TOP PERFORMERS

DAN ALAIMO

Supermarkets are climbing fast in their use of the latest technologies and even when it seems some of them have reached the top, there is still farther to go.

Leading-edge retailers have their choice of projects these days. Point-of-sale upgrades and improvements top many lists, while others work in the back office to establish intranets that connect all facets of the organization.

Despite the heavily publicized collapse by many "pure-play" Internet shopping businesses, some supermarket companies continue to see a future in home ordering and are gradually building up their on-line presence. They see the combination of stores and modems as a long-term winner.

Following are eight examples of leading retailers and the technologies they have recently implemented.

Hy-Vee Sets Store-Based Home Shopping

WEST DES MOINES, Iowa -- Hy-Vee Food Stores here has started rolling out a store-based Internet and telephone home-shopping service.

"This industry is searching for what might work best, and we think we have found something that is going to work well for us," said John Briggs, vice president, treasurer and chief financial officer. "The real question remains, how quickly this is going to grow as a customer preference. If it does grow and becomes extensive, we are going to be right there with it."

Hy-Vee is using a third-party system from HometownGrocer.com, Northfield, Minn. However, the program and its components are identified as Hy-Vee. The retailer provides the personnel and the delivery service. All products will be offered with the exception of some service departments, such as video rental.

HometownGrocer.com has been operating a home-shopping program in Hy-Vee's Rochester, Minn., store for about five years, beginning as a phone-only service and then extending it to the Internet, said a source close to the program.

"We are doing it because we want to present our customers with the type of shopping that they want. We do have an increasing number of customers that like the convenience of it," Briggs said.

Promotion of the service will be limited to in-store, as it has been in the test, he said. "We are going to leave that to each store director to determine how they can best use that tool. We look at it as another tool for our stores and as a tool for customer convenience," he said.

One reason for going with an outside service, rather than setting up a home-shopping service in-house, is the relatively small demand, he said. "Right now, in my mind, it hasn't grown to the level that would help the in-house investment really make sense."

In the program, customers have the option of choosing phone or Internet ordering, delivery or pick-up, and credit card or check payments. They can also choose to order just grocery items in advance and select fresh products in the store. Delivery fees will range from $8 to $15 depending on the location, said a source. These fees will be set by the individual store. In the long-running Rochester, Minn., test, Hy-Vee charges $8, the source said.

Dick's Offers Internet Service to Customers

PLATTEVILLE, Wis. -- In one of the more unique promotions of the past year, Brodbeck Enterprises, under the Dick's Supermarkets banner, is offering its customers Internet access at reduced rates. The primary goal of the program is to boost Internet usage among customers, but it also has a strong tie to the retailer's Savings Club Card. It is called, 'Savings Club Connections.'

"The bottom line here is, in order to grow Internet penetration and to use it to communicate with our customers, and to grow the value of e-mail promotions as well as paperless opportunities like U-pons and ValuPage, it is important that we get more customers connected," said Ken Robb, senior vice president, marketing.

From participation levels in its three-year-old Web site, the retailer determined that Internet usage among the customers of its eight stores is at about 10% to 15%, well below national numbers. At the same time, the company recognized the potential for e-marketing activities.

A secondary objective of the program is to increase the value of the loyalty-card program, Robb noted. "That is being done by positioning this new program around the Savings Club Card with the bonus phone minutes, the on-line savings and the tie-ins with the brands," he said.

While the program promotes 200 items a week, it does so without resorting to price reductions, Robb said. Customers are offered a reduction in their Internet access fee, which is deducted automatically. For customers who don't desire Internet service, Dick's program allows them to earn long-distance telephone card minutes.

Ultimately, Dick's might get involved in on-line shopping, but with the low Internet penetration at present, that is in the longer-term future, he said.

The Internet service costs Dick's customers $14.95 a month, which Robb said is lower than other comparable local services and is accessible by local or toll-free calls. In this area, access to national providers like America Online is usually a toll call, he noted.

Compared to free Internet access offered by some companies, this is a full Internet service, with customer support and no intrusive ads, he said.

The retailer has two partner companies in the program: Universal Promotions, Pittsburgh, which is setting up and running the Internet service, and Tele-Currency Promotions, Minneapolis, which is signing up brand participation, providing the telephone card component and tracking customer participation, Robb said.

