Speed, always an important ingredient in food logistics and retail technology, was an especially dominant theme in 2005.
For example, one of the biggest news events of the year, Hurricane Katrina and its devastating aftermath, underlined the importance of a fast and flexible supply chain. While some government agencies fell short in this regard, food distributors like Associated Grocers, Baton Rouge, and Wal-Mart, were well prepared and reacted with alacrity and precision to the needs of hard-pressed retail stores and consumers.
Several other developments in the supply-chain arena aimed at streamlining the flow of goods between manufacturers and retailers. Data synchronization, for example, which saw considerable growth this year with the rollout of the Global Data Synchronization Network, can directly improve the speed with which new products get to the shelf, as well as the speed with which vendor invoices are processed.
Radio frequency identification pioneer Wal-Mart Stores demonstrated how RFID can improve supply-chain efficiencies and speed up in-store replenishment, thereby reducing out-of-stocks. In addition to Wal-Mart, other retailers began to seriously pursue RFID tests, including Albertsons, Hannaford Bros. and Publix.
In the store, retailers continued installing technology aimed at saving shoppers time. Notably, biometric payment, allowing shoppers to pay by placing their index finger in a biometric scanner, is gaining wider acceptance. Portable self-scanners, which enable shoppers to scan and bag their groceries during - rather than at the end of - their shopping trip, are being tested by more stores.
But 2005 will also be remembered for the many threats, both man-made and natural, to the retail enterprise. In addition to the barrage of hurricanes lashing stores in Florida and the Gulf Coast, retailers found themselves dealing with database security breaches that compromised the security of consumer-credit data. The threat of organized retail-theft rings was spotlighted as two new national retail databases aimed at collecting information on this activity were introduced.
The rise of fuel costs both impacted supply-chain efficiencies and prompted some retailers, like Giant Eagle, to aggressively link in-store purchases with discounts at the pump. And high credit-card interchange fees continued to rankle retailers, prompting some to launch legal actions against the credit-card companies.
Several retailers also sought to harness the power of nature through an emphasis on environmental technology. Wal-Mart, in particular, opened two "experimental" supercenters in McKinney, Texas, and Aurora, Colo., featuring a wide array of environmentally friendly systems, from solar panels to wind turbines.
Data synchronization was front-and-center in the industry this year, as its infrastructure became established and more trading partners committed to the process. The GDSN, the standards-based network of certified data pools sharing product data via a central Global Registry, was established and staffed as a business unit of Brussels, Belgium-based GS1.
The number of companies subscribing to the Global Registry is now 554 (96 retailers and 458 manufacturers), a 250% increase since 2005, according to Sally Herbert, president, GDSN. More than 432,000 items are listed in the Global Registry, a 130% jump since January.
In the data pool arena, two major mergers occurred that are expected to strengthen the data synchronization market - the merger of UCCnet and Transora into 1SYNC, and the merger of the WorldWide Retail Exchange and GNX into Agentrics.
Also notable has been the growing commitment of retailers and wholesalers to the global data sync process.
Last month, a group of seven food distributors last month issued a letter to their suppliers "endorsing the Global Data Synchronization Network and requesting that our suppliers use the GDSN when synchronizing their data with us." Those distributors include Albertsons, Associated Food Stores, Associated Wholesale Grocers, Supervalu, Unified Western Grocers, Wal-Mart and Wegmans Food Markets.
In support of data synchronization, much attention was paid this year to the issue of data quality - whether the data associated with a product accurately reflects its physical attributes.
Last spring a consortium of six trade organizations was launched to tackle the data quality issue. Those organizations include Grocery Manufacturers Association, Food Marketing Institute, GS1, Global Commerce Initiative, CIES and AIM. "They are working to have a data accuracy protocol available to [GDSN] users and data pools in the first quarter of next year," Herbert said in a recent SN-hosted e-seminar on data synchronization.
On the RFID front, Wal-Mart presented solid evidence this fall of the technology's impact. That evidence came from a Wal-Mart-commissioned study by the University of Arkansas, Fayetteville, on the effect of RFID on product availability at outlets operated by Wal-Mart Stores.
The study found that RFID led to a 16% reduction in out-of-stocks while helping replenish out-of-stock items three times faster than comparable items could be replenished using standard bar code technology.
Wal-Mart's RFID tags use electronic product codes, a digital identification system, to identify the contents of pallets and cases. "This is no longer a take-it-on-faith initiative," said Linda Dillman, executive vice president and chief information officer, Wal-Mart, in a statement. "This study provides conclusive evidence that EPCs increase how often we put products in the hands of customers who want to buy them, making it a win for shoppers, suppliers and retailers."
For most of the year, Wal-Mart engaged in a test of RFID technology at 130 outlets, including stores and clubs, and three distribution centers in north Texas. By the end of October, the number of outlets in the program increased to 500 and the number of DCs to five. About 130 suppliers have participated in the program, shipping pallets and cases equipped with RFID tags. Next month, Wal-Mart is bringing its next top 200 suppliers into the program.
Among in-store technologies, biometric payment, promising faster checkout and the ability to dispense with plastic cards, made significant strides in 2005. Piggly Wiggly Carolina, Charleston, S.C., completed the rollout of biometric payment technology from Pay By Touch, San Francisco, to all of its 84 company-owned stores. Cub Foods, a division of Minneapolis-based Supervalu, announced it is rolling out the same system in its 24 Chicago East Region stores and in the 65 stores in its West Region. Pay By Touch itself made news earlier this month by acquiring its competitor BioPay.
Some retailers believe that contactless credit cards or fobs, which shoppers merely tap or wave near a reader, is the technology consumers will prefer to use to speed up the payment process. This year, Meijer became the first U.S. supermarket or supercenter chain to accept MasterCard PayPass as a contactless payment option chainwide.
Still other retailers see the future of payment in cell phones. A few Boston-area stores began allowing shoppers to use their cell phones to pay or collect loyalty discounts via a system provided by MobileLime, Watertown, Mass.
Complementing the growth of self-checkout lanes, portable scanning devices that allow shoppers to scan and bag their purchases as they shop continued to be used at Food Lion's five Bloom stores in the Charlotte, N.C. area, as well as at Albertsons stores in the Dallas market. More recently Giant Super Food Store, opened on Oct. 12 by Carlisle, Pa.-based Giant Food Stores/Tops Markets, a division of Ahold USA, began offering shoppers portable self-checkout (EasyShop) along with traditional front-end self-checkout (EasyScan).
Portable self-scanning units have also teamed up with shopping-cart screens that provide shoppers with product offers and other information. The best-known example of this is the Shopping Buddy, pioneered by Stop & Shop, Quincy, Mass. (See story, Page 51.)
Check processing also continued a trend emphasizing speedier electronic processing, as more stores moved toward check conversion and check imaging, both of which dispense with the handling of paper checks.
Digital media also made headway in 2005. Albertsons and Pathmark, Carteret, N.J., both rolled out a point-of-sale broadcast network from Premier Retail Networks, San Francisco, and plasma screens for interior departments from SignStorey, Fairfield, Conn. Price Chopper Supermarkets, Schenectady, N.Y., also opted for the SignStorey screens in produce and bakery-deli areas.