Increasing data demands in the supermarket industry -- both in terms of moving large amounts of data and making them available to the right people in the organization -- have retailers and wholesalers embarking on a variety of systems
integration projects.
Among the areas getting the most attention are internal communications, point-of-sale systems, purchasing, pricing and frequent-shopper applications.
Associated Wholesale Grocers, Kansas City, Kan., is investigating the best way to streamline its internal communications. The wholesaler is exploring ways, other than relying on a paper trail, to make data more readily available to its retailers in order to support decision-making.
Taking internal data usage even further, Ralphs Grocery Co., Compton, Calif., is merging a new purchasing system with its internal pricing system in order to keep abreast of replenishment, pricing and merchandising -- in real time.
One of the key benefits of systems integration is the opportunity it affords to analyze POS data such as customer purchase behavior and item movement. While POS systems integration is a large, costly project to undertake, Harding's Friendly Markets, Plainwell, Mich., is a small chain investing in new equipment to integrate a labor-scheduling program. The retailer is also investigating integration of electronic payments over the Internet.
Similarly, Strack & Van Til Supermarkets, Schererville, Ind., is upgrading its POS systems in order to launch a frequent-shopper program.
Companies anticipate these solutions will promote smoother business operations, as well as give them a jump on conducting business in the fast-approaching 21st century.
AWG is one of many companies exploring opportunities to give their associates easier access to internal corporate data.
"We recognize our retailers need to work with us more closely, especially in areas that involve transmitting timely information," said Dave Thompson, executive director of management information systems. "We are interested in creating a solution that will allow us to filter information -- such as movement data or order activity -- down to retailers, or let them send the same information to us."
Associated is anxious to step away from a paper-based environment and is exploring use of the Internet or satellite communications. "We want something that will link our organization and will be cost-effective and not a burden," Thompson explained.
The wholesaler has not yet determined what the best solution is to communicate with its members, a group of about 360 retailers. Thompson emphasized that it may take multiple solutions to fulfill the organization's needs.
"Our solution could be either satellite or modem, or both types of links, depending on the best way to meet our time and volume needs in-house," he concluded. "We are trying to acknowledge that we need to be flexible to be successful."
The wholesaler already uses satellite communications technology for small-scale internal activities, such as in-store marketing data and recall notices. However, the Internet would be a new undertaking.
"We need to distinguish whether this will be a successful solution, or if it's a problem waiting to happen for us," said Thompson.
"We have not aggressively embraced the technology thus far, but that does not mean we will rule the Internet out."
Systems integration at Ralphs involves linking a new purchasing system with an upgrade of its in-house pricing system in order to monitor replenishment, pricing and merchandising in its 341 southern California stores. The chain has a total of 404 stores.
"These are priorities for us because we are building the infrastructure that will be the core platform to support both systems for the upcoming millennium," said Gary Herman, vice president of information systems.
According to Herman, the purchasing and pricing systems will be centralized on the company's mainframe and utilized by Ralphs' marketing department. The retailer expects the first two systems to be integrated by the first quarter of 1998.
"We will use the purchasing system to replenish the warehouse, while the pricing system monitors the product on hand in the depot and tracks pricing of product as it hits the stores," Herman said.
The key benefit to integrating the two systems is to have one common location for all data, and to analyze the data in real time, according to Herman.
"The integration will provide us with a logical product database that we will be able to refer to for all purposes connected with replenishment, pricing and merchandising," Herman said. "It will keep all of our information in real time, as opposed to now where information is on-line, but is not in real time."
Some smaller chains are also exploring ways to maximize systems integration efforts. Harding's is in the preliminary stages of integrating a platform for its electronic payment systems to work with its planned web site.
"We are working with our Internet provider to integrate our future web site to our electronic payment system," said Curtis DeVries, director of information systems. "All pieces have to function together and act as if the customer was paying for an order in the store. It needs the same functionality."
Harding's expects the integration to be completed by early January 1998, though DeVries declined to comment on when the web site will be launched.
Another small retailer focusing on POS integration is Strack & Van Til. The retailer will roll out a new PC-based POS system this month, allowing it to integrate a new frequent-shopper program to go live by January 1998 in 11 stores.
"The new POS system will allow us to do more at store level, including customer discounts," said Larry Lesich, scanning supervisor at Strack & Van Til. "It will also let us store our customer purchase data longer than our previous units. These will keep data for at least 60 weeks, as opposed to 52 weeks."
Strack & Van Til expects to reap important data from its loyalty program. "This will let us learn about our best shoppers and what they are buying," Lesich explained. "We will also eliminate the cost of blanket mailing for incentives. Instead, the program will help us pinpoint our best customers and better spend our advertising dollars."