Fresh Encounter Sets BeeLine Shopper

FINDLAY, Ohio -- Fresh Encounter here has rolled out the BeeLine Shopper home-scanning program to seven of its Fulmer Supermarkets in the Dayton-Springfield, Ohio, area.

The program enables customers to scan empty product containers and coupons at home, and generate shopping lists sorted by store aisle. It also makes health-related recommendations on food purchases, and electronically generates coupon savings. While Fresh Encounter's program is focused on building loyalty and is based on paper lists printed at home, the BeeLine system has the potential to interact with on-line shopping programs. BeeLine is based in Troy, Ohio.

"BeeLine gives our customers another way to find out what is going on in their stores," said Eric Anderson, vice president of merchandising and marketing at Fresh Encounter, which operates 28 stores under eight banners throughout Ohio.

"It tells customers how they can shop smarter, faster and healthier. For us, it is just a natural tie-in to our strategy as being the local community market in the towns we serve," he said.

"As a smaller company, we are still trying to determine what our Internet involvement should be," said Jason Bock, Fresh Encounter's director of advertising. "This is an excellent opportunity for us to look at it from a different angle than some other retailers.

Customers are charged a $29 deposit and a $25 annual subscription fee, which can be offset with special coupons offered through the program. "If someone really uses the system, it won't cost them anything at all," Bock said. A source close to the project expects these fees to decline as economies of scale take hold.

Publix Revamps IS Development to Focus on Delivery

LAKELAND, Fla. -- With the advent of business-to-business exchanges, e-commerce, intranet, UCCnet and more, Publix needed a faster and more responsive approach to developing systems. As a result, the retailer has embarked on a project to restructure its entire development organization and all its processes, said Jerry Gates, director of information systems development.

Gates and his staff have been working at not only changing the development organization, but the way the company thinks about development. "We've got to see our job as delivering business functionality," he said.

In the past, the company found that building its own systems gave it competitive advantage through flexibility, but times have changed. "The competitive advantage now is time-to-market, getting it out there so the business can use it," he said.

"We decided our purpose is to partner with Publix business areas to rapidly deliver IS business solutions. This was a culture change. We saw ourselves as developers. But we had to say, it doesn't matter whether we develop it, whether we buy it, whether we integrate it. We are about delivering to the business so that they can compete. We had to get that mindset going," he said.

The result of the restructuring will be "a holistic approach to development," Gates said. "We want to be able to have different teams develop different applications for different business areas at different times that can leverage each other. We don't have to worry about whether they are going to be able to go together. We feel that component-based technology is really going to take us there."

Gates has set 12-, 24- and 36-month targets for the effort. "In the 12-month period, I think I am going to have a lot of people who are uncomfortable and a lot of people who are in the learning stage. But we are going to be delivering some applications that are really flexible enough to meet the new business demands," he said.

Corporate Intranet Is Economical and Efficient

WEST VALLEY CITY, Utah -- Harmons is realizing unexpected value and speed of applications deployment from a corporate intranet, said Ken Pink, vice president, information systems. Not only has the intranet helped the retailer achieve its initial goal of facilitating communications among its 10 stores, but it has improved efficiencies in the many areas covered by the system, said Pink. On top of that, the intranet is easy and time-efficient to expand and maintain, he said.

"We save a lot of money," said Pink, noting that wasn't the retailer's original intention. "We put this in three years ago with the idea of making Harmons one family again. From a communications perspective, we needed to go back to the day where we were a single store," he said.

With its 11th unit under construction, Harmons is hardly a big chain by today's standards. "But we did see our culture starting to go away. We saw the inability of our store department heads, our store directors and our senior management people to freely exchange ideas and use collaborative-type computing and applications. That's why we put it in," he said.

In addition, the intranet improves efficiencies in areas like human resources, help desk, electronic reports, e-mail, policies, procedures and training. "We found that we have continual benefits in saving money from virtually every department using it," Pink said.

The Harmons intranet is based on Lotus Notes running across a wide-area network using a single IBM Netfinity server. Tomax Technologies, Salt Lake City, extended this application with its Retail.net EMS applications suite.

When the system was originally installed, it was budgeted at $125,000, but "we made it happen for considerably less." Ongoing expenses include the server, network architecture and one staff member, a developer/administrator, and a budget that is "not real high," he said.

"This software deploys very quickly. You can get 80% of the value really fast -- in 20% of the time," he said. This is primarily because everything is browser-based.

