"Wait and see" has no place in the vocabulary of today's most technologically adventurous retailers.
Instead of sitting on the sidelines, watching the pilot tests of competitors, a handful of progressive companies are rapidly moving forward with new applications -- or putting a fresh spin on existing technologies.
Take intranets -- not a familiar word to many until this year. But that hasn't stopped Hughes Family Markets, Irwindale, Calif., which is building such an internal network for company purposes. The retailer aims to streamline communications and make information more readily available in real time to support decision making.
"Data warehousing" is another term now making its way into retail circles and Giant Food, Landover, Md., is among those leading the charge. The chain has invested a substantial amount of time and money in constructing a massive database used primarily by category managers, but with promise to penetrate the entire organization.
Customer self-scanning, on the other hand, might be considered by some to fall on the opposite pole of intranets and data warehousing because the basic technology has been around for many years. Some who got in the game early with self scanning are now re-evaluating their systems or letting them gather dust, unused.
But Kroger Co., Cincinnati, has demonstrated a serious commitment to finding the right self-scanning approach and is intent on testing all those commercially available in various divisions.
Kroger, Giant and Hughes represent only a small sampling of companies who have ambitiously embraced new technology. These retailers, along with Hannaford Bros., Scarborough, Maine; Dorothy Lane Markets, Dayton, Ohio, and Farm Fresh, Norfolk, Va., emerge as leaders who will continue to leverage technology in innovative ways going into 1997 and beyond.
Hughes Family Markets: Intranets
IRWINDALE, Calif. -- While many retailers are "talking up" the great possibilities of intranets for the future, Hughes Family Markets here is among the few actively pursuing the technology now.
Intranets -- sometimes called "internal Internets" -- are password-protected corporate networks using Internet-developed applications, such as the World Wide Web. Authorized users are often provided with a gateway to the Internet, but data moving through the intranet itself is protected from unauthorized use.
At Hughes, intranets figure big in information technology strategic planning and the chain is already enjoying dramatic improvements in file transfer capability.
As a first step, the chain installed new communications software that reduced from three hours to about five minutes for the time it takes to upload data from stores to the corporate mainframe.
Joey Valentine, systems analyst, said file transfers from the host to the mainframe were problematic before the upgrade. "Often in a three-hour file transfer you'll get errors and you've got to restart the process," he told SN earlier this year.
The same software will provide the foundation for a sophisticated intranet and a wide range of new applications not previously possible.
For example, stores will be able to access pricing information at the corporate level in real time, rather than rely on printed price books that quickly become out of date. Once all stores receive upgraded point-of-sale systems, they'll be able to communicate with one another via the intranet.
Hughes said it may eventually add greater bandwidth capacity to the leased lines going into stores to further increase communications abilities.
"It's going to enable us to more accurately build a perpetual inventory and help us in our goals toward Efficient Consumer Response," Valentine concluded.
Hannaford Bros.: Home Shopping
SCARBOROUGH, Maine -- Pessimists may predict a strikeout, but the Homeruns program launched by Hannaford Bros. here could be the closest thing to a working model of home shopping for the future.
The naysayers are convinced home shopping will never take off, but those who are familiar with Hannaford's strategy say its strength lies in the fact that the program is self-contained -- run exclusively by the chain -- and that the service is free, which is critical to widespread acceptance by consumers.
Currently the service is offered only in the Boston-Cambridge-Brookline market, a veritable hotbed for home-shopping tests today.
"We are finding that people are fulfilling their total weekly shopping needs through this service," said a chain spokeswoman shortly after the program's launch late this summer.
Hannaford set up a distribution center dedicated solely to home-shopping order fulfillment. The facility is located in an industrial park and has far lower overhead costs than a store, for example, where many retailers do their order picking for home shopping.
"It's a killer location because it's close to all the major routes that service the densely populated area of the Boston suburbs," said a competing retailer familiar with Hannaford's Homeruns program.
Finding ways to effectively cut costs of delivery and improve efficiencies of logistics is where the focus lies if home-shopping programs are to advance from a mere "customer service enhancement" to a profit center, industry observers said.
Giant Food: Data Warehousing
LANDOVER, Md. -- "Data warehousing," still only on the wish list of many retailers, has evolved into a full-fledged, mission-critical decision-support system at Giant Food here.
