MASTERS OF SCIENCE

Retailers that have embraced leading-edge technologies in areas such as computerized automation, loss prevention and marketing programs may vary widely in strategy, format and capital strength. But they share a common driving force in serving as active co-developers of the innovative projects.With new technology programs, there's no place for a cookie-cutter philosophy, according to Tom Nowak, vice

Retailers that have embraced leading-edge technologies in areas such as computerized automation, loss prevention and marketing programs may vary widely in strategy, format and capital strength. But they share a common driving force in serving as active co-developers of the innovative projects.

With new technology programs, there's no place for a cookie-cutter philosophy, according to Tom Nowak, vice president of management information systems at Price Chopper Supermarkets, Schenectady, N.Y.

"Just because it works for me doesn't mean it'll work for the guy down the street," he said. "And just because something's running great in his organization doesn't mean it's going to work for me, because I have a different culture."

Price Chopper is currently developing new

approaches for a customer self-scanning system. Guided by day-to-day analysis of customer traffic, as well as shopper feedback, the chain is working closely with the system's inventor to modify it.

"As with anything, you really have to do your homework," Nowak said. "You can't take somebody's success and apply it to your own. You have to modify it based on the way you do things."

Among the retailers that share that view is H-E-B Grocery Co., San Antonio. In front-end technology, for example, the chain understands that the "plug-and-play" nature of industry standard hardware is only the beginning. H-E-B is maximizing the utility of an open-systems platform with a host of innovative software programs at the point of sale.

With pricing integrity and reduced labor savings as its goal, Edwards Super Food Stores, Windsor Locks, Conn., has launched one of the industry's largest electronic shelf label projects. Using radio frequency to transmit prices to the shelf edge, the chain has become one to watch in wireless technology applications.

Ten-store Gregerson's Foods, Gadsden, Ala., pales in size compared with some of the industry's technology leaders. However, the company has quickly demonstrated the expansive marketing utility and effectiveness of electronic frequent shopper programs.

At Dominick's Finer Foods, Northlake, Ill., cashier productivity is on the rise and shrink is on the decline thanks to an innovative loss-prevention system that combines detailed POS analysis with surveillance systems. Following is a closer look at the strategies that have put these five retailers on the leading edge.

H-E-B: Getting to the Point-of-Sale

SAN ANTONIO -- When H-E-B Grocery Co. here talks "open," the 221-store chain is referencing more than just its migration from a closed, proprietary front-end system.

"Open" describes the wide array of new in-store applications H-E-B is implementing, and "open" is the door to massive savings. Already the chain's equipment costs dropped 16% from last year when the rollout of personal computers began. More dramatic are potential maintenance savings of 40%, projected thanks to a longer warranty period and lower parts replacement costs.

The open architecture point-of-sale systems, dubbed "information stations" by the chain, are now in place at about 120 stores. "The point of sale is the gateway for 90% of our store data. We needed to open that up," said Ed Oertli, manager of retail automation, during an industry presentation this fall.

The company works closely with its vendor, ACR Systems, Jacksonville, Fla., to make system enhancements. Among the features adding functionality and versatility:

Extensive data base: The system tracks voids, refunds and other cashier activities and stores the data for 52 weeks for productivity analysis purposes. Some 60 weeks of product movement data are also maintained.

Graphics capability: Running on 15-inch color computer monitors, a produce imaging program helps cashiers more quickly and accurately identify items. As a customer interface, the monitor displays the last 12 items scanned, more detailed product descriptions and a running total. Also, the monitor may be used later for in-store promotion, Oertli said.

On-line training: Updated training information can be loaded into the system quickly. "We all have manuals out there that are out of date about a month after you publish it. Why not put it right there at the point of sale?" Oertli said.

Bilingual capability: POS systems at H-E-B stores in large Hispanic communities can print receipts in Spanish.