With the support of management, the intranet has become part of the retailer's culture, even to the extent that few of the applications developed for the intranet originate in the information systems department. "We get the ideas for virtually everything that we do from the people working in the stores. We like to think that it is the culture that we created around this product that has accomplished that," Pink said.

Big Y To Roll Out New Interactive POS System

SPRINGFIELD, Mass. -- Big Y Foods here is rolling out a new interactive, point-of-sale system that integrates store operations, a customer loyalty program, Internet capabilities and corporate systems, said John Sarno, vice president of information systems.

The most distinctive characteristic of the system is its dual touch screens, one for the cashier and one for the customer, capable of displaying not only the items and prices as they are scanned, but recipes, frequent shopper savings and real-time customer surveys, with results reported immediately to headquarters. It can also display product information and advertising, and allow the customers to specify how they want the information on their receipts sorted.

"We try to be progressive and we think of this as a customer transaction station, not just as a cash-out area," Sarno said. "Big Y is trying to build a two-way experience with the customer. We are a very highly service-oriented company, and it's not just talk on our part. We don't always just talk about prices, we talk about service, service, service, the customer, the customer, the customer," he said.

Big Y decided to roll out the system, supplied by ICL's Retail Systems Division, La Jolla, Calif., only days after the first store opened with it after seeing how pleased customers were, Sarno said. "We took our first pulse of whether we were successful with it on opening morning. We saw those customers go through and they were smiling. That's what we wanted to achieve. The benefit is delighted customers and the growth of our business," he said.

"For the last 10 years, our shopping experience was built around a loyalty program, but it was a one-way communication. The customers would come in, present their cards, we would have already started trying to delight them with what we thought they would want," Sarno said.

"But our service model has changed, as has the whole industry's. We have to start asking customers what they want, and run an analysis on what they want and hope to delight them, and that's what this accomplishes," he said.

Andronico's Kiosks Activate Shopper Interest

ALBANY, Calif. -- An ambitious touch-screen interactive kiosk program at an Andronico's Market store is attracting significant customer response, said Kathie Mullally, director of electronic marketing.

The retailer, based here, has 11 kiosks in its Danville, Calif., store. "We are creating a different feeling in each of our departments. We like to think that our customers will have a sense of having had a really good time, that they enjoyed themselves while they were here and taken home something that will improve the quality of their lives," Mullally said.

The kiosks are used to communicate product features in various categories, such as wine and olive oil. They also serve to promote and provide information about Andronico's Premier Customer frequent-shopper program. "We can steer our customers toward the things that they may not notice while all of their senses are being assaulted in that store," she said.

Located in different parts of the store, some kiosks are on endcaps while others are in in-line shelving, and one freestanding island station has two screens, with the second one at a lower position for children and elderly customers who might be using mobile carts or wheelchairs while shopping.

The kiosks are from AP Unix, San Diego, and the frequency program is Allegiance from Triversity, Toronto, a company recently created out of the recent merger of Trimax, Toronto, and Stores Automated Systems, Bristol, Pa. The Danville store is the only one of Andronico's 10 units to have the frequency program or the kiosks, although the retailer is considering a wider rollout, Mullally said.

Mullally estimated that about 10% of the store's customers regularly use the kiosks. The content of the kiosks will change and new functions will be added, she said. For example, "Customers soon will be able to go to the kiosks and see where they stand in earning their next reward. They will be able to get offers specifically targeted to them when they scan their card at the kiosks," Mullally said. Customers can even print out a temporary frequent-shopper card if they have forgotten theirs, she said.

Price Chopper Testing Electronic Checks

SCHENECTADY, N.Y. -- Seeking to cut transaction costs, Price Chopper Supermarkets here is testing an electronic check-conversion program at its Dunmore, Pa., store. This is thought to be the first test of the digital-imaging check readers by a major U.S. supermarket chain, said industry observers.

"We feel that it is going to add greater efficiency at the front end and that there are some cost savings as well, even after the investment," said Joanne Gage, vice president for consumer and marketing services at Price Chopper. The retailer is using electronic check-conversion services from BankServ, San Francisco, and digital-imaging readers from Hypercom Corp., Phoenix.

With the check-conversion system, the digital readers take a photo image of a customer's blank check, capturing the checking account number, as well as the name and address, according to a source close to the test. The check is voided and given back to the customer, but the electronic image will be available if needed later. Customers need to present fresh checks for each transaction. Customers also have to sign a receipt as they would for a credit or debit transaction.