Giant Eagle: Multi-Tool Player

MICHAEL GARRY

If Giant Eagle’s IT department were a baseball team, it would be described as fundamentally sound in all areas, hitting, pitching and defense. In food retailing terms, the Pittsburgh-based chain’s 185-person IT department has excelled in all areas as well, from its stores to its warehouses to headquarters.

For Giant Eagle’s 138 corporate and 78 independent stores, the IT department, led by Russ Ross, senior vice president and chief information officer, has orchestrated the highly successful fuelperks! program. In an era of sky-high fuel prices, consumers have clamored for the discounts on fuel made possible by this program.

IT has also played an important role in facilitating the chain’s rollback of prices, using both internally designed price management and sophisticated new price optimization software. Out-of-stocks have also been reduced through the use of technology. And Giant Eagle is now testing such cutting edge systems as self-scanners for shoppers and biometric check cashing.

At its six warehouses, Giant Eagle is starting to implement a state-of-the-art, real-time warehouse management system, which will interface with a variety of transportation systems for inbound and outbound deliveries. At headquarters, the chain has developed an internal portal and a vendor portal, and is pursuing data synchronization with no less than 40 suppliers. It is also implementing a master database or single repository of data.

For its overall use of technology to bolster sales at its stores, drive efficiencies at its warehouses and communicate more effectively with its suppliers, Giant Eagle has been selected as the winner of SN’s Technology Excellence Award in the chain category.

FUEL FRENZY

The high price of gasoline was a major story throughout the past year, especially when prices spiked in the aftermath of Hurricane Katrina last September.

Giant Eagle was able to capitalize on this trend with its fuelperks! program, under which customers earn a 10-cent discount on each gallon of gas purchased at 94 GetGo stations for every $50 spent with their Advantage loyalty card in Giant Eagle stores. GetGo stations are located at Giant Eagle stores and stand-alone outlets. Reward points can be earned at 204 of the chain’s 216 stores, and applied up to the full price per gallon of gas.

The fuelperks! program, itself fueled by software from Excentus, Irving, Texas, sparked an outcry from local gas dealers. Their trade association, The Petroleum Retailers & Auto Repair Association, filed a complaint with the Pennsylvania attorney general last year, claiming that the program violated the state’s Unfair Sales Act. However, they were rebuffed last September when the attorney general rejected the claim.

“The fuelperks! program had the largest impact on our sales of any technology we worked on,” said Ross, who has been with Giant Eagle for 16 years.

Another important merchandising program at Giant Eagle, propelled by widespread price competition with dollar formats and Wal-Mart Stores, has been its reduction of everyday prices. Last October, the chain lowered prices on 3,000 items an average of 10%, following rollbacks the prior April and November on 1,700 and 3,000 items, respectively.

The price cuts were rolled out using an internally developed retail price management system. In addition, some of the price cuts were determined via price optimization software, provided by DemandTec, San Francisco.

“We have used [the optimization system] in some dry grocery categories over the past four to five months, and will roll it out over the next year or two in all categories,” Ross said. “It will be a key driver in determining the right items to reduce.

Giant Eagle has started testing some cutting-edge store devices as well. Last November, the retailer launched a one-store test of “personal shopper” scanners that allow loyalty card shoppers to scan and bag groceries during their shopping trip. Two additional stores were expected to be added to the test as of the end of January.

“We are very pleased with the number of shoppers who have used [the scanners] and their basket-size increases” in the original store, located in Irwin, Pa., Ross said. Giant Eagle is partnering with Symbol Technologies (for the scanners) and Cuesol (for the scanner software) and integrating the scanners with its IBM point-of-sale system.

SYNCING UP

Giant Eagle is actively shoring up its headquarters and supply chain systems. For example, it is implementing a master data repository, from Aldata, Atlanta. The repository will support all of the chain’s many applications. “We have a lot of packages and they have a lot of interfaces going back and forth between them,” Ross explained. “The packages will all interface to the repository.”

The chain is also among the more aggressive retailers in synchronization of product data with its suppliers. Using the 1SYNC data pool, Giant Eagle is synchronizing at some level with 40 vendors, and is close to 100% synchronization with some of them, Ross said.

Data synchronization has required considerable work, but “we’ve certainly seen a reduction in errors so there are fewer invoice discrepancies,” Ross said. “And with new item set up, we are getting better data accuracy.”