In 2007, retailers will have plenty of opportunities to use technology to improve the operations of their stores and prepare them for doing business well into the future.
At the POS, the linchpin of any store operation, retailers will have to start preparing their scanners and POS software to handle a new breed of bar codes on the horizon — Reduced Space Symbology codes. RSS codes will eventually appear on everything from coupons to produce to pharmaceuticals; they will be on coupons no later than 2010.
Technology can also be used to improve store operations from the floor to the ceiling. Floor monitoring systems, for example, can prevent costly slip-and-fall accidents from injuring customers and landing retailers in court. Meanwhile, retailers can improve the light coming from above with such new technology as induction lighting.
Task management systems are enabling retailers to ensure that strategies conceived at corporate headquarters are properly implemented at the store level. For example, this can make a huge difference to the success of promotions because retailers will know that displays have been placed on the sales floor at the appropriate time.
The underpinning of all store activities is accurate and synchronized product data. To that end, retailers are increasingly adopting data synchronization systems. But to ensure the success of data sync, retailers and manufacturers need to address the accuracy of their internal product data throughout their organizations.
INITIATIVE 1:
Prepare for RSS
Reduced Space Symbology bar codes are coming, and in 2007 retailers need to begin preparing for them.
RSS codes are smaller — yet contain more information — than conventional UPC codes. There are several versions of RSS codes, but at their simplest they contain 14 digits compared with the 12 in UPC codes.
The meat, produce, dairy and pharmaceutical industries are working to implement RSS codes, but the coupon industry is the closest to offering one. In fact, GS1 US, Lawrenceville, N.J., and its Joint Industry Coupon Committee are expected to release formal standards for RSS expanded coupon bar codes in the first quarter of 2007.
Manufacturers will stop using current EAN/UPC codes on coupons in favor of RSS codes in 2010. So retailers will have until 2010 to be fully capable of scanning and processing the RSS codes on coupons.
But to make sure there are no unpleasant surprises, retailers should begin to identify any necessary business process changes as well as to plan for budgets and training, said Joan Wyndrum, vice president of Pinpoint Data, North Plainfield, N.J., a company that creates and validates bar codes.
Retailers and manufacturers can look forward to a number of benefits when coupons start bearing RSS codes. For example, the restricted size of the current 12-digit coupon bar code limits manufacturers and retailers in their ability to create flexible promotions involving multiple products. Those limitations can result in costly delays or errors at the point of sale.
RSS codes, which can hold 70 characters, should reduce or eliminate these limitations, Wyndrum said. This should result in an improved customer experience, as well as increasing the accuracy of redemptions and creating a more accurate exchange of information between trading partners.
But to realize these benefits, retailers need to begin addressing some basic issues, starting with whether their current POS scanners are capable of reading RSS codes. “That should be their first step, assessing readiness by talking to their POS vendor,” Wyndrum said.
The next step, “probably the biggest project,” according to Wyndrum, will be to rewrite POS coupon processing software. “Once the POS reads and identifies the code, the system has to know what to do with it,” she said. “Management has to decide how to handle all of the business rules that go along with the transition to RSS.”
Next, Wyndrum said, retailers need to look at external systems related to their POS to determine whether these systems need adjustments to handle the new data. These include host file maintenance, EDI processing and transaction processing, as well as analysis tools such as shrink analysis and cashier productivity.
Finally, retailers need to look at whether they will need more staff to make necessary changes. They may need to retrain not just cashiers, but also finance and IT people — anyone who deals with the RSS data that will be coming in from the POS.
— LIZ PARKS
INITIATIVE 2:
Prevent Store Accidents
Any food retailer would like to reduce the number of slip-and-fall accidents in its stores — to say nothing of the lawsuits those incidents engender.
One retailer who has found a way to do that is Beavercreek, Ohio-based Lofino's Food Stores. An electronic floor monitoring system the company has installed in all 17 of its stores has dramatically reduced accident claims caused by in-store slip-and-fall incidents.
Lofino's, which operates stores under three banners — Lofino's, Cub and Sav-A-Lot — began testing the system, called GleasonESP, from Malvern, Pa.-based Gleason Technology, in 2001. The system “has worked out so well for us that it's now part all the new stores we open,” said Joe Miller, loss prevention manager.
The system essentially automates the store inspection process. Instead of walking the store and writing down what they find, Lofino's employees carry an electronic data retriever shaped like a wand. They use the wand to register their ID number as well as to read electronic identification markers (in the shape of buttons) installed at vulnerable points throughout the store, such as near water fountains, coolers, freezers and produce.
