HI-TECH ON THE RANGE

PETER PERROTTA

EDMOND, Okla. -- It isn't exactly Silicon Valley here. It certainly is a far cry from New York City's Silicon Alley, too.

But, that hasn't stopped Jim Mills, owner of six Snyders IGA supermarkets in Oklahoma, from using cutting-edge technology to gain the competitive advantage over the stiff competition he faces from the "Big Boys" in his market.

"We need technology to give us a more level playing field with the competition," Mills said. "Those that don't have it will suffer a tremendous disadvantage against the competition."

With that mantra in mind, Mills said he is the only supermarket operator in the state of Oklahoma who offers self-checkout in its stores.

He said he is also the only food retailer in the state's largest city, Oklahoma City, who has an on-line shopping program.

Beyond that, Mills said he is eyeing an electronic shelf-labeling system for his stores as well.

Headquartered in Edmond, Snyders has two stores there, two in Oklahoma City and stores in Bethany and Yukon. Mills, a former group president of sales and marketing for Dallas-based Fleming Cos., purchased four of the stores in April 1999. He acquired two more last year.

Mills' stores average about 42,500 square feet. The chain does about $50 million a year in total sales, Mills said.

Mills has turned to using a high-profile on-line shopping program and a state-of-the-art self-checkout system in some of his stores to keep up with some stiff competition in his market from Bentonville, Ark.-based Wal-Mart Supercenters and Neighborhood Markets and Albertson's, Boise, Idaho.

"Using technology like this helps us process our customers faster," Mills said. "It also differentiates us from our competition. That's what we are all about, trying to be different from our competition."

Currently, Mills' supermarkets have Web sites (www.snydersIGA.com) for all six stores. The on-line shopping program Snyders uses is in conjunction with mywebgrocer.com, New York.

He has the NCR scan master self-checkout system in two of his stores and is hoping to expand it to all six sometime in the near future.

"We need to upgrade the scan master program so that we can expand this feature to all of our stores," he said.

Mills would like to see more customers using self-checkout.

"It's [self-checkout] going pretty well," Mills said. "Actually, the big thing is customer apprehension of their own ability to operate the system. Once they get familiar with it, they like it.

"Actually, we could get a little more utilization out of it," Mills said. "At peak times, it's used, but we need to boost utilization at other times, too."

In order for Snyders to offer the self-checkout in all stores, Mills said he needs to upgrade the front-end systems in the stores where it is not featured.

The NCR self-checkout system Snyders uses was featured at a Food Marketing Institute show last year.

"It's a weight detection system, NCR's newest," Mills said. "We were looking at some technical issues there [at the show]. Actually, we were looking for an on-line program and when we saw the checkout system, we decided to try it."

With Snyders' system, when a customer scans an item and places it in the receptacle area where orders are bagged, if the weight of the item scanned doesn't match up, the customer is asked to rescan the item.

When it came to adopting an on-line shopping program, Snyders developed its own site. Mills decided to use a software package offered by mywebgrocer.com. The sites for his stores are hosted and maintained by mywebgrocer.com as well, Mills said.

"We're the only supermarket in Oklahoma City with on-line shopping and delivery," Mills said. Under Snyders' program, customers can have their on-line orders delivered for a fee ranging from $9.95 to $12.95, depending on the size of the order. Or, customers can pick up their own orders at the store for $6.95.

Pick-up orders are preselected and delivered to a customer's car, Mills said.

"The service is being used. It's growing. December was a very good month; we picked up quite a bit of additional use."

According to Mills, when Snyders launched its on-line shopping service in August, it had 16 orders in the initial month, 69 in September, 46 in October, 61 in November and 92 in December.

"Through December we had 284 orders for about $28,000 in on-line sales," Mills said. "The average order is $97.31."

Of the on-line shopping program, Mills said, "It's new. It's an all new thing to people. There probably will be more of a need for it in the future. We think it will grow. We're anticipating that it will grow over time."

While Mills knows that the on-line shopping program remains just a tiny portion of his chain's overall sales, he is willing to stick with it. "I like it because it just gives us another point of differentiation."

Mills hopes that through promotion the on-line program will also grow. "We put it in our weekly ads. We have run a number of promotions and we did some radio," he said.

Snyders also did some target marketing for its on-line shopping service, designed to attract the attention of the busy two-income families.

While the on-line shopping program and the self-checkout installations are still in their embryonic stages, Mills is eyeing adopting more state-of-the-art technology.

"I am taking a look at an electronic shelf-labeling system in the future," Mills said. "With this system we don't have to maintain paper shelf labels. Using an RF [radio frequency] controlled system you can electronically change the labels, and the information automatically gets transferred to the scanners.

"We don't have it yet. The cost is still high on this item," he added.

Mills is excited about the future of the supermarket retailing business, an industry he has been a part of ever since his young adult years.

When he was with Fleming, Mills was in charge of sales and marketing for several hundred stores. Prior to that, he was in the wholesale food business.

"I was in the [food] business since I was 15," Mills said. "I always wanted to own my own stores."

When Mills found himself out of a job in January 1999, he decided to pursue his dream by purchasing his first four stores from Fleming. Fleming had repossessed the stores after a retailer went bankrupt.