Dominick's: Securing Cashier Performance

NORTHLAKE, Ill. -- Dominick's Finer Foods here is putting a high premium on productive -- and honest -- cashiers by installing a system to ensure top performance.

A cashier productivity software program linked up with the point-of-sale system compiles transaction data from each checkout stand. Based on parameters established by the 101-store chain, the software program "flags" suspicious cashier activity such as excessive refunds, couponing or voids, and prints out reports.

Early results of the first store's installation indicated a 30% reduction in cashiers operating "outside the norm."

Slated for a chainwide rollout by year-end 1995, the data analysis software program is now on line in six locations, according to Michael Watt, director of loss prevention and security. Three of those stores are working in tandem with closed circuit television cameras that "follow" specific cashiers, even as they move from one checkstand to another.

The cameras record front-end activity and superimpose the register receipt onto the video image for a complete picture of a transaction.

Dominick's, which is testing the system both with and without video surveillance, says the program is not only designed to reduce losses due to front-end theft, but also to reduce cashier turnover and training costs.

"We want to incorporate it into employee training. We don't want to lose cashiers. We're very up-front about the program," Watt told SN in an interview earlier this year.

He said cashiers whose behavior is flagged by exception reports may be scheduled to undergo retraining, or, in some cases, face dismissal.

The software program, Cashier Security and Productivity Assistant, was developed by International Business Machines, White Plains, N.Y. The video monitoring system, now installed at 51 Dominick's stores, is called POS/EM (Point of Sale Exception Monitoring) from Sensormatic, Deerfield Beach, Fla.

Gregerson's: Reaping Frequent Rewards

GADSDEN, Ala. -- An electronic frequent shopper program at Gregerson's Foods here is yielding strong results, in terms of both member enrollment and marketing data, according to Peter J. "Greg" Gregerson, president.

The six-store program has signed on 65,000 members, representing nearly 70% of total sales and almost 60% of all transactions since its launch six months ago. The company estimates that all but 5,000 of those enrolled are active "Club Greg" members.

The card-based program, which rewards loyal shoppers with in-store discounts and through targeted mailings, has also generated marketing data that's led to more effective use of advertising dollars, Gregerson said.

Since the program's introduction, advertising expense was scaled back by 10% and will be reduced another 20% early next year, Gregerson said. "We're able to reduce the amount of ad monies that we're spending and put them into areas that bring results.

"We know the best customers. We know how much they're spending and how often they're shopping, and we're able to track the ones using the card so we'll be able to start doing 'zone' mailings," he told SN.

Direct mailings targeted to specific demographic zones will become possible next year when Gregerson's adds a "numbers-crunching" software program from DCI Cardmarketing, Manasquan, N.J. The program will collect product movement information from the point of sale and draw upon the massive shopper database to generate reports for merchandising purposes.

"The data will become a lot more usable to us. We're going to know even more than we do today, to track different things like a mailing to a certain area," he explained. "We'll be able to evaluate the different promotions in even better detail than we have before."

Marketing data generated by the "Club Greg" frequent shopper program has already enabled the independent to launch more effective promotional campaigns while reducing advertising costs.

One project already starting to bring results and raise awareness of "Club Greg" is a new retail partnering program that started this fall.

"We're going out into the community and getting together with restaurants and auto services stores who offer discounts to cardholders. In turn for that, we're including them in our advertising.

"It increases the value of the Club Greg card to the cardholder, because now they're able to use it in a number of businesses around town as well as in our stores," Gregerson said.

Price Chopper: Planning on More Self-Scanning

SCHENECTADY, N.Y. -- Price Chopper Supermarkets here eschews the notion that customer self-scanning is destined to replace human cashiers; rather, it's the service gains that drive the chain to develop the technology.

Customer traffic continues to build at the stations where shoppers scan, bag and pay for purchases without human intervention, said Tom Nowak, vice president of management information systems.

