New applications push retailing technology to the next frontier - Retailing for the New Millenium

Discount Store News, Dec 7, 1992

|You ain't heard nothin' yet folks."

This comment by Al Jolson in 1927 in "The Jazz Singer," the first film to include sound, aptly sums up the future of technology in the retailing industry.

The driving force behind retailers' use of technology in the future will have the same focus as in the past: gathering and using information to more efficiently and effectively manage all phases of a company's business.

The technology (and the acronyms) deployed by retailers today covers a litany of functions: labor scheduling, capture and transmission of sales information, computer aided design (CAD) of gondolas and even stores, electronic data interchange (EDI) of orders and other information with manufacturers, Quick Response (QR) fulfillment of orders for just in time (JIT) delivery of goods and automation of distribution centers--including the use of warehouse information network standards (WINS) and shipping container codes (SCC).

Retailers' basic merchandising goal in using EDI, QR, WINS and other technology concepts has been automatic replenishment of merchandise, so stores are in-stock on the goods consumers want when and as they want the products. In related non-merchandising applications, technology is being used to design stores, control and manage building environments and safety, produce flyers through desktop publishing, track shopper flow through departments to checkouts and promote the sales of merchandise via electronic store signing, terminals on shopping carts and electronic couponing kiosks.

While the technology available to retailers is growing, only a small number of chains--cutting edge technology merchants like Wal-Mart, Kmart, Sears, JCPenney, Service Merchandise, Toys "R" Us--avail themselves of the broad panoply of available hardware and software. As costs drop and technology continues to be updated, more and more retailers will either phase in current technology to remain competitive or else go out of business.

The "you ain't heard nothin' yet folks" future outlook for technology is clearly coming into view. Wal-Mart president David Glass presciently told Inside Retailing, a sister publication to DSN, "I think that there are going to be some unbelievable things that are going to happen in the '90s, not so much through the development of new technology but through the application of the technology that is currently in place."

The leading deployment of current technology is the full application of Quick Response in two areas:

* Extending the interchange of merchandise plans and actual sales information from manufacturers, the current partnership level, to raw material companies that supply vendors. This will result in true JIT production of goods.

* Extending the automation of distribution centers to include the entire distribution cycle of both domestic and imported goods. This involves stepping up the pace of the slow internationalization during the past few years of the full range of QR technology. This would include such key services as EDI letters of credit as well as the UPC bar coding of goods and the use of SCC.

Other technology that has been developed recently and is now being probed will come to the fore by the end of the decade. The checklist includes 3-D bar codes that will enable manufacturers and retailers to encode an extensive amount of information in UPC-marked merchandise. The information, for example, could indicate the specific store that is to get the merchandise and could include the actual dates of the manufacturing and shipment of a product to obtain more exact and detailed turnover data.

Radio frequency communications is becoming standard for hand-held terminals used by employees in stores and warehouses as they receive goods and check inventory levels. The next step is extending RF technology to the deployment of a "wireless" store, whereby all communication equipment from electronic registers to backroom controllers can be moved as needed, rather than being hard-wired to specific sites.

Electronic shelf tags are being tested and should become commonplace as technology is refined and the cost of a unit drops through mass production. The advantages of these tags include display of product information, rapid price updating and easier capture of reorder information.

But even more exotic technology awaits retailers.

Consultant Cynthia Cohen Turk, president of Marketplace 2000, pointed to mass merchandisers' use of self-checkout technology as likely in the next few years. Some supermarkets are testing it and fast food chains are actually implementing it. "As consumers become more comfortable with it, other retailers will start to use self-checkout technology," she said.

Thomas Friedman, editor of Retail Systems Alert, a technology newsletter, identified a number of innovative applications that will use such new technologies as distributed multimedia networks, interactive high definition TV and digitized graphic systems. These include:

* Customer self-help desks where shoppers can use a kiosk, POS terminal or hand-held terminal to access a central site to obtain product information and availability information for a specific store;