TOPCO IN ELECTRONIC SHELF LABEL PACT

MARC MILLSTEIN

TAMPA, Fla. -- Topco, the large cooperative buying group, has signed an exclusive agreement with ERS International, Wilton, Conn., to offer electronic shelf-labeling technology to its retail members.

The move by Topco, announced late last month at the Food Marketing Institute's second annual MarkeTechnics convention here, is one more signal that electronic shelf labeling may be about to gain much wider acceptance in the supermarket industry.

Although only one Topco member, Edwards Food Stores, Windsor Locks, Conn., has announced plans to test an electronic-labeling program, others are expected to follow suit soon, a Topco official told SN in an interview.

"None of the members have yet signed on, since we just announced this agreement. But I know Big Bear Stores is seriously looking at it, and I think a lot of other retailers are very close. They are on the fence, if not jumping over," said Scott Pollina, management information systems and logistics buyer for Topco Associates, Niles, Ill. "I think a lot of our members are going to begin pilot tests before long, and within the next two to three years I think a third of their stores will be converted. At least that is my feeling from talking to many of our members. It is going to grow much as did point-of-sale scanning 20 years ago."

Topco's retail members include 33 chains with more than 3,000 stores and together represent about $38 billion in supermarket sales. Among the retail members are Ahold USA, Dillon Cos., Dominick's Finer Foods, Eagle Food Centers, Giant Eagle, Meijer, Penn Traffic Co., Randall's Food Markets, Schnuck Markets, Shaw's Supermarkets, Smith's Food & Drug Centers and Ukrop's Super Markets.

The exclusive agreement covers a three-year period during which Topco will offer ERS' electronic-labeling system at a somewhat reduced price, although exact numbers were not revealed. Typically, the cost to install a supermarket with electronic shelf labels is estimated to be in the $125,000 range, according to industry observers.

The growing interest in electronic shelf labels is clearly evident in recent moves by several large chains, including Loblaw Cos., Toronto, H-E-B Grocery Co., San Antonio, and Vons Cos., Arcadia, Calif., to install the systems in a considerable number of stores.

According to Pollina, several factors indicate that retailers may now be ready to invest seriously in the systems. Among the key forces driving the interest are improvements in the basic technology, rising labor costs and the potential of state-mandated item-pricing legislation passing. "The technology is finally there, and labor rates are going up. I think that combination is really boosting interest in this area. Plus, the mandatory item-pricing legislation [unless there is an electronic-labeling system in place] that was passed in Connecticut and is being considered in California and New York is of a big concern," Pollina said.

"Price integrity is the big thing. It is very labor intensive to mark every item. It is almost absurd. CEOs and upper management know that. So this may be the only way to go," he said.