PUBLIX TO REDO POS WITH NEW TECHNOLOGY 2004-09-13 (1)

MICHAEL GARRY

LAKELAND, Fla. -- Publix Super Markets here plans to replace its traditional IBM-based point-of-sale system in its 800-plus stores in the next year with more than 16,000 PC-based POS terminals from Hewlett-Packard (HP).

HP, Palo Alto, Calif., announced earlier this month that Publix would become the first large food retailer to install HP's PC-based rp5000 POS devices in its stores. HP thereby becomes a significant player in the POS market for large supermarket chains -- a market that has been dominated by IBM, Armonk, N.Y., and NCR, Atlanta. IBM declined to comment.

Publix announced last year that it has selected Retalix, Dallas, to be the supplier of the POS software, StoreLine POS, which will drive the HP terminals. Publix will also be adding 2,000 HP ProLiant servers to its stores to run in-store processing, including pricing and inventory functions, and to support pharmacy operations.

"As we keep pace with rapid growth, it's an absolute requirement that we deploy technology that is flexible and cost-effective to respond to constant changes in our highly competitive business, and at the same time reduce IT costs and complexity for store operations, ultimately improving services for our customers," said Danny Risener, chief information officer, Publix, in a statement referring to the new HP technology.

Publix declined to comment further.

The Publix announcement comes at a time when many food retailers are looking at replacing aging POS equipment.

In SN's 10th Annual State of the Industry Supermarket Technology Report, published in February, 59% of retailers surveyed said they planned to upgrade their POS software this year either substantially (23%) or on a limited basis (36%). Regarding POS hardware, 59% of respondents said they planned an upgrade, either substantial (16%) or limited (43%).

"In terms of glaring opportunities, an area of particular potential in supermarkets is the replacement of aging POS hardware," according to the "IT and the North American Supermarket" study published this year by IHL Consulting Group, Franklin, Tenn. "Some units are now reaching 10 to 12 years of age and are due to be replaced in the next two years. By our estimates, there are over 300,000 POS units that can be replaced in the next three years."

Another IHL Consulting report, "2004 North American Retail Point-of-Sale Terminals," stated that IBM's 4690 POS system "continues to have about 70% market share of the installed base [of POS operating systems] in the top 20 food retailers." Overall, IBM has a 37% market share in supermarkets, which for the first time is not the leading share, the report said, noting "Windows NT/2K/XP now holds 39% of the overall share and has its highest share among the Tier 2/3 retailers."

HP's rp5000 terminal, introduced in June 2003, uses the Intel Pentium 4 processor and runs on the Microsoft Windows XP Embedded operating system, "a lower-cost version of XP," said Leigh Morrison, vice president, retail sales and solutions, HP. In January, at the National Retail Federation Convention & Expo in New York, HP and Microsoft announced a "Point-of-Sale Migration Service" aimed at "helping retailers migrate from existing, proprietary point-of-sale platforms" to a Microsoft-based rp5000 system and other "open POS systems."

Morrison said the rp5000 will enable Publix to reduce its cost to support its POS and to introduce new applications more quickly. In addition, a key reason for Publix to deploy the HP terminals is that the chain "won't have to rip and replace its current peripherals, so it wasn't as expensive" as alternatives, she said. The rp5000 offers powered USB ports for peripherals.

Publix will take the next 12 months to roll out the terminals chainwide, according to Morrison.

The rp5000 was designed to be "retail hardened" and secure, and sustain a five-year life cycle, thus meeting the needs of retailers, said Morrison. Ordinary PCs typically have a one-year life cycle. The cost of a single rp5000 unit, fully configured with peripherals, is about $2,500, she noted.

In a separate announcement this month, HP stated that 7-Eleven, Dallas, has completed a five-year, $55 million deployment of HP technology in 5,300 U.S. locations. The technology supports 7-Eleven's store-level inventory management process that allows store managers to re-order best-selling products.