High-tech helps chain maintain leading edge - Target

Discount Store News, April 5, 1993

Target is deploying new technologies in both consumer service and store and warehouse operations as it strives to maintain its status as a leading edge retailer.

On the consumer side, Target is testing a debit card program in 12 California stores through an inter-connect with the Interlink Network division of Visa USA. The supermarket industry and a few retailers, such as Fred Meyer, up to now were the debit card pioneers.

Debit cards are similar to the cards used at bank automated teller machines to obtain cash.

In a retail store, consumers pass a debit card through a special checkout terminal, enter a PIN (personal identification number) and the system automatically deducts the amount of the purchase from their checking accounts, while electronically paying the merchant.

Target's other consumer technology test is a kiosk that enables shoppers to purchase personalized gift certificates that can be used at the discounter and more than 50 other retailers, restaurants and service providers. Target Service Express kiosks, developed by the Gift Certificate Center, are in the discounter's stores in Bloomington and Mankato, Minn., and the Target Greatlands in the Minneapolis-St. Paul market.

The Target kiosks also dispense special Target coupons and provide product information for selected merchandise.

In the store and warehouse operations arena, Target's latest moves include:

* Upgrading its automated check authorization program by installing Applied Communications check authorization software to reduce exposure to bad checks.

Last year, Target pioneered automated check authorization by rolling out the Check Reader from Soricon, which features a point-of-sale optical scanner. The vendor, in fact, developed its keyboard wedge interface for the scanner during Target's pilot program.

* Installing spread spectrum wireless communications as a replacement for the narrow band network the discounter has used. Applications for the spread spectrum network using Symbol Technologies' Spectrum One Laser Radio Terminals will be developed in-house.

Target will deploy about 10 hand-held LRT terminals per store, along with the network's hardware and software. The hand-held units, which incorporate a scanner, 16-bit computer and radio, will be used for traditional store functions such as shelf-price audit, price verification, in-store reordering and inventory receiving. The wireless technology enables data to be transmitted in real time to the in-store host computer, rather than batched for later down-loading.

The discounter switched to spread spectrum communication because the technology's wider bandwidth can handle a higher flow of data, providing faster transmission of information.

* Converting development of programs for its information management system to a computer aided software engineering (CASE) process using Texas Instruments Information Engineering Facility (IEF) technology.

The discounter has converted about two dozen MIS application uses to CASE. This effort included developing a company model that covers 14 major business areas like store operations, distribution, merchandising and financial services that was used as the prototype for conversion of other MIS programs.

CASE runs on all three Target platforms: IBM 3090 and Tandem mainframes and IBM PCs.

* Transforming its Quick Response partnerships into a true Just-In-Time program that includes increasing the information and number of documents transmitted via EDI with manufacturers and extending the automatic replenishment system now in use with a few suppliers to more vendors.

Target replenishes about two-thirds of its merchandise using the various QR technologies--scanning, EDI, shipping container marking--that form a JIT cycle with a growing number of suppliers. The chain continues to expand its library of EDI documents--including switching from company formats to VICS industry-standard formats-- to develop faster and more accurate information exchanges with suppliers.

The discounter has QR partnerships with about 1,000 vendors and is seeking to use JIT technology with as many as possible.

Besides using QR technology, this effort involves Target's meeting vendors on an ongoing basis to look at consumer numbers, inventory results and merchandise trends. The retailer and manufacturers have set up task forces that are in constant touch with each other.

The JIT drive aims to develop merchandise productivity models that use gross margin return on allocated footage and invested inventory dollars to determine stock levels and replenishment goals.

* Phasing in expert systems to provide the most efficient merchandising and distribution programs.

Target saw the benefits of expert system technology when it improved the efficiency of its seven distribution centers by using an IBM computer-based "expert scheduler" scheduling system for deliveries so that staffing and use of equipment is matched to arriving freight. The DOLRS (Distribution On-Line Receiving Scheduler) program was developed by the retailer and IBM's Retail Solutions Lab.