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POSITIVE MOVEMENT

Gone are the days when all a point-of-sale system was required to do was ring up a customer's order. Supermarket retailers are now exploring and investing in POS solutions that provide vital information to automate store operations, inform category management decisions and help maintain perpetual inventory systems. To support these multiple applications, retailers are leveraging open architecture

Gone are the days when all a point-of-sale system was required to do was ring up a customer's order. Supermarket retailers are now exploring and investing in POS solutions that provide vital information to automate store operations, inform category management decisions and help maintain perpetual inventory systems. To support these multiple applications, retailers are leveraging open architecture platforms that support PC-based POS units. Not only do these systems make it easier to create valuable item-level movement databases, they can also provide productivity increasesin the checkout lane -- especially when the POS units incorporate electronic payment systems.

"Everything is headed in this direction," said Rick Anderson, director of retail systems for URM Stores, Spokane, Wash. The ability of such systems to provide item-level movement "is a benefit to retailers from a reporting standpoint, as far as tracking sales trends and offering customer-specific marketing."

By deploying an open architecture system, retailers can integrate a variety of software applications directly into their POS systems, including frequent-shopper programs, electronic payment options and even back-office packages. According to SN's Fourth Annual State of the Industry Technology Survey, more than two-thirds of chain and independent retailers plan to upgrade their front-end POS systems in 1998, in some or many stores. Nearly 90% of wholesalers plan such improvements this year. A complete report on the survey will appear in a special supplement in SN next week, timed to coincide with the Food Marketing Institute's MarkeTechnics convention in Los Angeles Feb. 22 to 24.

Several retailers expect their investment in more sophisticated front-end systems to pay off handsomely in productivity gains and other ways.

"We are expecting to see at least 20% increases in our cashier productivity through the use of PC-based POS systems coupled with scanning technology," said Steven Gaines, operations project manager for Save Mart Supermarkets, Modesto, Calif.

Systems integration also plays a big role in open platform POS units. One area retailers are capitalizing on is the integration of electronic payment systems.

"Though stand-alone EPS terminals are still an option, integrating EPS into the POS can speed up the checkout process," said Bill Homa, chief information officer at Hannaford Bros., Scarborough, Maine. "We are not yet integrating electronic payments, however, we are evaluating the process as we speak.

"An automated process [directly tied to the POS] eliminates the cashier's need to re-enter purchase amounts and activate payment options [through the keyboard]," he added. "About three to 12 seconds can be eliminated from the checkout process through integrated EPS. That time adds up when you calculate the tens of millions of electronic payment transactions conducted at the front end."

The spread of electronic benefits transfer programs is also playing a part in the integration of EPS. Wholesaler URM Stores began integrating its EPS directly into new POS units to coincide with the launch of EBT in California.

"By replacing our stand-alone terminals we can streamline five little transactions [via multiple vouchers] to one order with the swipe of a card," said Anderson.

"Our goal is to have 100% of our stand-alone EPS terminals integrated to our POS by mid-1999," he added. "Currently, we have 24 out of 100 stand-alone units integrated."

EPS integration is also considered a deterrent against the Millennium Bug, according to officials at Strack & Van Til Supermarkets, Schererville, Ind.

"Though some of our stores use freestanding terminals to process credit and debit transactions, we need to be sure those units are not going to lock up on or before Jan. 1, 2000," said Larry Lesich, scanning supervisor for Strack & Van Til. "The integration of EPS to POS keeps up with year-2000 compliance, and keeps the store running, as well."

Several IS executives said concern about year-2000 compliance was encouraging them to convert to new, integrated POS units.

"The beauty of an open architecture is that all systems run directly from one network," said Save Mart's Gaines. "The year 2000 forced our hand in a number of areas when we began to deploy PC-based POS units in our stores. It began as a domino effect on other systems, and made us look in every nook and cranny for additional systems integrated into the POS that would be affected."

While an open platform gives retailers a bit more security in preparing for the new millennium, another key area is the collection and analysis of product data as it is scanned through the front end.

"The ability to capture data through an electronic journal can have strong implications on what retailers do in areas of category management, and has a strong potential for loyalty marketing," said Gaines.

"Item movement feeds category management because as sales take place at retail, the retailer looks to us to help them make good purchase decisions in what will gain consumer acceptance," said URM's Anderson.

Other retailers see item movement data as a way to determine profitability. "By focusing on item movement, we are able to monitor our profit, loss and item markdowns by what moves through the front end," said James Reach, information systems director for Food Giant, Bessemer, Ala. "If you do not know where you have been, or the point you are at, how can you focus on where you are going?"

Though open platform PC-based units seem to be the current POS solution, retailers are keeping their eyes open for the next wave in POS systems. Executives told SN those solutions could very well take the form of self-scanning units, once these systems prove their worth.

"I'm not sure if this will be a future trend or not at this point, but many chains are looking at self-checkout technology," said Hannaford's Homa.

Save Mart's Anderson agreed that self-checkout may make strides in the future, though he is unsure if it will replace the human interaction.

"Self-checkout will offer a more competitive advantage in the industry, especially if this solution is viewed as a faster way to funnel customer traffic through the front end more efficiently," he said.

"However, we still believe that the interaction between our customers and associates is an asset for us," he added.