THE HIGH PRICE OF CLEAN DATA

MATT NANNERY

Generating clean, accurate point-of-sale scan data is the most important thing retailers can do to help themselves and the industry benefit from the industry's ambitious Efficient Consumer Response initiative.

But getting to the point where that data is clean enough to support automatic reordering and replenishment may involve changes in the way business is conducted that some retailers may shy away from.

The choice for some retailers is between clean scan data and customer service. In most supermarkets, cashiers hit repeat or multiple keys when a shopper purchases several packages of a product. Such data does not account for product variations, like flavors of Jell-O on special, for instance.

"Scan data just isn't that accurate," said Don Gallegos, president of Denver-based King Soopers. "We don't want to hold up the line while cashiers scan multiples of the same item. Customer service is the most important thing to us."

Gallegos and others recognize the value of clean scan data for continuous replenishment relationships. But they do not want to make shoppers stand on line any longer than necessary to achieve it.

King Soopers has entered into continuous replenishment relationships with several manufacturers using warehouse withdrawal data to trigger replenishment. Though Gallegos is pleased with those relationships, he acknowledged that warehouse withdrawals are not a valid indicator of what goods are actually moving through the stores. "If you base continuous replenishment on withdrawal data from the distribution centers, the actual stores could be loaded with products and you wouldn't know it," he said.

"The closer you get to the point of sale, the better the information you are feeding to manufacturers," said Denny Milnes, assistant director of purchasing for Hy-Vee Food Stores, Chariton, Iowa.

Doug Mills, director of retail efficiency at Associated Grocers, Seattle, agreed that the multiple keys on registers are to a large extent responsible for poor scan data.

"You introduce this terrible thing called the quantity key," Mills said. "You have to tell cashiers you want productivity at the front end but you don't want to hurt the quality of the data."

Mills said clean scan data is just as important for retailers' internal ECR initiatives as it is for full-pipeline replenishment schemes.

"Clean data supports not only replenishment through computer-assisted reordering, but category management and planogramming," he said. "The quality of scan data has got to improve. It has to be accounting quality. It's a retraining issue."

Retailers, however, said it would be hard to make sure cashiers scanned multiple items individually.

"That's a big task," King Soopers' Gallegos said. "We have 69 stores and over 8,000 employees -- most of them cashiers. How many are going to conform and do it right?"

Betsy Tucker, a consultant with Chicago-based Retail Systems Consulting, said retailers can alter their point-of-sale systems to make retraining unnecessary. She said retailers can render the multiple keys inoperable or limit their use.

"Retailers can only allow for the six-quantity key for six-packs and disable the repeat keys," Tucker said.

"Accurate scan data is really the key to ECR," said Jeff Nedelman, spokesman for Grocery Manufacturers of America. "It's the first domino that is going to trip the whole system. It's so essential because it tells you the mix of products that is right for each store."

Retail Systems' Tucker agreed, adding that cleaning up scan data will help the retailers in many ways. She said an effort to generate cleaner data would not be an altruistic gesture to please manufacturers.

"Retailers have to see that data as valuable to their own decision making if they are to clean it up," Tucker said. "They can use that data to check pricing on the shelf, for category management and for making buying decisions."

Proponents of ECR say the timeliness of data is also vital if supermarkets are to replenish efficiently and out-of-stocks are to be avoided. Frequent movement reports are also important if retailers and manufacturers are to get a handle on what quantities are actually sold during promotional periods.

"Timely data retrieval will let us know what sold on promotion and what sold at regular price," Associated's Mills said. "Data should be pulled back on a daily basis."

Mills said wise use of sound, timely data will help wholesalers also. The point is important as many observers say the wholesaler community will likely be the last segment of the supermarket industry to benefit from the reduced costs ECR promises.

"Ideally, we would get item-movement information from retailers, study competitive data from mass merchandisers and then make suggestions about assortments to retailers," Mills said. "If we drive sales at retail, it's better for the wholesalers -- everybody wins."

King Soopers' Gallegos pointed to monitoring shrink as another reason for focusing on point-of-sale data rather than warehouse-withdrawal data.

"The major difference between front-end data and warehouse-withdrawal data would be shrink," he said. "Keeping tabs on front-end data would give us a better handle on what our shrink actually is."