ANDRONICO'S MARKET TO TEST BREAKING GROUND IN SBT

ADAM BLAIR

ALBANY, Calif. -- In what may become a model for bringing the benefits of scan-based trading to smaller chains and independents, Andronico's Market here will test an SBT program, scheduled to begin in July, with logistical help from its wholesaler, Certified Grocers of California in Los Angeles.

With SBT programs, manufacturers who supply retailers via direct store delivery maintain ownership of their inventory until it actually moves across the point of sale, rather up to the retailer's back door. Andronico's is reaching agreements with some of its DSD vendors to use SBT.

Not only does SBT streamline the back door check-in process, but retailers testing SBT have increased sales and lowered out-of-stock levels, partially because DSD drivers are able to spend more time merchandising their products.

While the process sounds simple, SBT requires a high degree of data coordination among all trading partners, beginning with agreed-upon price and item descriptions, down to the stockkeeping unit level, for all affected products. The information technology demands are one reason SBT has so far been limited to larger chains and a limited number of manufacturers.

"SBT has not been widespread [in the grocery industry] and it has not rolled into the independent grocery chain," said Jack Scott, chief information officer at Certified Grocers. He sees Andronico's move to SBT -- the company operates eight stores in the Bay Area -- as a template for large and small players.

"It's a vendor opportunity," said Scott. "To the extent that [Certified] brings on companies like Coke, Pepsi and Earthgrains, we will have a model that can be repeated in independent grocery stores."

Certified, under its CertiNet program, is bringing together a host of technology partners to help Andronico's implement SBT. The viaLink Co., Edmond, Okla., is providing a common electronic communications network for the retailer and its DSD vendors. In addition to basic price synchronization capabilities, viaLink will provide methods for sending key POS data to vendors and for adjudicating shrink incidents.

"[Andronico's] has a lot of DSD because we feature a lot of specialty and perishable items," said Merlin Stigge, the retailer's vice president of finance and chief financial officer. "Our stores are receiving a total of 500 to 600 deliveries per week. Automating DSD -- which is the basis of SBT -- will give us an immediate benefit in terms of [inputting] price changes, because it's more streamlined.

"It's very hard to support one-to-one communication with [different] vendors for DSD," Stigge added. Using the third-party network "provides a reasonable cost, and one format, for the retailer and the vendors."

In addition, he said, "[SBT] means more flexibility to bring vendors in, because they're on their own queue."

Bass of Dayton, Ohio, which supplies a variety of headquarters and store-level software, will capture DSD information via radio frequency units, put it into store-level inventory and track its move across the POS, according to a source familiar with the Andronico's plan.

For the wholesaler, SBT provides an opportunity to get a clearer picture of exactly what's selling at the supermarkets it supplies. "We need to know what's moving and what's being advertised," said Certified's Scott. "We know how to do replenishment; what we need to know about is the impact of promotional lift."

Even though Certified may provide as much as 40% of the products independent retailers sell, "in our role as a 'retail enabler,' we want to know what we can do about the other 60% of the store," said Scott.