HANNAFORD CUTTING POS COSTS WITH LINUX OS

Michael Garry

SCARBOROUGH, Maine -- Hannaford Bros. is replacing the point-of-sale system in all of its stores with an unorthodox Linux-based platform that is the "the lowest-cost POS solution available," according to the chain's chief information officer.

"Based on our internal analysis, this is the least expensive POS solution on a per-lane basis to acquire and maintain, any way you look at it," said William L. Homa, senior vice president and CIO for Hannaford Bros. He also expects the system to enable faster throughput at the checkout and easier training of cashiers.

Homa will be speaking about the new system today at a session, "The Next Generation POS Systems," at the Food Marketing Institute's Marketechnics show, being held at the Dallas Convention Center, Feb. 23 to 25.

Hannaford launched the rollout of the new system earlier this month at a store in Standish, Maine, 20 miles north of its headquarters here. The chain plans to install it in about one-third of its 120 New England stores this year, and it intends to complete the rollout in 2004, Homa confirmed. He said that three more pilot stores would be equipped with the solution over the next three months, with the rest of this year's installations taking place in the summer and fall.

The most striking feature of Hannaford's new POS solution, which Homa described as "revolutionary," is its Linux operating system. It is believed to be the first used for a POS application by a major chain in the U.S. supermarket industry, and among the first used in any retail setting.

The Linux OS, from Red Hat, Raleigh, N.C., is running in the checkout lane on POS hardware from Wincor Nixdorf, Austin, Texas, and supports StoreLine POS software from Dallas-based Retalix. The system runs off a Windows 2000 server in the back room.

Homa attributes the POS system's low cost, which he declined to specify, in part to the Linux operating system, which carries no license fee and adds less than $50 of cost per lane, he said. In addition, the POS terminal from Wincor Nixdorf, called the BEETLE /s, has no moving parts, minimizing its maintenance cost, he noted.

"The terminal has no fan, no hard drive, floppy drive or CD drive, so there are no mechanical parts to fail," said Homa. "For a retailer, that's music to their ears."

Homa said the Linux POS system should generate more rings per minute. "The system is so fast -- there's no delay in anything," he said. "Anecdotally, it's reducing debit and credit authorization times by four to five seconds." In addition, he said the system is already reducing cashier training time by half in the test store because "the touchscreen application is so intuitive to use."

The BEETLE /S terminal, housed in a sealed chassis, runs the price lookup files in "compact flash" RAM (memory) rather than on a hard drive. It can run independently "for days" if disconnected from the back-room server, said Homa. The terminal takes up a relatively small footprint -- 4.1 inches by 11.4 inches by 13.4 inches. The power supply resides in a smaller separate unit connected to the terminal. At Marketechnics, Wincor is operating the terminal immersed in mineral oil to demonstrate its sealed, rugged qualities.

The terminal is connected to most peripherals via powered USB (Universal Serial Bus) connections, allowing cashiers to easily replace devices without powering down the system and without a service call, Homa noted. Peripherals for the POS system include an Epson TM-H6000II printer, NCR 7875 scanner/scale, Symbol LS 4007 handheld scanner, and Hypercom ICE 5500 payment terminal. All but the payment terminal use USB connections.

Homa also pointed out that the new POS system is so open that it can reside seamlessly on Hannaford's store and headquarters IP network. Hannaford can manage the system using its Tivoli applications as just another end point on the network, he said. "POS systems are usually proprietary and don't fit onto your network," he said.

The new POS platform replaces an 11-year-old proprietary ISS400 POS system, from Fujitsu Transactions Systems, Dallas, which is dropping support for the system, said Homa.

Homa acknowledged that adopting such an unconventional platform for a mission-critical application like POS is not without risks. "There's always pressure to go the conventional route," he said. "But this has a bigger payback. We took a calculated risk that it will pay off and it has. We see all encouraging signs in the pilot."

Also, Hannaford, a subsidiary of Delhaize America, is not completely new to Linux, which it uses in its corporate Web server and e-mail server, as well as thin-client Web-access machines. "We're not intimidated by Linux," said Homa, though he admitted the diskless POS terminal is new to Hannaford and a little intimidating. But he expects the payback from it to be "huge."

According to IHL Consulting, Franklin, Tenn., Linux represented 2% of the POS operating system market across retail in 2001. The operating system, which has gained notoriety as "freeware" available over the Internet and as an increasingly popular alternative to the dominant Windows operating system from Microsoft.

But Hannaford and its vendors had to overcome several technical challenges to install Linux at the point of sale. Foremost was the need for peripheral suppliers to develop special JavaPOS and Linux-compatible USB drivers in order to connect their devices to the system. In addition, the system required considerable integration of elements from multiple vendors. Hannaford worked with Wincor Nixdorf on the integration.

Lyle Walker, director of marketing for Retalix, said that while Linux is a free operating system, "there are huge challenges associated with it." These include writing special drivers for peripherals, and building and supporting the "kernel," or basic operating system code, which the vendors are handling.

Walker said that Microsoft's XP Embedded operating system was another low-cost option for retail POS and would also support a diskless terminal.