PATHMARK EMBARKS ON AMBITIOUS TECHNOLOGY PROGRAM

DAN ALAIMO

CARTERET, N.J. -- Pathmark Stores has embarked on an aggressive investment program for its information technology, said Bob Schoening, chief information officer.

The program is based on the renewal of an outsourcing agreement with IBM, Armonk, N.Y.

Pathmark started working with IBM 10 years ago. It recently renewed its relationship with IBM, signing a five-year agreement.

"With our emergence as a public company, we have been on a path of rebirth of the corporation and we are beginning to make significant investments back into the business in our stores," Schoening said.

"We've got a significant renovation program going on and we are also going to be significantly investing in information technology over the next several years, not only to bring ourselves up to the market standard, but also to try to push the envelope with newer technology to make our people in our stores and in our headquarters more productive," he added.

Among the technology projects in the works are:

The implementation of a frame-relay system (a switching protocol for a wide-area network).

Replacement of the chain's satellite and land-line communications system.

Upgrading the local area network at headquarters.

Replacing the company's financial software and e-mail.

Upgrading the point-of-sale system to IBM's SurePOS 700 system.

Schoening expects to have the frame relay system completed by October, the financial software suite implemented by November, and the rest -- except for POS -- by December.

Along with the POS system, the retailer will also install an IBM eServer x200.

Moreover, IBM Global services will provide data center operations, application development and maintenance, help desk services and other support services.

"IBM understands our business objectives and has the expertise to help us build and maintain the IT infrastructure we need to compete," said Frank Vitrano, executive vice president and chief financial officer, Pathmark.

"We are embarking on some rather ambitious activities and we are looking for a fairly quick implementation of a number of these with the intention of improving how we are able to provide services internally to the people who really run the business of the supermarket," Schoening said.

"We will examine the ultimate impact that it has on providing a higher level of service to the customers who shop our stores."

The open front-end system is expected to be piloted in the fall, and rolled out in the first half of 2002, he noted.

"The whole concept of open systems will allow greater ease in attaching different types of devices into the POS environment," he said.

"Along with many of my peers in the supermarket industry, we have been pressing IBM and others to move the technology in that direction so that we can comfortably select the best-of-breed components that suit our specific business needs in the market that we serve."

He would not discuss specific details of the front-end system, but indicated that debit and credit-card applications are an example of the types of things the chain wants to do.

Also on a wish list are using fingerprints rather than cards to identify customers and implementing various wireless applications.

"Before, you just couldn't easily take those other activities that have become very common in supermarkets and tie them cleanly into your point-of-sale environment. As you move forward with the open systems, it is much easier to attach these devices and make them part of a comprehensive sales-gathering system," Schoening said.

"Where this is all heading for a retailer is that a variety of different technologies -- such as POS, customer databases containing loyalty card information, merchandising systems, back-office systems, supply chain systems, company intranets and the Internet itself -- will work together seamlessly. Then, retailers can do a better and more cost-effective job of offering personalized service to their most profitable and loyal customers," said an IBM spokesman.

"We call that e-infrastructure, in which all of the systems are linked into one e-business infrastructure across the entire enterprise -- from the store to the supply chain. That is impossible without open standards. Open systems, throughout the hardware, software and middleware, enables everything to seamlessly connect with everything else," he said.