the multitude of tasks which comprise the start-up list for streamlining transactional communication," Graham said.
"Clearly, technology upgrades
in this area are synonymous with corporate profitability, or even survival," he said. Graham pointed out scanner technology, especially, must be employed to help retailers strengthen their merchandising programs and target diverse consumer groups. "Canada's relatively strong emphasis on ethnic diversity creates difficulties for retailers facing sharply contrasting shopper wants in closely located metropolitan trading areas.
"The almost universal use of scanner technology with its enabling support systems has opened a multitude of opportunities [for retailers] to tailor stores to their clientele accurately in terms of product mix and merchandising methods, including pricing and space allocation," he said.
Use of scanning data can help retailers determine the traffic flow of individual items, discover how items sell when placed on sale and prevent overstock of items that don't move at high levels, Graham said.
For retailers to get accurate scan data, though, some changes may be required at the front end. For example, cashiers would have to ring up all items individually, rather than hit the multiplier button when faced with a number of the same items.
"Many grocers have been concerned that the heavy emphasis on cash payment in food stores, and government threats to keep it so have placed their industry at a disadvantage," Graham said. The widespread acceptance of credit cards at rival general merchandise retailers, in contrast, has put supermarkets at a competitive disadvantage.
But that is changing. "As recently as three weeks ago, the widespread acceptance of the debit card arrived as an alternative to the use of cash for food purchasing," he said.
At that time, a group of supermarket chains in Ontario, including about 50 Oshawa corporate stores, jointly introduced a debit card as an alternate means of customer payment.
The Canadian government traditionally has discouraged supermarkets from accepting credit and debit cards.