Editorial by Sarah Herrlein, Senior Retail Technology Analyst

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IT & Supply Chain Newsletter

05 May 2011

Editorial by Sarah Herrlein, Senior Retail Technology Analyst

This week, Ahold’s Stop & Shop in the US started to pilot self-scanning with shoppers’ mobiles in selected stores. As one of the retail industry’s long-time pioneers in self-scanning and tracking customers throughout their shopping trips, the new iPhone app is the logical next step for Shop & Shop. After experiments with Shopping Buddy, a trolley-mounted touchscreen computer, the retailer started to roll out mobile self-scanning devices from Motorola under the name Scan It! in 2008. The Scan It! scheme will now be expanded to the iPhone, based on the same software from Modiv Media.


With Stop & Shop’s new app, customers can scan products in the store.

Stop & Shop’s iPhone app uses data from customers’ loyalty cards to provide offers based on past purchases. With the help of the last barcode scan and triangulation with the store’s Wi-Fi network, the system also sends out messages according to the shopper’s current instore location. Once customers have finished shopping, the app automatically forwards information about the contents of the shopping cart to the store's POS system. Shoppers can then go to any checkout in the store, scan their loyalty card and pay for their purchases. Random bag checks will make sure shoppers pay for everything in their shopping carts. The iPhone app is planned to be available for general download by the end of the summer and Modiv Media is currently working on a version for Android smartphones, too.

If Stop & Shop’s pilot turns out to be successful, other retailers are soon likely to follow its example. Self-scanning with shoppers’ mobiles requires significantly lower investments than deploying handheld devices for this purpose. This will be especially interesting for retailers who have not invested in this technology at all. They will be able to simply skip self-scanning with dedicated handheld devices and turn straight to shoppers’ smartphones as scanning units. Also, for retailers that already have experience with self-scanning, using shoppers’ smartphones could be an alternative which saves them some investment costs.

However, this technology will only spread across the globe if several conditions are met. In a retail store’s day-to-day business, smartphones will have to prove that they are able to capture barcodes clearly. Customers will have to accept the technology and consider it time-saving and easy to use. The latter is especially important, as in terms of handling, smartphones have to be treated with greater sensitivity than mobile scanners, which are more robust. Finally, the technology has to integrate well with already existing infrastructure in the stores. Further down the line, retailers will have to ensure that their systems work for all smartphones and not only for the iPhone or Android devices.

Should all this be the case, self-scanning with mobile devices will be a major success in the retail industry. As soon as more smartphones are Near Field Communication (NFC) enabled, shoppers might also be able to use their phones as both a scanning device and a mobile wallet.

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AHOLD Stop & Shop pilots self-scanning with shoppers’ mobiles

Ahold’s Stop & Shop in the US has launched an iPhone app which allows customers to self-scan products in the store, Technology Review reports. So far, the retailer has piloted the system in selected outlets, building on its existing deployment of the Scan It! technology for mobile self-scanning devices from Motorola. The new app is planned to be available for general download to Stop & Shop customers by the end of the summer. The software for the iPhone application comes from Modiv Media which also provided the technology for Stop & Shop’s Scan It! system which was launched in 2007.

The new smartphone app uses data from customers’ loyalty cards to provide offers based on past purchases and also sends offers according to the shopper’s current location in the store. Once customers have finished their shopping, the app automatically sends information about the contents of the shopping cart to the store's POS system. Shoppers can then go to any checkout in the store, scan their loyalty card and pay for their purchases. There will be random checks to make sure customers pay for everything which is in their shopping carts. Modiv Media is currently also working on a version for Android smart phones.

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BELK improves website performance with Azul systems

US regional department store chain Belk has replaced about 80 of its outdated and internally developed Java applications with new software from Azul systems, as part of a major website redesign and e-commerce platform update.

The software aims to make it easier for retailers to run Java applications, monitor and modify e-commerce applications during peak periods and improve website consistency and page loading times, according to Murali Bandaru, Belk Director for Information Technology Solutions Delivery.

“We were able to solve our Java scalability issues and provide a very consistent user experience on our site," he said. As a result of the smoother operating Java applications, Belk has said that it has reduced the time it takes a shopper to navigate a shopping cart checkout page and complete a transaction by as much as 16 seconds.

“Through various types of feedback, our customers were telling us the site had been slow to load and we addressed the problem,” said Ivy Chin, Belk Senior Vice President of E-commerce. ”Improving site performance is one way we are investing in the web.”

