NEWS & SOLUTIONS 1997-12-08

DEENA AMATO-McCOY

Intelligently applied technology has the power to help a retailer stand above the crowd -- even when addressing the most basic elements of operations.

For example, a relatively simple loss-prevention technology, which records the fingerprint of a consumer cashing payroll checks, has cut check fraud by up to 90% in some units of Winn-Dixie Stores.

Implementation of technology to accept electronic benefits transfers, a government-mandated requirement, is expected to shorten checkout lines and eliminate benefits fraud for Stater Bros. Markets.

SN has profiled four leading-edge retailers using a variety of technologies to improve their performance in key areas of retail systems.

Winn-Dixie Cuts Check Losses With

Fingerprint System At POS

JACKSONVILLE, Fla. -- Stores in Winn-Dixie's Jacksonville division experienced a nearly 90% decline in fraudulent payroll check cashing through the use of a fingerprinting system at the point of sale.

Such dramatic results in the crucial area of loss prevention, where retailers' efforts can add to their bottom lines immediately as well as provide a deterrent to those considering future frauds, encouraged the chain to expand the system into two additional regions.

As customers present payroll checks with photo identification to cashiers, they are asked to touch a sticker that captures a copy of their fingerprint through a chemical reaction. The sticker is placed either on the face of the check or on the back next to the customer's endorsement.

If a counterfeit payroll check is returned to the retailer, Winn-Dixie here contacts the local police and turns the document over as evidence. A computer at the police department compares the print to those stored in its proprietary criminal files. Winn-Dixie does not have access to these files.

The fingerprint system, from Crime Bite, Aiken, S.C., was first used in Winn-Dixie's Jacksonville division in September, following a three-month test in 10 stores.

"We currently use the system in 30 of the division's stores and expect another 20 stores to be using the technology by the end of this year," said Eric Padgett, return check supervisor for the retailer's Jacksonville division. A rollout to all 97 stores in this division is planned by the end of 1998, he added.

Since implementing the system, the Jacksonville division reported between 40% and 90% reductions in payroll check fraud in some stores. "What is even more impressive to us than the numbers is that the culprits are being caught, they are submitting confessions and they are being prosecuted," he added.

The retailer's Charlotte, N.C., division began an eight-week test in 12 stores last month. Charlotte is the third division to pilot the system, following an eight-week test in 10 stores in Winn-Dixie's Raleigh, N.C., division that started in October.

Self-Checkout

Use Increases

At Calgary Co-op

CALGARY, Alberta -- Self-scanning technology, which has the potential to help the industry reduce labor costs while maintaining, or even improving, front-end service levels, has generated high-profile interest. Tests of the technology have involved the industry's biggest players, including Kroger Co., Cincinnati; Winn-Dixie Stores, Jacksonville, Fla.; and Safeway U.K., London.

But a small chain seeking to speed the checkout process at its busiest stores is also achieving impressive early results with portable self-scanning technology.

The 15-unit Calgary Cooperative Association here began testing 64 handheld units in its Shawnessy, Alberta, store in October. The test, expected to run through February, has already piqued customers' interest.

"We see an average of 8% of the store's customers using the handheld units on a regular basis," said Darlene Crowell, communications adviser at Calgary Cooperative. "During the first week of the test we had 1,000 customers using the units. The number of customers using the scanners has climbed to 2,100. The addition of 1,100 users in five weeks is impressive."

Calgary Co-op decided to test the self-scanning units as a way to expedite the checkout process for its customers. "The Shawnessy store is very busy and there is no room to install extra checkout lanes," Crowell explained.

"Ultimately, we are seeking a solution that will provide easier and faster checkout. If the self-scanning technology proves financially feasible, then we have our solution," she added.

An average of 1,000 transactions per week are done through the handheld units, provided by Symbol Technologies, Holtsville, N.Y.

"Some of those are small shopping trips, but we also see people process $200 orders with the handheld units," she explained. "Customers like using the units for big orders because they can track what they are spending, item-by-item. Others find using the units for big orders too tedious and instead rely on them only for smaller orders."

If the test results stay positive, Calgary Co-op plans to expand the units into other stores.