When employees tap the wand on a marker, it records the time and location of the tap. If they find a spill, they tap one of three markers to register whether it is wet or something else. Once the spill has been cleaned up, they tap another marker, recording how long it took to clear.
If spills keep occurring in the same place, Miller said, store managers know there must be a maintenance problem, such as a leaky water cooler.
The information stored in the wand is downloaded weekly to a docking station and then transmitted to Gleason's online database, where it is processed and turned into management reports. Lofino's uses the reports as a tool to monitor and improve store conditions, and importantly, as a defense against legal claims if an accident happens and someone charges negligence.
“We've never lost a court case since we've had that system in place,” said Miller. “Plus, our stores are much cleaner.”
Lofino's worst store used to average 40-50 accident claims a year. “Not all were slip-and-falls,” Miller said, “but about 80% were. We put that system in and the following year, that store had one claim.”
Because the system costs less than $3,000 to install, Miller says eliminating one claim of negligence “gave us an immediate ROI.”
Employees are scheduled to walk the store hourly, and they must do a minimum of 75% of those walks. However, most stores average between 85% and 95%.
In the Cub stores, which average between 65,000 to 70,000 square feet, it generally takes between 12 to 15 minutes to complete a walk, with the store associate tapping approximately 25 to 30 buttons.
— L.P.
INITIATIVE 3:
Install Efficient Lighting
Retailers are becoming increasingly conscious of energy consumption in their stores, to reduce costs and to help preserve the environment. Energy costs and the environment will continue to be pressing issues in 2007 and beyond.
Among its energy initiatives, Raley's, West Sacramento, Calif., has been overhauling the lighting fixtures used in its 138 stores. In particular, the chain has decided to employ induction lighting, a highly efficient source that is emerging as one of the newest technologies in lighting.
Raley's experience with induction lighting began five years ago. “I got really frustrated with [the lighting in] our walk-in boxes,” said Ed Estberg, senior director of facilities, Raley's, speaking at the Food Marketing Institute's Energy & Technical Services Conference in September. “So we looked for something with really long life and dependable, that would start in the cold.”
Raley's found a local manufacturer that built it an induction fluorescent lighting fixture. At the center of an induction lamp is an induction coil, which produces a magnetic field. The magnetic field energizes a mercury electron-ion plasma material, producing UV light. After testing the induction lamp in one store, “we realized this is where we wanted to go,” Estberg said. “So we made it standard for all walk-in boxes.”
What most attracted Estberg to the induction lamp was its 100,000-hour life. “We have not burned one out yet in five years,” he said. In fact, because Raley's does not operate 24-hour stores, Estberg estimated the bulbs would last for 27 years, compared to 30 months for a T8 fluorescent bulb. Induction lamps also deliver 20% more lumens of light per watt.
However, Estberg noted that the initial cost of the induction maps is higher than that of conventional lighting. “If you're only interested in first cost, you're not going to do this,” he said. “But if you're interested in maintenance and energy, these things are really great.”
More recently, Raley's began installing induction lighting in its back rooms and sales floor lighting — in both cases in concert with skylights. So far, the chain has committed to using the induction lighting in the sales areas of five stores.
For the sales areas, the induction lighting is in “Hi Bay” fixtures containing two 100-watt bulbs. Light sensors are used with skylights so that “we don't have to turn lights on and off,” Estberg said. In addition, the system is configured so that “on a cloudy day we can get the light level exactly where we want it,” he noted.
“We get very good light,” Estberg said. “Products look very good. We're happy with the ambience.”
In one visit to a store with the induction lighting and skylights, Estberg said the store initially seemed dark because the lights were turned down. But after a few minutes he noticed feeling more comfortable in the natural light. “I didn't realize that the fluorescence we used pulsated and there's a high tension that goes along with fluorescent lights,” he said. “When you have skylights, it really makes you feel comfortable and relaxed.”
— M.G.
Energy Consumption at Raley's Store [June 2006]
210,658
kilowatt hours of electricity
3,503
therms of gas usage
2,666,300
BTUs/hour in total connected heating output
360,000
BTUs/hour in air-conditioning usage
INITIATIVE 4:
Master Data Sync
The food industry has made great strides in adopting data synchronization processes and technology that enable manufacturers and retailers to exchange accurate product data. Next year should see even more progress in this area.
