CATALINA CUTS ITS ELECTRONIC CLEARING TEST FOR COUPONS

DEENA AMATO-McCOY

ST. PETERSBURG, Fla. -- The future of electronic coupon clearing was thrown into disarray with the sudden shutdown of Catalina Marketing's electronic coupon-clearing test program this month.

"This is a setback for our industry," said David Sefcik, manager of corporate scanning for Giant Food, Landover, Md. "I still believe that this [electronic coupon clearing] is the direction that coupon clearing is headed, but there needs to be 100% participation on the retailer and manufacturer side for that to happen."

Retailers participating in the electronic coupon-clearing test included Dick's Supermarkets, Platteville, Wis.; Dominick's Finer Foods, Northlake, Ill.; Giant Food; Giant Food Stores, Carlisle, Pa.; Kroger Co., Cincinnati; Ralphs Grocery, Compton, Calif.; Shoppers Food Warehouse, Landham, Md.; and Vons Cos., Arcadia, Calif.

The retailers joined forces with Catalina Marketing here, which provided them with scanner technology that electronically captured coupon data and marketing information at the point of sale.

Through the scanning technology, retailers electronically transmitted coupon data to Catalina, where it was sorted by manufacturer, and then passed on to the manufacturers or their processing agents.

This process enabled participating retailers to collect coupon reimbursements within seven to 10 days, as opposed to up to 45 days through the manual processing of coupons.

"The shutdown was a small surprise, but it was mentioned to us that there was some problem with payment flow," said Michael Plumley, manager of accounting services for Dominick's Finer Foods.

He added, "Though I did not see any financial statements, part of the problem was said to be that by reimbursing their retail partners within seven days Catalina would still be waiting on collecting payment on the manufacturer side."

Catalina said the shutdown was the result of a deficiency in the number of manufacturers embracing the process. "The market demand did not increase as we had hoped," said Dan Granger, president of Catalina Marketing. "Manufacturers are still clinging to an antiquated manual process."

When the process was launched in September 1993, it was supported by several large manufacturers, including Procter & Gamble, Nestle U.S.A. and Ralston Purina Co.

"We need all manufacturers, not just the major players, to adopt the electronic clearing process," he said. "If we have 80% of the manufacturers participating, this will not work."

Retailers involved in the electronic clearing test agree that total manufacturer participation is required for the process to become a standard industry practice.

"What makes electronic coupon clearing unique is in order for it to be successful you need virtually 100% of manufacturers participating in the process," said Sefcik. "Ultimately, we need to get to the point of manufacturers relying solely on that POS data and not manually recounting the coupons -- otherwise it defeats the purpose."

Though disappointed in the program's shutdown, officials at both Dominick's and Giant Food said they support the concept of electronic coupon clearing.

"First of all, to collect payment on coupons within a week is great -- the earlier the better," said Plumley. "Also, by receiving coupon data electronically, you are eliminating the need for manually counting physical coupons, which reduces the risk of misredemptions and charge-back problems."

"We will be seeing coupon clearinghouses getting more involved in moving the industry along," he said. "Catalina needs to be complimented for moving the industry years ahead of where the process would have been if these tests were not done.