Belk’s site performance enhancement project and overall e-commerce technology upgrade are part of a broader plan that will cost USD125 million.

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CO-OPERATIVE GROUP selects Wyse for thin client hardware

UK grocery retailer Co-operative Group has selected thin clients from Wyse for 2,500 of the 2,750 users at the company’s new headquarters in Manchester, Computerworld reports. The move is part of the strategy to keep the building - which is scheduled to open in 2012 - as energy efficient as possible.

In July 2010 it became known that the software virtualisation technology will come from Citrix with XenDesktop virtual desktops for information workers and XenApp application delivery for task workers.

The grocery retailer will also allow users to access their virtual desktops from their own computing devices, including the iPad, and plans to offer a self-service model in which users will be able to install applications from an application store.

For its thin client project, the Co-operative Group expects a return on investment by the end of the second year.

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CVS to offer medical benefit drug management services to clients

US drugstore chain CVS has announced a new medical benefit drug management service for the company's pharmacy benefit management (PBM) and speciality pharmacy clients, Pharma Business Week reports. The offering provides a comprehensive management solution for the buy-and-bill drug model currently used by physicians under which they purchase speciality medications, administer them to the patient and directly bill the payer.

CVS will work with speciality care management company New Century Health to offer its clients integrated evidence-based medicine, treatment care pathways, quality improvement programmes, and peer-to-peer review through a web-based decision support platform. This offering will be available to CVS customers for implementation beginning 1 January 2012.

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EUROSET upgrades ERP systems

Russia-based electronics specialist Euroset has upgraded to a new Enterprise Resource Planning (ERP) information system that will help the company facilitate its strategic development plans, operating performance and management of the growing volume of business. The implementer of the project was TeamIdea, a value-added reseller working in partnership with the IT company SAP.

Previously Euroset used SAP ERP 4.7, an ERP system which had an enhanced financial module, and in July 2010 the company increased its system financial consolidation with Oracle Hyperion Financial Management. However, the new upgrade to ECC 6.0, which has about 300 functional improvements over its predecessor, provides better data co-ordination and data flow.

“The project allowed us to streamline communication between key divisions of the company, thus facilitating the overall management of the business,” said Dimitry Milstein, Financial Director of Euroset.

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GAP teams up with Visa for mobile marketing

US casual wear retailer Gap has teamed up with credit card provider Visa to deliver real-time discounts and promotions to consumers via text messages. Gap customers who opt in to participate in the service receive offers on their mobile devices when transactions are made with enrolled Visa accounts. The text messages are sent according to certain pre-determined programme criteria, such as shopping at a retailer within a specified zip code, a specific retail category type, or spend on a specific day or during a specified time period. Shoppers redeem offers by simply presenting the text message displayed on their mobile devices during their next visit to a Gap store.

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HASTINGS selects Datalogic for handheld mobile devices

US entertainment retailer Hastings has selected Datalogic to provide mobile computing to its 147 stores. The retailer has installed 750 Skorpio Gun mobile computers to read barcodes and manage storage and inventory processes.

Kristi Wall, POS Installations Project Manager for Hastings Entertainment said: “When it came down to making a decision, Datalogic Mobile’s Skorpio Gun offered the most advantages and highest performance levels… It adapted to our information systems perfectly.”

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JESSOPS implements touchscreen POS at new concept store

Camera and photographic product retailer Jessops has installed touchscreen POS systems in its new ‘Centre of Excellence’ store in Birmingham. The eight Toccare Bezel Free Touchscreens from tech solutions specialist DigiPos Store Solutions allows staff to showcase all the products and services the company provides.

Retail Technical Support Analyst at Jessops Kam Patel commented: “The black gloss finish of the Toccare screens fits in really well with the look and feel of the new concept stores, and the product is also strong and durable - given we plan to use these screens for a long time these were key factors.”

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KF Gruppen Coop to pilot Itab self-checkouts

Swedish retailer KF Gruppen has signed an agreement with shop fitting expert Itab for the delivery of ten MoveFlow self-checkout systems. In two of its Coop stores, the grocer will test the system before a possible larger rollout. POS systems supplier Visma Retail will implement the solution during the second quarter this year. | read more

KROGER to add lottery ticket vending machines to Arkansas stores

US grocery retailer Kroger has signed an agreement to offer Arkansas Scholarship Lottery tickets through vending machines in its stores in Arkansas, Supermarket News reports. Previously, the retailer had said that it did not expect to roll the machines out to all 33 of its stores in the state which sell the lottery tickets, but has since reconsidered this decision. The machines have been tested in around eight convenience stores so far.