What does it take to be successful in data synchronization? One person who should know is Greg Zwanziger, director of e-commerce, Supervalu, Minneapolis. A pioneer of data synchronization in the food industry, Supervalu now has about 525 suppliers in production-level synchronization of item data, representing 60% of its nonperishable volume.
Speaking last month at the Data Synchronization Summit in Las Vegas, Zwanziger emphasized that executive leadership is critical to success. In Supervalu's case, Jeff Noddle, its chief executive officer, has been a longtime champion of the process. “Our executive management has never wavered in its support,” Zwanziger said. Top executives can “invigorate” an organization so that all key players, such as buyers and merchants, are open to learning about the process, he said.
“Virtually every area of an organization uses item information and may have systems that rely on item information. So you need to bring all the right stakeholders into the process.”
It's also important to have someone in the company serve as a data synchronization/data quality “czar,” who has the “responsibility to make it happen,” Zwanziger said.
Before even getting started in data synchronization, manufacturers and retailers need to make sure their internal data is accurate — that dimensional data, for example, reflects physical reality. “Manufacturers need to put the right people, processes and technology in place to ensure that their product data remains accurate, consistent, complete and standards-compliant,” said Simon Glass, senior program manager, Procter & Gamble, Cincinnati, who also spoke at the Data Synchronization Summit.
At the same time, Glass added, retailers need to ensure that their data “stays accurate, consistent and standards-compliant.” A resource available to retailers and manufacturers is the GS1 Data Quality Framework, recently assembled by Food Marketing Institute, Grocery Manufacturers Association and other trade groups. It includes an inspection procedure to physically validate product attributes.
Zwanziger noted that the same product attributes can be viewed differently by different parts of an organization. “Inaccuracies can result in the way data is interpreted,” he said. “You need to all start working with common definitions. You need a person to reach out internally and to trading partners to work on accuracy and understand best practices.”
Zwanziger also pointed out that data synchronization has the potential to expand well beyond just item data. “We as an industry have only just scratched the surface,” he said. Additional areas include price, which will be piloted by an industry group next month, marketing information, consumer data, planograms, online catalogs and hazardous materials.
He also urged synchronization of “party” or organizational information so that “you can take information to the level of the organization that it applies to.”
Supervalu, said Zwanziger, is expanding its data sync efforts to new product categories, including meat, bakery, deli and store brands as it goes after the “next wave” of suppliers.
— M.G.
INITIATIVE 5:
Execute In-Store Tasks
Sometimes the most brilliant strategies developed by retailers at the corporate level break down because they are poorly executed at stores. So two divisions of the Delhaize Group — Hannaford Bros. and Food Lion — have rolled out a system to ensure that stores carry out their corporate instructions to the letter.
The system, RetailAction Manager, from Reflexis Systems, Norwood, Mass., provides a closed-loop task management process that includes confirmation of task compliance. Besides Hannaford and Food Lion, U.K. grocers Tesco and Marks & Spencer are employing the system. Otherwise, it is used by nonfood retailers such as The Home Depot, Staples and Circuit City.
Hannaford Bros, Scarborough, Maine, completed its rollout of the system to its 157 stores in October. “We will use it to carry out the top 10 tasks in our stores,” said Bill Homa, chief information officer for Hannaford. One example is ensuring that displays are in place when an ad breaks. Tasks are accessed by store and department managers via a Web browser.
Homa sees the tool resulting in more efficient execution of store tasks. The task-confirmation feature, he added, is “a big plus.”
In a statement released by Reflexis, Kevin Carleton, director of retail automation at Hannaford, said the system “supports our culture, allowing our associates to be available to customers in the stores as much as possible, and it gives us the visibility we need to see if resources need to be shifted.”
Homa said that Hannaford would eventually like to disseminate task assignments via IP phones that the chain is installing in new and remodeled stores. One retailer actually using IP phones in this way is Les White, president of Zeus Nestora, a Tucson, Ariz.-based franchisee of 30 Subway restaurants.
White, who is also a motivational speaker, in July enabled the Cisco IP phones in his stores to communicate a wide range of information to store associates, including store task reminders, employee recognition and a daily lesson, as well as timecard and shift management. “I will remind them to put bread in the oven, and they have to acknowledge that this was done or it goes to the store manager,” White said. The applications were developed by IPcelerate, Dallas.
He credits the system with helping to increase employee retention by 30% to 40%. “The applications that run on our Cisco IP phones are helping us maintain our unique sense of culture and improve our communication capabilities. I never imagined a phone would have such an impact on my business,” he said in a statement earlier this year.
— M.G.
