THE NEXT STEP IN POS

MICHAEL GARRY

Of all the technologies used by retailers, most observers agree that the one most essential to running the enterprise is that used at the point of sale.

Not only does it process consumer sales transactions, but the POS system generates the data that tell how products are performing, how consumers are shopping and how cashiers are doing their jobs, among many other applications.

Because of its importance, retailers need to keep upgrading their POS systems over time, to ensure performance and stay competitive in the marketplace. Indeed, in SN's eighth annual State of the Industry Report on Supermarket Technology, published in June, 32% of survey respondents said that they plan to substantially upgrade their POS software in 2002 on a limited basis, while 24% said they plan to substantially upgrade on a wide scale. In addition, POS systems ranked first on the list of areas that commanded the highest priorities in 2001, with 39% of respondents saying it was a high priority.

But what are retailers looking for these days when they upgrade their POS systems? There will always be certain basics that retailers will want in the POS. Because of its critical importance to running the store, reliability usually comes first. Because POS is ubiquitous in the store and across the chain, cost considerations are also key. And because so many associates use it, attention must be paid to ease of training and use, ensuring speedy throughput at the checkout.

In the interest of reliability and low cost, the chief information officer of a midsized supermarket chain who declined to be named, is planning to deploy what would be the first Linux-based POS system in the grocery industry, and one of the first in retail. Linux is a Unix-derived operating system that has gained momentum in the last few years as a stable alternative to Microsoft and because it is "freeware" -- available at no cost over the Internet. Of course, most users buy Linux through distributors who offer expertise in downloading, executing and maintaining the free code.

The CIO said he plans to deploy the Linux POS system at one store in January and make an official announcement at the Food Marketing Institute's Marketechnics show in February. Four vendors will be used in assembling the system and "getting it to work."

The CIO described the technology as a "dream" system. "If a retailer could have a dream of what he wanted at the POS, this would be it," he said. What makes the system so attractive, he said, was that it consisted of a Linux-based thin-client device in each lane that runs a POS application but has "no moving parts" -- no fan, no hard drive -- so it "never breaks" and the lane "never goes down." The lanes will be managed by a Windows server in the back room, but each lane device will have enough capacity to run offline "for days," he said.

In addition, the acquisition cost and total cost of ownership will be "lower than anyone's ever seen," the CIO said. The cost of the Linux operating system will be between $50 and $75 per license, including utilities, integration and documentation. JPOS (Java POS) drivers, which will "all be ready in January," will be employed to link up peripherals to the system, he said. Powered USB interfaces will also be used.

The supermarket chain currently runs PC-based "fat clients" in the lanes that use IBM's OS/2 operating system and Fujitsu's ISS400 application. The chain has a lot of experience with Unix servers, making the transition to Linux easier, the CIO said.

Elsewhere in its stores, the chain has begun testing Linux-based units to run deli scales. The units, the size of a hardcover book, also have no moving parts, he said.

According to IHL Consulting Group, Franklin, Tenn., Linux represented 2% of the POS operating system market in 2001, a slight decline from the prior year. "Several POS vendors like IBM, NCR, Wincor-Nixdorf and Fujitsu Transaction Solutions support Linux but are finding few retailers willing to make the jump away from DOS, Windows or IBM's 4690 operating system," said Greg Buzek, president, IHL Consulting.

"That being said, Linux has some strong growth potential in the right situations. The best opportunities for Linux-based POS are in those accounts that want full control of their POS development efforts." Many applications running on Linux platforms are written in the Java programming language, which can run on any operating system.

IBM is spending more than $5 million this year on "developments around the Linux operating system in retail," said Tom Peterson, general manager of IBM store solutions, Raleigh, N.C.

Integration, Please

Beyond the basics, supermarket operators want POS applications that are non-proprietary and easily integrate, not only with any POS terminal, but also with other applications used in the store and at headquarters, such as labor scheduling and pricing.

One retailer interested in integration, among other things, is Minneapolis-based Lund Food Holdings, which runs eight Lunds stores as well as 12 Byerly's outlets. Lund uses NCR 2127 POS systems in its Lunds stores and IBM 4690 Supermarket Application POS systems in its Byerly's stores, but the company ultimately wants a "single platform" across both banners, said Kevin Baartman, vice president of information systems.