The initial installation at a Clifton Park, N.Y., store drew 16% of the store's customers; six months later, 20% of the shoppers were scanning their own orders, and when the stands were integrated with conventional express lanes this fall, more than 30% used the system.

Nowak said these results underscore the systems' ability to increase customer convenience and boost productivity.

"You may be asking yourself, 'Isn't that diametrically opposed? How can you really meet both objectives?' " he said. "Well, it's a challenge."

To meet that challenge, Price Chopper worked closely with the system's developer, Optimal Robotics, Plattsburg, N.Y., to fine-tune the systems. Reconfiguring the bagging surface area, for example, made the task more convenient for shoppers, while integrating the system with conventional express lanes increased productivity for the store, according to Nowak.

Unlike other self-service checkstands tested throughout the country as early as 1988, Price Chopper's system is the only one of its kind with an automated payment function.

"We have cash accepters and we've integrated debit and credit, so once again, we've tried to minimize the reasons for having a person oversee this system and interact with the customer," Nowak explained.

Although the automated tendering feature eliminates the need for separate cashier stations, a space-and labor-saving advantage, all self-service transactions are supervised via video so staff can assist shoppers and provide price lookup codes for produce.

Price Chopper will experiment with other new features next year, perhaps in February when the self-scanning system will be brought into a second store, Nowak told SN.

"We've found there's a niche that's fulfilled by self-scanning systems and it's customer-driven," he added. "We've found that there's a core group that likes to use self-service. And why? Because you can give them more points at which to get checked out without a great increase in labor."

Nowak noted that the intallation of self-scanning lanes did not require removal of any conventional checkouts. "With the system we're testing you can get a lot more checkout points per square foot than you can in a conventional setup, so if you have an unexpected rush, the customer has that option."

Edwards: Shelving Paper Price Labels

WINDSOR LOCKS, Conn. -- Edwards Super Food Stores here may not have been the first chain to test electronic shelf labels, but it's fast becoming a leader in implementing the technology.

The chain is moving quickly with a statewide rollout of the technology. Edwards' plan to replace paper price labels with the plastic tags in its Connecticut stores by April is the most accelerated installation rate in North America.

Stores outfitted with the system transmit price changes electronically to the tags' liquid crystal display readout. The system's cost can range between $100,000 and $125,000 per store, industry sources estimate. Edwards Super Foods declined comment.

Pricing integrity is often cited as a key benefit of such systems, because prices displayed on the shelf edge are drawn from the same data files that feed the point of sale. Because price changes are made electronically, storewide updates can be made instantly.

The potential for labor savings is another big plus, say advocates of electronic shelf label technology. For example, the 17 Edwards stores using the system in Connecticut today are exempt from the labor-intensive task of item pricing mandated by state and local regulations.

"Of course we have been helped in Connecticut because of the law. Now we don't have to item-price, and you can save on that to justify the whole investment," said Robert Zwartendijk, president and chief executive officer of parent company Ahold USA, Parsippany, N.J.

Ahold, the Dutch retailer based in Zaandam, the Netherlands, operates five other U.S. chains: Bi-Lo, Mauldin, S.C.; Tops Markets, Buffalo, N.Y.; Red Food Stores, Chattanooga, Tenn.; Finast, Maple Heights, Ohio, and Giant Food Stores, Carlisle, Pa.

Electronic shelf tags installed at Edwards utilize wireless technology and are provided by Telepanel Systems, Toronto, Canada, one of two North American suppliers. Prior to committing to the systems this past spring, Edwards ran a six-month test of both Telepanel's system and one marketed by ERS International, Wilton, Conn.

Edwards declined to comment on the system's features, but other chains using the tags say the technology goes beyond pricing integrity and labor issues. In addition to displaying prices, the tags can be programmed with short promotional messages that flash alternately with the price data.

One retailer, who asked not to be named, put forth the idea that electronic shelf labels could be used to run hourly specials displayed at the shelf edge, a merchandising tactic logistically impossible with paper labels.