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Complete IT Makeover
By Mary Carlin — July 27, 2006
Since 2004 Giant Eagle has served up more than $104 million in total annualized savings to its customers, through cost cutting measures initiated through customer research. The company is continuing to focus on bringing savings to consumers and its own bottom line, with a full agenda of technology implementations ranging from price and assortment optimization to mobile personal shopping scanners and bottom-of-basket shrink initiatives.
Giant Eagle is one of the nations largest food retailers and distributors, with $5.5 billion in annual sales. Still owned by the same five families that founded it in 1931, it is one of the countrys largest private corporations, with 140 corporate and 73 independently owned supermarkets and more than 90 fuel and convenience stores in western Pennsylvania, Ohio, West Virginia and Maryland.
The man spearheading this pioneering use of technology to drive waste out of Giant Eagle operations and pass savings on to the consumer is Russ Ross, senior VP of IS and CIO of Giant Eagle. Our senior management appreciates new technologies, and were given the budget and priority to try out new concepts, he explains. But were leading edge, not bleeding edge. Were definitely focused on return on investment (ROI).
When asked which technologies have helped most in driving business efficiencies, Ross explains: In 2003, we implemented the Invatron PeriScope DSS perishables management application for forecasting, planning, control and shrink. For perishables, it provides better ordering and code dating management to minimize shrink. We also have a homegrown knowledge management application using an OASIS (Organization for the Advancement of Structured Information Standards) portal and Open Text for software. Other projects driving the recent price reductions DemandTecs price optimization and Milton Merls (recently acquired by Accenture) assortment optimization, which enables the retailer to review category performance, optimize item assortment and make better space allocation decisions.
Increasing basket size with scanning
Giant Eagle currently is piloting several new technologies that promise to increase basket size and decrease shrink. The Giant Eagle Personal Shopper (GEPS), which uses Symbol handhelds and Cuesol software, enables customers to self-scan their shopping as they go through the aisles. The company enlisted help from IBM for project management and integration, as well as the POS hardware. The pilot is in three stores, starting in November 2005. Were watching adoption rates and basket size increases before deciding to roll it out, explains Ross.
Another pilot is designed to spot unscanned items in basket bottoms. Evolution Robotics LaneHawk uses video cameras and object recognition in the checkout lanes to prompt cashiers if an item has not been scanned. Weve got that in five stores now, and were analyzing the pilot results. It looks promising, says Ross.
One homegrown initiative by Giant Eagle has transformed the companys seafood ordering process, resulting in more than half a million dollars in savings. Before, telemarketers called for the seafood orders and we had a DSD process in place, says Ross. We changed to hand-held store ordering, and the product is cross-stocked in a central warehouse. Our estimate equates the savings to $700,000 for our bottom line.
Training its focus on the warehouse, Giant Eagle implemented Manhattan Associates warehouse management system in one warehouse, and plans to have the second up in July. There are significant benefits like voice-directed put away, and the receiving process now accepts advance shipment notices and scans the vendors own labels as they arrive in the warehouse, Ross explains. The company has an RFID infrastructure in place, and is currently in pilot for data synchronization.
Loyalty program integrates businesses
Taking advantage of its dual businesses convenience store and gasoline pumps Giant Eagle has designed a loyalty program that integrates both. Fuelperks! enables shoppers to use or earn points at the companys fuel pumps as well as in the stores uses Excentus technology to manage the fuel pumps and POS, and to integrate back to IBMs Electronic Marketing Enterprise, which runs Giant Eagles frequent shopper card database. More than 3.2 million households are currently enrolled in the Giant Eagle Advantage Card loyalty program.
Helping to streamline the companys loyalty program is TARGUSinfo Retail Solutions, which reduces distribution costs by automating the capture of consumer contact information, enabling a card to be issued within minutes, rather than weeks via snail mail.
In addition to managing its customers, Giant Eagle has focused on managing its employees. The retailer recently implemented H.B. Maynards enterprise workforce management solution, which does the analysis, and BlueCubes new labor management software, which has improved workforce performance, according to Ross.
Proof of Concept Sells New Ideas
Such extensive implementation of new technologies has made Ross a canny buyer for the company. We changed our software acquisition strategy three years ago, he explains. Now, we require a proof of concept or a conference room pilot first. This adds expense up front, but it really eliminates costs down the road. BlueCube managed two stores with their labor management solution in a conference room pilot before we agreed to roll it out. In hindsight, I wouldve done this sooner. The next business area that Ross intends to focus on is human resources, which he says had been neglected, but now has projects budgeted.
There are technologies which Ross feels are too far ahead of the curve to implement just yet. Giant Eagle piloted information-based kiosks in the past, but found the usage to be too low. It currently only uses deli pre-order kiosks in its stores. I think we could be servicing a niche customer now with self-service and kiosks, but well see much more technology built around customer service in the store in the future, with personal shoppers and informational kiosks.
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