SATELLITE FEED

CHRIS O'LEARY

Retailers and wholesalers are leveraging their investment in satellite technology by adding new applications ranging from electronic mail and in-store advertising to video conferencing.

"We've put a lot of applications on our satellite, which has made it cost-effective," said Bob Uebelher, director of store systems at Copps Corp., Stevens Point, Wis. "Our satellite network is like a leased phone line: The more we can ride on it, the lower the cost."

Video conferencing and E-mail are among the new applications running on Copps' satellite network. Both initiatives are tightening communications systemwide, and E-mail, in particular, has improved corporate buying performance, he explained. For example, "if a buyer got a large shipment of hot dogs with only a two-week shelf date left, he used to get on the phone and make long-distance phone calls to each store, one at a time, trying to sell the product," Uebelher said. "Now he sends a short E-mail [message] that is at each store in 15 seconds."

No doubt satellite technology's speedy transfer of information is paying off for data-dense applications like batch files, retailers say. But the benefits go beyond cost savings: Data access capability of satellite technology surpasses that of many land-based networks.

Giant Eagle, Pittsburgh, recently upgraded satellite technology to create more efficient communication between the corporate headquarters and individual stores, said Joe Ratay, corporate architect at Giant Eagle.

The retailer installed a router, which enables Giant Eagle to communicate simultaneously with various store-level local-area networks. The router can also be programmed to automatically choose optimum transmission routes based on factors like low costs and short paths.

"The router gives us easier access between [in-store processors] in the stores," Ratay said. "It makes it easier for us to manage the devices in the store. Before, we had a wide-area connection to each machine individually."

Corporate-to-store communications "are now a lot more reliable," he added. The retailer currently conducts pharmacy adjudication and much of its corporate-to-store communications via satellite.

"We integrated everything at the same time; it was a big bang," Ratay said. "Our point-of-sale batches go over there and all of our batch traffic to the in-store processors for [direct-store-delivery]."

At Associated Wholesale Grocers, Kansas City, Kan., plans are in the works to expand communication with retailers via satellite.

"We now communicate with over 600 stores on a one-way satellite linkup that downloads information on a daily basis," said Douglas Carolan, executive vice president. The wholesaler currently sends messages "relative to market changes, new item bulletins and cost changes."

This month AWG is launching a pilot test of enhanced satellite applications with two retailers. As more retailers go on line with the system, it will pave the way for direct two-way communication, he said.

"The system we've helped introduce lays the groundwork for scan data retrieval from all the stores in an efficient manner," he said. "It lays the groundwork for other communicating processes that we could use in the future."

For instance, Associated hopes to use the satellite network to exchange information through electronic data interchange. "We should be able to create an [electronic] invoice, download that invoice via satellite and create an electronic payment," Carolan said.

"It will hasten the communication time and we hope we can reduce the amount of time spent processing relative to those systems," he added.

One satellite-driven application that is already delivering measurable results for both retailers and wholesalers is audio broadcast of promotional announcements and advertisements.

Broadcasts created at either the corporate level or by a third-party and regularly transmitted to individual stores lend consistency and control to store atmosphere and can drive product sales through vendor-supplied advertisements.

Supervalu, Minneapolis, uses such a system in more than 700 of its corporate and supplied stores and has seen regular sales increases from the use of satellite-based advertising.

"We track all the promotional items and we have determined there are definite sales increases by using [satellite marketing]," said Bob Marshall, president of Wincom, a division of Supervalu. "It does sell more product."

While Supervalu's corporate offices use the system to ensure that standardized announcements are played regularly in each store, local managers are also allowed input.

"Store managers can record a spot on the system at store level, and it will play in conjunction with everything that's broadcast by satellite," Marshall said. "That gives them the flexibility to personalize the messages for their stores."

Another large wholesaler using satellite broadcasts told SN the medium has had a significant impact on boosting sales.

Under the program, stores can take advantage of the advertisements by coordinating related in-store promotions, said the wholesaler, who requested anonymity. For example, one corporate store saw a 115% sales increase of a product advertised via satellite and promoted at the store level.

Satellite-based marketing is "where the growth is," the wholesaler said. "Mass media is just not as effective as it used to be."

Another area seeing some growth -- or at least growing interest -- is satellite-driven video conferencing. Copps said the interactive "real time" application holds great potential in training and strategic programs for employees in remote locations.

"We've got the video feeds in and we've got TVs in each store," Copps' Uebelher said. "Now it's just the matter of us sitting down and working out the program."

Video conferencing would create a virtual electronic meeting place, saving the company the expense of sending employees to a central location. For instance, a corporate-level floral director and all store-level floral managers could communicate from remote sites via satellite feeds into store television sets.

"It would be like 'Larry King Live,' " Uebelher said. Store-level employees "would see the floral director on TV and hear her talking. She'd be on speaker phone and they could call in and ask questions."

Such meetings would be vastly more economic than "paying 17 people to drive two hours [to a meeting], pay for their meals and have them out of the stores all day," he added.

While newer, innovative satellite-driven applications such as video conferencing may capture the imagination of some companies, more conventional applications such as electronic transaction processing cannot be underestimated.

Giant Eagle, which owns its satellite hub, decided to invest in the technology so the chain could begin offering electronic payments.

"We would have never been able to have done our interactive applications like electronic funds transfer without [satellite technology]," Ratay said. "It's the primary reason we built it.

"Our organization is not terribly widespread, but to build a terrestrial network, we would have probably involved eight or nine telephone carriers," he added. "Instead we just deal with one satellite."

Using a satellite network for credit authorizations is much less expensive than a number of leased lines, one observer said. Retailers "now get a discount because you're coming in over one line rather than multiple store locations," the observer said. "Some supermarkets have almost completely cost-justified the investment based on that discount."

Copps used its satellite network to create a chainwide negative check file, which cashiers in all stores can access in about five seconds, along with greatly expanding its acceptance of debit and credit.

"We didn't have a terminal at every lane because we didn't want to install a lot of phone lines," Uebelher said, adding that only 10 of its 17 stores accepted credit. With the satellite linkup, "we've got credit at every checkout." Response time has been slashed by about 10 seconds, he added.