A COOPERATIVE ARRANGEMENT

MATT NANNERY

STOCKHOLM, Sweden -- It's still Sweden's largest retailer, but Kooperativa Forbundet here has seen competitors whittle away at its market share in recent years. Company officials hope better use of data will turn things around.

"Information technology is going to become more and more important for KF," said Urban Strand, information technology coordinator. "But to keep current with technology and train staff would require quite a lot of investment."

A desire to generate better data for less money prompted the company to spin off its management information systems department as a subsidiary called Apiron in 1992. Apiron and its staff of 530 became part of Stockholm-based EDS Sweden last July 1. Under a 10-year contract, that company will handle data management for KF through 2003.

"We bought KF's hardware assets and hired its MIS department, but didn't buy their building," said Kevin Murphy, an account manager at EDS Sweden. EDS Sweden will continue to serve KF out of the latter's facility.

KF owns 450 supermarkets and supplies just as many cooperative grocery stores. The company also owns convenience stores, shoe stores, department stores and home furnishings stores; but 80% of its business is grocery.

Geoffrey Carroll, a spokesman for EDS's Brussels office, called the outsourcing arrangement "a sort of pay-for-performance deal" in which EDS will be compensated based on the quality of its service.

That situation is fine with KF, which wants EDS to help it milk data it has been collecting for some time.

"We are trying to give category managers the data they need to make better space management and buying decisions," KF's Strand said. "And when they make changes, we want to monitor the effects."

"If we can't do a project that can be measured from the start, we won't do it," Murphy of EDS added.

He said EDS is working to use KF's own data to "improve distribution, replenishment, merchandising and customer loyalty."

EDS has a head start because KF already has 2.2 million card-carrying members in its frequent-shopper program. One in four Swedes is a KF member, and purchase data is collected. "You can do a lot with a data base that big," Murphy said.

"Wal-Mart has proven MIS has to be a weapon in the retailing business, and we want to help KF load their gun."

KF's Strand said adding new MIS applications is risky and time-consuming for the retailer who chooses to add them on his own.

"We have been through large projects like distribution systems for supermarkets, and they took quite a lot of time to develop," he said.

Unlike some U.S. retailers who have considered outsourcing, KF doesn't feel it will lose control of its own information by working with an outside company, according to Strand.

"We knew we were taking a step that would be difficult to reverse when we chose to outsource, but we remain in control of our infrastructure," Strand said. "If the arrangement comes to an end after 10 years, we'll be able to handle [technology] on our own."