Three technologies that will change retailers' work

Drug Store News, Feb 2, 1991 by Ted Gladson

Three technologies that will change retailers' work

Articles in Drug Store News' Store Management Training Program are written by Ted Gladson of Ted Gladson & Associates, Lisle, Ill. Managers who wish to participate can do so by reading the course material and completing the questions that follow. To receive a certificate denoting successful completion of the course, 10 lessons must be completed within 18 months.

Send the completed answer sheets for grading to Drug Store News, Lucille Henry, Store Management Training Program, 305 Madison Ave., Suite 535, New York, N.Y. 10165-0079.

Technologies shape the way we perform our jobs: cars extend the range of our trade area, electronic cash registers capture and organize sales data, and video cameras improve store security. This article discusses three innovations that will change the retail environment by the mid-'90s. Some drug stores may have these new technologies already in place.

Practical Perpetual Inventory & Sales Tracking: Perpetual inventory systems have been available for years, first in a variety of manual forms and then computerized. Many drug store computer systems currently have perpetual inventory capability for the prescription department. Improvements in existing technology will make this financially feasible for the entire drug store. The effects on managers will be found in how the information is used.

Infrared scanning at the front end, available for years, will soon become virtually universal in chain drug. This will permit the capture of extensive sales data for each unit in the chain. When scanning is combined with improved data manipulation capabilities, retailers will better estimate inventory needs. But the truly innovative use of this technology and the use which will influence your job is the ability to "customize" the merchandise mix of each unit in a chain.

Customizing means managers will spend less time managing inventory, but it will produce more sales per square foot. All categories will be affected. Staples and specialties can be customized to the client base of any drug store.

Besides monitoring sales to predict inventory, it will be possible to blend sales data with trading area measurements and census track statistics (or demographic data from another source) to estimate the quantities and prices for new products to be sold. The manager can reallocate his time to other tasks.

Bank debit cards: These are plastic cards that look like credit cards, but automatically withdraw funds from your bank account. This technology exists today, but retailers have made little use of it. That will change as labor costs (to say nothing of losses from bad checks) climb and it becomes more difficult to find and keep employees.

Bank debit cards are in widespread use in Europe and will soon become common-place in the U.S. In Europe they are used at nearly every retail establishment, in automated ticket sales machines (e.g., for parking meters, concerts, transportation, telephones, etc.) and have greatly reduced the number of checks used.

In retail stores a card reader is connected directly to the cash register, which enters the purchase amount and automatically checks the customer's bank account for sufficient funds. The cash register prints the receipt, in duplicate, which the customer signs to acknowledge the debt (customers enter a PIN on a keypad to maintain security of their card). The clerk has no additional paper work to complete and there are no forms to put through an imprint machine (there is no imprint machine!). The typical transaction is completed in less than 20 seconds.

This offers two main advantages to the retailer: a guarantee of payment, because funds have been transferred electronically, and speedy check-out.

Debit cards will change the way you work, because more customers can be assisted per unit of time. For the same level of sales you will need fewer check-out clerks. It also relieves many employee judgments associated with accepting customer checks. Put another way, sales (and profitability) per employee will increase and the same level of sales can be achieved in a shorter period of time. Both trends will improve store profitability.

Debit card technology will accelerate the perpetual inventory trend, because the card can be used to capture more precise demographic data that are useful in customizing a store's merchandise mix. Currently only crude descriptors such as zip codes are used; a variety of other information can easily be included.

Vending machine sales: This old technology will be updated by adding more sophisticated electronics and replacing the coin slot with one that accepts bank debit cards. The additional electronics will be used to lead customers through a series of choices for selecting their merchandise. For example, one machine installed in a drug store could sell small high-value items such as stamps (or attached to a scale to sell exact postage), tickets (many kinds), and coupons for paying parking violations. Replacing coins with the bank card insures greater reliability, instant payment and improved security since there is no cash in the machine.