Lund is in the process of evaluating POS replacement systems and expects to make a decision in the first quarter of 2003, Baartman said. The company plans to replace the Lunds stores' NCR 2127 systems first, followed by Byerly's systems.

For the past year, Lund has been testing the NCR Advanced Checkout Solution (ACS) on a Windows NT platform in one Lunds store and one Byerly's store. The company is also looking at Fujitsu's ISS45 system, among others.

Baartman said that Lund is "in general pleased with the ACS's performance in the store" and noted that the system reduces training time for new personnel. It is also easy to integrate with NCR's self-checkout system.

In regard to training, Debbie Briggs, manager of information systems for Lund, praised the ACS's DynaKey keyboard, calling it "very intuitive." They keyboard is designed, she said, to allow cashiers to do "the same thing three ways," making training easier for tasks like produce look-up.

Briggs and Baartman have also found the ACS's dual display capabilities (for cashier and customer) to their liking. "It allows you to market certain items in specific stores," as well as put up special graphics for the holidays, said Baartman. They have also found the system's top-down scanner able to scan Lund's many prepared-food packages without having to move them around, which may disrupt their contents.

But Baartman said the company had a "concern" about ACS's ability to share data with other back-office applications such as pricing and labor scheduling. "We would like to have best-of-breed applications that work well together," he said.

Baartman also said it was important to "extract information out of the POS and make it available to [other corporate departments like] marketing and operations." Added Briggs, "To have data on an open platform is very important."

When presented with these comments, Rock Wight of NCR responded, "We actually have many interface capabilities and will make sure our ACS sales specialist reviews these with Lund in the very near future."

According to Wight, director of solutions marketing for NCR, Atlanta, the ACS system offers Microsoft ODBC (Open DataBase Connectivity) access to all ACS data for customer-created or third-party applications; LAN (local area network) capture for packages such as Catalina, S&H Greenpoints and Sensormatic (ADT); NCR's HOME package for host data transparency to and from the store; NCR's HOUSE package for data input to data mart and data warehouse applications; and a SIL (Standard Interchange Language) package for price file maintenance. He added that the system can integrate to a pay-at-the-pump fuel operation.

In addition, Wight pointed out that NCR's ACS business partners include such application providers as Timera, Trax, TCI, Softechnics and MEI Solutions.

Another user of NCR's ACS system, Smart & Final, has made it part of a standards-based data repository system that interfaces relatively easily with other applications, said Bob Graham, Smart & Final's vice president of store technology.

Smart & Final, Commerce, Calif., completed a chainwide rollout of ACS (along with the consumer marketing component) a year ago, replacing NCR's 2127 system at its food-service and warehouse grocery stores, including 189 Smart & Finals and 46 UG Cash & Carry units. This year the chain added the corporate data repository based on the Freedom middleware system from Matra Systems, Duluth, Ga., and Microsoft SQL enterprise server. The chain has also unveiled a digital receipt program designed for the chain's small business customers.

"We made the store an integral part of the total enterprise, so the store can easily interact with corporate systems," said Graham. "It's pretty revolutionary, especially in the grocery industry, to complete a transaction, and then a few seconds later the transaction is posted at the corporate repository."

Graham said the next step is that Smart & Final is helping to develop a fast way of identifying and dealing with problematic POS data.

The data repository is based on a standard data model developed by the Association of Retail Technology Standards (ARTS), Washington. By organizing data, the data model, Graham said, makes it easier for Smart & Final to exchange data between the POS and other applications, especially if those applications are themselves compliant with the data model.

Smart & Final is also making use of ARTS' IXRetail data exchange standard based on XML technology for its digital receipt program. Graham is an advocate of more retailers adopting ARTS' standards.

Smart & Final has also employed another standard -- SIL -- to link the POS to a corporate pricing system. SIL, developed by the non-profit Food Distribution Retail Systems Group (FDRSG), is designed to facilitate data exchange between disparate applications.

"Architecting around standards is important to us," Graham said in a presentation at the Retail Systems 2002 conference in Chicago in June.