The massive database contains item movement history on 65,000 stockkeeping units collected over two-years' time. Because the data warehouse is designed for on-line analytical processing, authorized users can perform ad hoc queries to guide their decision-making.
A desire to sharpen category management programs was a key driver behind the project. Now that the system is up and operational, after two years in development, it's become a tool that the staff relies on and uses daily.
"We needed to be able to provide category managers with information to do sales trends and profit analysis, promotion tracking and shelf space management," said Zach Decker, lead programmer analyst of information systems, during an industry seminar earlier this year.
Gathering the information to load into the data warehouse was no easy task, he acknowledged. Many times, the needed data was buried deep within disparate proprietary systems making extraction particularly difficult. Once massaged and verified, the data was loaded and is now readily available by users equipped with access tools.
Giant's data warehouse project places the chain among only a few bold pioneers willing to invest in the technology. Most retailers have yet to take the plunge into data warehousing claiming the time and expense required are just too steep.
Nonetheless, Giant remains committed to data warehousing and is continually building on its breadth and functionality.
Kroger Co.: Self Scanning
CINCINNATI -- Customer self-checkout technology appears destined to find some type of long-term role at one or more divisions within the Kroger organization here.
The company distinguishes itself from other retailers also testing the technology because it is the only chain exploring all three commercially available systems for customer self-scanning systems.
The Louisville, Ky., and Columbus, Ohio, divisions of Kroger are each testing different vendor's stationary customer self-service checkstands. Just last month, Kroger's Dillon Cos. division, based in Hutchinson, Kan., installed in a corporate lab the same system used by shoppers in stores within Kroger's Louisville division.
Although the Nashville, Tenn., division has not yet begun testing, industry observers said a pilot of another vendor's system will begin there shortly. That system is based on portable customer scanners and is currently used by only one other retailer in North America.
Executives at the various divisions told SN that such systems hold great potential in easing costs associated with express-lane checkouts.
Because purchases going through the express lane are smaller, the labor needed to run them is proportionately more expensive as a percentage of sales than labor used for conventional lanes, where orders are larger. Because of this, retailers and industry observers believe the express lane may be the prime candidate for automation.
Kroger's division testing of self-scanning technology dates back several years and includes a series of software upgrades.
Farm Fresh: POS Systems
NORFOLK, Va. -- Few systems integration initiatives garner such passionate support from top level management as the project currently under way at Farm Fresh here.
While many chief executive officers expect that various store systems ought to work together flawlessly -- or be made to work together -- Michael Julian, chairman, president and CEO of Farm Fresh knows it's not that easy. It's for that reason he signed off on a $6 million project to totally overhaul the company's store systems.
The 54-store chain was to complete this year computer upgrades in all stores. New open architecture point-of-sale systems, in-store processors, radio frequency and check-verification technology were to be integrated with one another and linked to corporate headquarters via a wide-area network.
With the new systems in place, the chain expects to see improvements in front-end productivity, because the new cashier interface is more intuitive in design.
Dorothy Lane Markets: World Wide Web
DAYTON, Ohio -- Dorothy Lane Markets here is exploiting the promise of trend analysis software to paint a picture of shoppers visiting its physical -- and virtual -- store.
The two-store operator is bullish on the benefits of leveraging such data and continues to collect it in two ways. The retailer tracks customer purchasing patterns through its card-based electronic-frequent shopper program in its stores and also tracks data on consumers visiting its home page on the Internet.
Using information gathered through its card program, Dorothy Lane develops promotional offers targeting shoppers whose spending levels put them in the top 30 percentile.
"In everything we do, we try to differentiate. Every time we send out a [mailing,] we might send out three or four different offers" tailored to a particular household's buying patterns, said Amy Brinkmoeller, director of information systems.
By the same token, Dorothy Lane closely monitors consumer visits to its World Wide Web page. Recognizing that traffic greatly increases during lunchtime on weekdays, the retailer began thinking about what opportunities there might be in targeting that population, perhaps with a home-shopping and delivery service, said Norman Mayne, general manager.
The retailer has concluded that a growing number of better educated, possibly higher income consumers are visiting its page because a larger proportion are accessing the site through universities and local network service providers rather than through commercial on-line services.