Stater Bros. Jumps

Into EBT, Expects

Faster Checkouts

COLTON, Calif. -- Acceptance of electronic benefits transfers will eventually be mandated for all supermarkets. Federal regulations call for nationwide EBT implementation by 2002, and many states are already well on their way.

Even so, some retailers have been reluctant to invest in EBT-friendly front-end technology, citing uncertainty about what type of system will become the standard and who will pay for equipment.

An early investment in technology, however, has helped Stater Bros. Markets here turn a requirement into an advantage in its southern California stores. By integrating EBT into its personal computer-based point-of-sale terminals, it is speeding checkout times and cutting benefits fraud.

"By bringing the [EBT] program on-line, we expect to see the time customers spend at checkout reduced by at least a third,"said Jack Brown, president, chairman and chief executive officer for Stater Bros. "We have already seen improvements in our stores, though the real time savings won't be clear until the customers are familiar and comfortable with the new system.

"A one-third reduction in transaction time is unquestionable," he added. "However, that time could even be cut by as much as half."

Stater Bros., the first retailer to launch EBT in southern California's San Bernardino county, was to roll out electronic benefits acceptance in 28 stores Dec. 1. .... The retailer went live with EBT in seven stores in November. Stater Bros. plans to have all 111 of its stores capable of accepting EBT by July 1998.

Besides faster service at the point of sale, Stater Bros. also expects to significantly cut benefits fraud. "By using a card rather than paper benefits, I believe there is virtually no chance of experiencing food stamp fraud," Brown said. "Since the program was launched we have had no incidents of fraudulent benefits reported."

The retailer is processing EBT transactions through its PC-based POS systems from NCR, Dayton, Ohio. The POS system is installed in at least 10 checkout lanes at each of the chain's 111 stores. Each POS unit in stores accepting EBT is equipped with a payment terminal for all card-based EBT programs, as well as credit and debit transactions.

Smart & Final Is

Aiming, Expanding

Loyalty Program

VERNON, Calif. -- With customer-loyalty programs proliferating, retailers are discovering it's not enough to simply provide rewards to their best customers. To really achieve a competitive advantage, such programs have to be tailored to give specific customer groups the things they really want.

In addition, the savviest retailers are discovering the valuable data such programs provide them about their customers, and are using that information to inform their business decisions.

Smart & Final here has certainly demonstrated the flexibility of frequent-shopper programs. The chain has two distinct customer groups, a consumer segment and a resell/business segment, but it is finding that both groups see functionality in its Smart Advantage card program.

Smart & Final is also using the card-based program to learn more about customer preferences. "We want to better understand our customers," said Bob Graham, director of retail systems for Smart & Final. "Their purchase behavior will help us to get the best product mix in our stores and [know] how to transact business with them. We want to provide a value to our customers."

Smart & Final's customer base is 50% resell, or business customers, and 50% retail customers. It originally focused on its business customers, which include small businesses, community groups and clubs, with the Smart Advantage program because they represented greater value for the chain. "Both classes of customers are equal in the percentage of customer transactions, however, in terms of dollars generated from our customers, we see 60% are generated from our resell customers," said Leanne Reynolds, spokeswoman for Smart & Final.

For these business customers, the Smart Advantage card doubles as a monthly charge account. Members can use their Smart Advantage card to charge large purchases, then pay the balance each month.

"It is not a bank card, it is not co-branded and it cannot be used outside Smart & Final stores. It is simply a frequent-buyer card that gives our resell customers another method to transact business with us," said Graham.

Smart & Final began signing up retail customers for the Smart Advantage card program Nov. 17. The chainwide expansion of the program followed the program's original rollout to its business members in March.

"We are hoping that by enrolling customers chainwide we will be able to make additional enhancements, like monitoring purchase behavior and moving away from advertising through inserts," Graham explained. "Rather than rely on traditional advertising, we want to move toward one-to-one marketing as a way to successfully sell products to those customers."

To market to specific customers, the 176-unit retailer is planning to implement a data warehouse by the end of this month. "In order to pursue one-to-one marketing, we really need to understand our customers. By collecting their purchase preferences and buying behaviors, and querying that information, we can better target those customers with worthwhile promotions and pricing," he said.

Through benefits like the charging privilege, Smart & Final provides value to its members. "If a retailer does not do something to enhance his program, his members are going to carry two cards," one from his store and another from a competitor, he explained.