STATER BROS. NETWORK CUTS BAD CHECK LOSSES

DENISE ZIMMERMAN

COLTON, Calif. -- Stater Bros. Markets here has reduced bad check losses by 30% halfway into a chainwide rollout of a check authorization system.

The chain is putting stores on-line with a new network, which also includes a debit-credit approval system, at a rate of four per day and expects to have all 110 stores connected this month. Prior to this spring, Stater Bros. did not accept credit and debit cards.

"We paid for the [network investment] just in the reduction of bad checks, so when we add customer benefits it will be at no cost to our customers," Jack Brown, president, told SN.

"That's very critical," he added, "because we are the low price leader in our market and we have to be careful, in everything we do, that we don't give the appearance of raising prices because of new services."

The check authorization system "will let us know when a customer has cashed more than a given number of checks in the store, or chain, and allows us to set parameters to make it as tight or as loose as we need," said a source familiar with the situation.

Brown said Stater Bros. will explore new initiatives such as an electronic frequent shopper program but has no immediate plans in place.

The chain's new payment systems network features a financial switch developed by Abco Foods, Phoenix. Because the communications software was written for a mainframe environment, Stater Bros. did not need to make major investments in new hardware.

Debit-credit terminals were provided by Verifone, Redwood City, Calif. About half of Stater Bros.' stores will be equipped with integrated card readers and older point-of-sale systems will add stand-beside units.

The chain is now accepting Visa, MasterCard and Discover Card as well as debit cards. This fall, Stater Bros. will add the American Express charge card to its offering of payment options.