PENN TRAFFIC BUILDING SATELLITE STORE LINKUP

SYRACUSE, N.Y. -- Penn Traffic here is building a $2.8 million satellite-driven communications network to link its expanding store base.The chain is developing two laboratory sites to test and refine existing store applications -- from automated direct store delivery to a frequent-shopper program -- before rolling out the satellite network to 200 to 300 units early next year. Such applications are

SYRACUSE, N.Y. -- Penn Traffic here is building a $2.8 million satellite-driven communications network to link its expanding store base.

The chain is developing two laboratory sites to test and refine existing store applications -- from automated direct store delivery to a frequent-shopper program -- before rolling out the satellite network to 200 to 300 units early next year. Such applications are now running on a dial-up land-based system.

Currently, Penn Traffic operates about 250 stores in the mid-Atlantic region, but its purchase of 45 stores from Acme Markets, Malvern, Pa., is expected to close next month.

Penn Traffic plans to equip all stores with very small aperture terminals that will provide the communications link between headquarters and stores in four states, according to Frank Lolli, director of telecommunications.

"The main reason for the VSAT network is to get a common infrastructure that crosses the geographical locations and to be able to add to our network any future stores very inexpensively, quickly and easily," he told SN.

The satellite link, working off a master earth station in Atlanta, will replace the land-based dial-up network that has proven slow and costly for Penn Traffic stores in Ohio, West Virginia, Pennsylvania and New York.

"Here's where the economic justification comes in: The VSAT will provide very quick response time, especially with regards to electronic funds transfer," Lolli said. "To go from dial-up to a VSAT means going from 30 seconds to 6 to 8 seconds [to process EFT transactions] at the front end."

Lolli declined to specify the projected savings in telephone charges, but said it would be "significant."

Although the VSAT network

rollout is set to begin in earnest next year, at a rate of 25 stores per week, Lolli noted that about 20 stores in the Buffalo region are using the terminals in a limited manner. "Today, we have 10 stores doing EFT live and by year-end plan to have 45 to 50 installed," he said.

However, it is the laboratory stores Penn Traffic is setting up now in Syracuse and Columbus, Ohio, that will implement advanced telecommunications projects first. "All of our existing dial-up applications will be tested over the VSAT network and verified to work as we expect them to work," Lolli said. "We want to test things before we just deploy everything."

Among the applications to be driven by satellite rather than dial-up communications are debit and credit card transactions, price maintenance, inventory control, item movement and daily sales. Other applications to be enhanced include automated direct store delivery, pharmacy adjudication, in-store music and a frequent-shopper program.

"With its advanced technology and greater bandwith capacity, [the VSAT network] will allow us to consolidate our store local-area networks into a company-wide area network," Lolli added.

The VSATs were provided by Scientific-Atlanta, Atlanta, which owns the master earth station linking the stores to headquarters. Penn Traffic operates supermarkets under the names Big Bear Stores, Big Bear Plus, Bi-Lo, Insalaco Markets, P&C Food Markets, Quality Markets and Riverside Markets.