ERS, TELEPANEL TO MERGE EARLY NEXT YEAR

DEENA AMATO-McCOY

WILTON, Conn. -- Two of the supermarket industry's strongest electronic shelf label vendors, Electronic Retailing Systems here and Telepanel Systems, Markham, Ontario, announced they would merge in the first quarter of 1998. Retailers expressed optimism the combined company would offer improved service and possibly lower prices for the ESL technology.

"From our perspective this merger will lead to good synergies between the two companies and, in turn, will result in better technology support to the retailers using their units," said Joe Alicandro, manager of operations support for Stop & Shop Cos., Quincy, Mass.

"This is a great advantage for us, especially since we have both systems within our 19 stores that are using ESL tags," said Bernie Rogan, spokesman for Shaw's Supermarkets, East Bridgewater, Mass. "The consolidation of two major competitors is a benefit for us, because logistically we only have to make one phone call instead of calling two separate vendors about any issues with the technology."

Electronic shelf labels are plastic tags that display product prices via a liquid crystal display. A chip housed inside the tag receives pricing information via radio frequency technology, so shelf pricing can be updated simultaneously with the store's point-of-sale system.

The merger was announced Oct. 29. "The transaction, which will officially happen during the first quarter of 1998, will allow us to move forward as a single entity and use both our technologies and expertise to benefit the market," said Chris Skillen, chief executive officer for Telepanel.

The combined companies plan to provide a single platform that would allow retailers to use either ESL system. "We are establishing one common software platform, or standard, that will support both systems," said Bruce Failing, chief executive officer of ERS.

"ESLs provide a stronger integrity of pricing accuracy, especially when the prices match those scanned through at checkout," said Christian Haub, president and co-CEO of A&P, Montvale, N.J. "Price integrity also allows retailers to reduce shrink and labor. Instead of changing prices, we can rededicate those associates to customer service and selling product."

A&P launched a 40-store rollout of Telepanel's electronic tag system last month. The retailer's only concern is that the merger would increase the cost of installing the system.

Overall, retailers were unsure about the merger's effect on system costs. "The company as a whole still needs to remain competitive," noted Stop & Shop's Alicandro.

Failing expects to see 1,000 stores using the ERS and Telepanel units by the year 2000. "Together, we have 165 stores using our technology to date, with another 150 stores committed for 1998," he said.

ERS would function as the parent company, and Telepanel would be considered a subsidiary, he added.