FRED MEYER WILL SPEED, STRENGTHEN ITS NETWORK

DENISE ZIMMERMAN

CHICAGO -- Fred Meyer Inc., whose recent acquisition makes it the nation's sixth-largest mass merchant, is adding new functionality and greater power to its communications network systems.

Next month, the company will install high-speed T-1 lines to stores in order to carry both voice and data communications, said Walter Spellman, vice president of information services.

Additionally, in the next few months the chain will add "store and forward" functionality to facilitate electronic transactions in the event of an outside point of failure, such as a third-party's network link shutting down.

Spellman discussed future network enhancements during a presentation at last month's Retail Systems '97 conference and exhibition here. Only four weeks ago, Fred Meyer, Portland, Ore., acquired 152-store Smith's Food & Drug Centers, Salt Lake City, pushing the company's combined annual sales past $6.7 billion.

The company's expanded presence in Utah brings with it greater involvement with electronic benefits transfer programs. During his talk, Spellman outlined how Fred Meyer implemented both EBT and debit systems, pressured by an aggressive timetable that some believed to be unachievable.

EBT is the electronic distribution of food stamps and other government benefits through a card-based program rather than a paper-based system.

"We were told we couldn't get debit and electronic benefits transfer in less than two years," he said. "We did it in six months."

The rapid installation was not by Fred Meyer's choice, however. The state of Utah established timetables for retailers.

"We were told on Aug. 10, 1995 that we needed to have electronic benefits transfer up by Feb. 1, 1996 -- and at that time we didn't even have debit. Our plans were to roll out a debit system some time in 1996," Spellman said.

Because the company was new to the food business in the state of Utah, it learned late in the game that the deadline for implementation was rapidly approaching.

Rather than place blame on whomever should have been aware of the new requirements, Fred Meyer moved swiftly and dedicated to the project a large number of staff and outside resources -- up to 50 people, many of them on a day-to-day basis.

A 16-question request for proposal was prepared for hardware vendors in a matter of days and, after hearing from six vendors, Fred Meyer settled on customer-interactive card readers from Atalla, San Jose, Calif., a division of Tandem Computers, Cupertino, Calif.

The devices, which enable customers to swipe their EBT and debit cards and enter personal identification numbers, feature four-line displays. Spellman said the displays will allow for in-lane customer surveys to be taken in the future. In addition, the terminals can be customized to accept smart cards and frequent-shopper cards.

PIN pad software was provided by IBM, Armonk, N.Y., and the devices were encrypted by POSdata, Gig Harbor, Wash. Credit network software was provided by Retail Electronic Payments Systems, Phoenix.

Only 10 days into the pilot, Fred Meyer was operational with electronic benefits in the six stores bound by the state-imposed EBT schedule.

Going forward, Fred Meyer is working on EBT projects for stores in Oregon, Idaho and Alaska.