SUPERVALU BLENDS PSYCHOLOGY WITH IT 2004-03-29 (1)

LISA BERTAGNOLI

CHICAGO -- In applying technology to meet the needs of its consumers, Minneapolis-based Supervalu also uses some basic psychology, said Bob Borlik, senior vice president and chief information officer for the retail/wholesale giant.

That was the crux of a presentation Borlik gave at AMR Research's Retail and Consumer Goods Executive Conference at the Westin River North here March 16 to 18. Borlik's rapid-fire talk -- "Investing in Technology to Create a Better Consumer Experience" -- covered strategies in the company's retail and logistics divisions.

To outline the company's approach to technology, Borlik said he'd take his audience of 200 "back to Psych 100." The company, he explained, defines its consumers by using a fundamental concept of psychology -- Maslow's hierarchy of needs: psychological, safety, love and esteem. (The fifth need, self-actualization, is up to the customer, he observed.)

Psychological needs -- product selection and availability, and consistent performance -- are "the most obvious," Borlik said. "It's the right product at the right place and the right time."

Quality data, captured via an integrated data warehouse, helps the company provide the right products to customers; so do regional and local modifications of assortment.

As for safety, "customers need to be comfortable with and understand the store map," he said. Confidentiality in financial and pharmacy transactions also fall under safety. So does understandable, dependable pricing. "That's clearly important," Borlik said. A point-of-sale lockdown, with pricing set from a host, ensures that the price the customer sees on the shelf will be the price rung up at the cash register.

Attended and self-service checkout systems and deli kiosks that have customers' orders waiting for them at the checkout line also fall under the safety category, Borlik said.

In fact, he called such kiosks the next step in Supervalu's technological evolution. "Wireless, that's where the most innovation is now," Borlik said. "With grocery, deli lines and lunchtime crowds, we have to channel people away from normal POS checkouts."

Community involvement and courting customer loyalty fall under the love category. Supervalu addresses those needs with multilingual signs and ethnic merchandising, friendly cashiers (trained in the store or via the Internet), and gift cards.

Esteem issues include value, which is linked to supply-chain efficiency. "Being a logistics company helps," Borlik said. Shrink reduction, he said, also increases value: Borlik reported "very nice results" with Shrink Trax, a product that looks at patterns of transactions in POS sale history to detect shrink.

Also on the distribution side, Borlik said the company's SV Harbor Internet system for its retail customers is also "becoming the way manufacturers and brokers conduct business with Supervalu." The system includes tools for price, promotion, event and shrink management, order visibility, reporting, store signage, employee training, customer service (especially self-service), and store and product availability.

In a question-and-answer session after the presentation, Borlik said the company is moving toward sub-20 days of supplied inventory, and that it is also moving toward perpetual inventory and computer-based ordering. "Computer-aided re-ordering is a big initiative," he said.

Regarding RFID (radio frequency identification), Borlik said the company is watching it closely. "Supervalu wants to be in a position to react quickly, not too far in front," he said. "We're right behind Wal-Mart; we're letting them drive."

Late in 2003, Supervalu's logistics division, Advantage Logistics, signed new service agreements with Atkins Nutritionals and Kroger. Responding to a question on how Supervalu persuaded Kroger, a competitor, to purchase logistics, Borlik replied, "We have good marketing people. Performance has done it for us."