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Next month Glenn Gibson, c.i.o. of Magruder's Supermarkets, a Washington, D.C.-based 10-store independent chain with roots dating back a century, will place the finishing touches on a two-year overhaul of in-store systems. That's when the company will go live with the digital ID imaging functionality of its stores' point-of-sale printers for digital check and ID imaging.
The list of suppliers for Magruder's in-store systems revamp reads like the exhibitors' list at FMI Marketechnics. The POS printers mentioned above are Epson TM-H6000II multifunction machines, with TransScan digital check imaging and ProofPlus ID scanning. Then there are FastLane self-checkout systems from NCR, Symbol wireless LAN and FM handheld scanners for the stores' receiving staff, and Hewlett Packard PCs running an OpenField point-of-sale application called StoreCentral.NET, which is part of Microsoft's .NET framework.
"This was all part of our strategy of putting together a total in-store solution," says Gibson. "We wanted a true best-of-breed solution, and by running on an open platform, we were able to accomplish this."
When Gibson began doing his due diligence for a replacement system three years ago, he tried to be consider all options that were available to him. In the back of his mind, however, he expected that a total package from a single vendor would be the only way to go. "I wanted the back office, the host, and the front end integrated as tightly as possible," he explains.
The reason for this is that Gibson and the other members of Magruder's executive committee are big on corporate control. "We wanted to have control at the host level for things like authorizing items, maintaining the cost of promotions allowances, things of that nature. Plus we have policies and procedures that are centralized, for example, rules on how to proceed when a vendor brings in an extra flavor of ice cream from Haagen-Dazs that he offers to us for half-price. There's a procedure for cutting such items in. We would mark it in such a way that the host knew that it was an in-store only."
But after struggling to find a single source for a total integrated solution, Gibson had a cathartic moment at the 2002 Marketechnics event, when he ran into some old industry friends at the booth of Systech (now OpenField Solutions). One of Gibson's pals ran through a small dog-and-pony show about the company, and Gibson was immediately impressed.
"They had the host, they had the back office, and their own PC-based front end," he recalls. Just as important, all of the solutions were Microsoft-based: the database, the server, and even the front end registers ran on a Microsoft platform.
"We were a Unix shop with BASS, but had since converted our corporate systems over to Microsoft," recounts Gibson. "In addition, OpenField, at the time, was actually writing the software drivers for a lot of the hardware vendors, so it had development resources right there with the company. I figured, how could I go wrong with that?"
When his search ended, Gibson ended up having to decide between two retail technology providers -- SystechOpenField Solutions and a competitor. He ran the two systems side by side in a corporate lab. For the test, he enlisted the participation of users from throughout the organization, including corporate executives, store managers, cashiers, and the receiving crew -- in fact, any user who would touch the system was involved in the decision-making process. OpenField was the vendor they eventually selected.
Building for the future
Gibson quickly set to work planning out the architecture with an eye toward the future, and a commitment not only to address where the business was, but also where it was going. "I'm going to get seven to eight years out of this system," he says. "I'm already two years into it -- my first store went live in March 2003. But I sit on the executive committee, as well, so I knew that we were looking at remodeling more stores, acquiring more stores, and I didn't want to have to go back into that committee meeting and say that I needed $250,000 to upgrade the printers and software."
One necessity was to speed things up by getting away from the company's existing satellite payment systems and integrating into a virtual private network (VPN) within Magruder's corporate network. For this, Gibson went with the MicroTrax EPS framework. (Microtrax is now owned by Hypercom, based in Phoenix.)
"The system integrates into our network, so what we ended up doing is wiring all of our stores through the VPN, through T1 lines," says Gibson. "One of the things that ticked off our customers in the past was the delay in the credit authorization, because of the flakiness of our satellite. Now transactions are completed in about three seconds."
Another aspect of OpenField's technology that Magruder's decided to take full advantage of is its flat-panel displays, which Gibson uses at the checkout to run various promotions when a customer is checking out. "We scroll messages on the screens for our catering and party platter offers, and similar items," he says. "The best part about it is that we can do all of the programming ourselves. Our customers love it because it's easy to read."
Competitive pressure, meanwhile, was pushing Magruder's to get involved in self-checkout. "We are a small independent and -- as most of us independents will tell you -- are service-oriented. But our competitors, whether it be Giant or Food Lion or some larger chains like them, they're bringing in a lot of self-checkout lanes, and some of our customers wanted that," says Gibson.
You get the sense that Magruder's needed that prod from competitors and customers to take the plunge into this new technology. "I guess the analogy is back years ago, when retailers didn't want to do scanning because they felt that customers didn't like it. Well, today we're all scanning. So we felt that maybe we need to get into this and just pilot it in a couple of stores, and maybe just in a couple of lanes in those stores."
One of the reasons Gibson himself was a bit reluctant to go to self-checkout was that his chain's strong produce business, which accounts for 30 percent of sales, had the potential to make self-checkout problematic. "We're known for our exotic fruits and vegetables, because of the different nationalities here," he says of the Washington market. "But when customers use the self-checkout with produce, they must enter the PMA four-digit code, so there is a learning curve for them.
"Plus we had to adjust to fine-tuning the security scale parameters on a regular basis," continues Gibson. "There were things we just didn't know impacted the self-checkout security system. For example, a gallon of milk weighs different in August than it does in January, because milk sweats in the summer, so your weight tolerance has to be adjusted. The worst offenders are carrots. A five-pound bag of carrots can really weigh anywhere from five pounds to seven-and-a-half pounds, depending on how much water is in the carrots at the time of the weighing. The same goes for cauliflower and lettuce. Because of this, I have one person who roams the stores constantly auditing the self-checkout and checking on these product weights, for security purposes."
The import of imaging
The new ID imaging functionality was especially important at Magruder's Maryland store, since it's is one of the few retailers in that market for whom liquor sales are not prohibited by Alcohol Beverage Control (ABC) legislation. (As it sold liquor before the current legislation banning alcohol sales in grocery stores passed, the store was allowed to continue doing so under a grandfather clause.)
This is why Gibson opted for the Epson TM-H6000II ProofPlus imaging solution. The ProofPlus allows Magruder's cashiers to take a digital image of customers' ID cards, which helps to enforce compliance in checking identification for purchases of alcohol and tobacco. This reduces Magruder's liability, since an ID image is collected with each alcohol or tobacco purchase.
"Liquor sales and check-cashing services are a large part of our business," says Gibson. "The new printer lowers our overall liability while speeding up transaction time for our customers. And I have a digital image associated with the transaction. The POS integrates directly to the Epson printer; it creates a file and puts it in a directory, and I have scripts at host that pull that over my VPN at night, so I have the records at the central office."
Although the ID digital imaging functionality completes the in-store system rollout for Magruder's, the grocer plans to continue work with OpenField to adapt and optimize the system as new needs arise. It's a synergistic relationship, since Gibson and his team helped develop the software that OpenField installs at retailers today.
"They listened to us when we had specific needs," notes Gibson. "As each store went live, we learned something new and made adjustments to the system as needed. During the entire process, we developed 40- to 50-page statements of work that detailed specific needs we had for the system. They agreed to do that to help further develop their product. So I guess we became kind of an incubator for their current software. To date, we still continue to work with them, and I guess we're kind of their leading-edge customer for their current software versions."