POSITIVE REINFORCEMENT

DENISE ZIMMERMAN

Retailers investing in new point-of-sale systems are placing great importance on features that will speed the checkout process today and on technology that is flexible enough to meet tomorrow's as-yet-unidentified needs.

No single point-of-sale function, though, has garnered more attention than data management. While retailers applaud the arrival of systems that can collect and store vast volumes of data -- in deeper detail than before -- they also say that the new capability makes data management more critical than ever.

Key initiatives such as category management and frequent-shopper programs could be lifted to greater levels with superior data management, retailers told SN.

The challenges associated with POS data management are great for both large and small retailers. For retailers with few stores, the cost of data management tools is a major obstacle; for larger players with deep pockets, cost is less of an issue, but the sheer volume of data generated by numerous stores can be paralyzing.

"Right now we are not making good use of the information in the system because we don't have enough tools in place for data management," said Robert Lockwood, information systems manager at Nature's Fresh Northwest, a six-store Portland, Ore., retailer.

"Executive information systems out there are generally too expensive or too cumbersome for a retailer our size, and to develop a custom application to handle the data is also prohibitively expensive for a retailer our size," he said. "It's a 'catch-22.' "

In contrast, consider a larger retailer who can afford the technology, but laments that the choices for data management tools are somewhat limited for an organization of his size -- well over 1,000 stores.

"I think one of the reasons big folks haven't gotten nearly as far, including all of my divisions, is that we just choke on the data," said a systems executive at the major chain, who requested anonymity.

"When you talk about specific individual-customer marketing, a chain with seven stores can handle that. But for a chain with over 1,000 stores like us -- think about that for a minute and a half. Your eyes just glaze over. It's just overwhelming."

Both retailers are currently evaluating POS upgrades and told SN that integration capability is key.

At Nature's Fresh, which experimented with innovative new POS features, such as multimedia customer interfaces, the emphasis has turned to more practical matters. "Our focus has shifted away from being out on the edge to trying to get a more integrated systems approach," Lockwood said.

A point-of-sale upgrade project is currently under way at Copps Corp., Stevens Point, Wis., and Mark Uebelher, director of store systems, said seamless integration plays a major role.

"Our big project for 1997 will be integrating some type of loyalty program with our scanning system, which would allow us to do a lot of different things, mainly automating our coupons and doing discounts -- in lieu of store coupons -- and also to capture more information," he said.

Copps' first test store should be operational with the new POS system by June or July, with a rollout to the remaining 16 stores to follow afterward. In addition, some of the retailers Copps services also will upgrade their POS systems, he said.

"We'll have faster processors and the printers will be a little faster, but more importantly it will enable us to automate coupons. Doing it manually really slows you down," Uebelher said.

Copps' electronic payments systems are not integrated with the point of sale now, but Uebelher is reluctant to make any major systems changes until more questions get resolved with regard to the state's electronic benefits transfer project.

"It's gotten to the point that you don't dare change to a new system until you find out what you're going to need for EBT," he said.

"The last thing you want to do is roll out something new and have to make changes for EBT. I think there's a lot of people out there just hanging onto existing systems" until an EBT implementation plan is made final.

Uebelher, who serves on the Wisconsin Grocers Task Force on EBT, said the state is working on a joint EBT program with Minnesota and hopes to go live with a system by September 1998.

Save Mart Supermarkets, Modesto, Calif., is also evaluating POS hardware and software, with an eye on frequent-shopper applications and integration capability for electronic funds transfer, said John Lasater, director of information systems.

"We have three different [POS] platforms and are now reviewing all of the hardware and future technology requirements that we have at the point of sale, i.e., frequent shopper, integrated electronic funds transfer and depot maintenance capability," he said. The latter consideration is an equipment maintenance arrangement that allows Save Mart to quickly and easily replace POS parts on an as-needed basis.

The chain hopes to consolidate point-of-sale systems by the year 2000, but that does not necessarily mean settling on one hardware vendor.

"We're not going to say we'll have one platform. Sometimes two platforms are good because you are always working with two point-of-sale vendors," he said. "The key is to make sure that both POS systems can accommodate your needs in the same way."

Lasater said Save Mart is looking to integrate electronic payments systems with the POS to eliminate the accuracy problems that are inherent with a stand-beside system.

Late last year, the chain installed a frame relay network for payment systems, replacing the two-way satellite communications network that had been in place. With the new network installed, Lasater said it's critical that any new POS systems be compatible with Transmission Control Protocol/Internet Protocol.

"We want to make sure everything is TCP/IP compliant because that way we could actually do diagnostics down to the specific piece of hardware in the lane," he said. The chain's corporate service center can currently do diagnostic work on in-store processors, but not on individual computers in the checklanes.

With TCP/IP-compliant PCs, "You could dial in and see what the user is doing, or see if the box is dead or maybe it got signed onto in too many areas. You can do a lot of support that way," he noted.

Single-store Paw Paw Shopping Center, Paw Paw, Mich., recently installed PC-based point-of-sale systems and owner Marvin Imus said, while the learning curve for staff has been substantial, the benefits are even more substantial.

"I think PC systems are the only way to go. The ability to get information in forms that you can manipulate in different ways -- back and forth from the point of sale -- is phenomenal," he said.

"What I can do with the information today just blows me away, compared to just a year ago when I thought I had the world by its tail. There's a lot more data I can keep at store level."

Paw Paw is collecting and analyzing POS data for its frequent-shopper program that segments customers into groups according to demographics and purchasing patterns. The upgrade will open the door to one-to-one customer marketing, Imus said.

The transition to a PC-based system with a Windows NT network, however, did present some challenges, he said. The new system brings greater flexibility, but each time the operating system is upgraded, staff must learn how to adjust.

"For example, our frequent-shopper system is running on the Windows NT 3.5 operating system. Well, now they've got Windows 4.0 out and probably on a regular basis they will roll out a different version of the operating system," Imus said.

"The learning curve has been significant, but my upgrade path from here on out is substantially less than if I had bought a proprietary system. I can throw all kinds of peripherals in and if the processing power begins to degrade, I can very simply and very cheaply upgrade memory, the central processing unit, processor and hard drives, with much more flexibility."

With an eye on POS flexibility, Bristol Farms, Rolling Hills Estates, Calif., is taking a new twist with the point-of-sale by taking it wireless. The retailer will test the application early next year by placing a POS terminal outdoors that can communicate with the in-store processor via wireless technology.

Another POS feature that Bristol Farms is investing in is a customer interface using Windows technology, "which gives customers a nice view of the receipt tape as the order is being rung up -- as opposed to the old style line at a time," said Ron Glickman, chief information officer.

"That's the nice thing about it -- the screen is segmented to show customers important details about their orders, such as a running receipt tape and scale display. In addition, we can show an image of our gift baskets, our floral department, our catering service and some of the departments that we think differentiate use in the marketplace," Glickman said.

While many retailers, like Bristol Farms, continue to investigate newer technologies, the focus remains on better POS integration -- but there is still progress to be made.

"As an industry, we continue to look at the point of sale as being separate from the rest of the store in terms of a technology platform," said an IS executive at a major chain. "Even when we've tied the systems together, we still say, 'This is POS and this is ISP -- we continue to duplicate the same data between those two platforms.

"We haven't looked at this from the customer perspective and the clerk's perspective. The customer sees a store -- not a store with electronic payments system and a pharmacy system. The clerks, too, want to look at it as a store, but we force them to go to one terminal to look up a customer on the pharmacy system, and to go to another terminal for frequent shopper.

"That's stupid. The technology is there" for better integrated store technology.