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MEDIA SATURN Media Markt in China selects Oracle Retail

Metro Group-controlled consumer electronics retailer Media Markt has implemented a suite of Oracle Retail merchandising applications for its Chinese operations. To support its merchandising, supply chain, stores and distribution centre processes, the retailer deployed the Oracle solutions Store Inventory Management, Merchandising System, Price Management, Invoice Matching, Sales Audit and Data Warehouse. | read more

MEIJER chooses Plex Systems for food manufacturing support

US retailer Meijer has chosen Plex Systems as its cloud/software as a service (SaaS) enterprise resource planning (ERP) software solution for its manufacturing processes.

Meijer will be using the full suite of Plex Online and Cloud ERP solutions for its food processing and manufacturing facilities. This system enables efficiency through tools that cover the shop floor up to top leadership by looking at manufacturing systems, quality and supply chain management, and financial planning.

Terry Shamblin, Director of Manufacturing for Meijer commented: “We did a great deal of research regarding ERP systems to support our food manufacturing efforts. We ultimately chose Plex Online because we believe it will help us produce and manufacture our high quality food products faster and more efficiently than ever before."

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METRO GROUP Makro pilots energy saving technology from Smartcool

Metro Group-owned Makro Cash & Carry has installed Canadian green technology specialist Smartcool’s Energy Saving Module (ESM) on the refrigeration system at one of its outlets in Poland.

The project has been conducted by Bricks & Bits which distributes Smartcool's technology in Poland, Hungary, Czech Republic and Slovakia. According to the distributor, the pilot at Makro provided a return on invested capital in 20 months.

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MPREIS selects Compex Commerce as store merchandising system

Austria-based supermarket operator MPREIS has selected the store merchandising system from Compex Commerce for its operations. MPREIS partly focuses its offer on local products, with the range consisting of around 1,600 food items from Tyrol (corresponding to 20% of the total product range), produced by 200 regional suppliers. Due to this regional emphasis and the heterogeneous structure of its 192 outlets, the retailer was looking for a solution that also facilitates automated replenishment. | read more

SEARS Canada looks to draw in younger audience with Skype

Sears Canada has incorporated Skype systems into 10 of its 43 “modern shops”, which allows customers to model possible purchases for friends or family, on a 58 inch screen, before making a buying decision.

Dene Rogers, Chief Executive Officer at Sears commented: “We’ve been looking to provide new technology to assist the sales process. Skype is really the start of that interactive effort, allowing customers to communicate with friends and family outside of the stores.”

Sears is planning to enhance its e-commerce site by introducing an online programme that will allow customers to design their own furniture. The company also plans to appeal to a younger audience by offering free instore Wi-Fi in order for shoppers to check online for product information and pricing on their smartphones. Rogers believes that the younger customers are responding to the changes the company is making. In 2010, Sears saw sales of brands found in “modern shops” grow 32% from the previous year as Skype was placed outside fitting room areas the previous summer. Sears is planning to add another 35 “modern shops” to its 122 full-line department stores this year.

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SIGNET invests in ATP business testing software

Speciality jewelry retailer Signet has invested in business testing software from Applied Predictive Technologies (ATP). The group will implement the new Test and Learn system from ATP through both the H Samuel and Ernest Jones chains across the UK.

The Test & Learn software is believed to help companies trial and adapt major business investments - such as new products, marketing promotions and store refits - before going ahead with new store launches. Signet will use the method to test further marketing and promotional initiatives and staffing costs.

Test & Learn will also provide new insights into shopping behaviour and analysis of potential new schemes.

Ken Pratt, Chief Financial Officer of Signet UK, commented: “Working with APT on the pilot project has shown that we can have greater confidence in the outcomes of our business trials. In rolling out Test & Learn across our UK brands, we expect it to meaningfully change the way we test and implement major new initiatives.”

| read more

SODEXO in Norway teams up with Zeta Display for digital signage

France-based catering company Sodexo had selected digital signage supplier Zeta Display for its operations in Norway. With the new media platform, Sodexo will be able to provide customers with up-to-date information in its restaurants. Menus and offers can be updated according to the time of day and sent out either to the whole chain or to individual restaurants. | read more

SUPERVALU and Coinstar roll out free coin counting

US grocer SuperValu and coin counting kiosks provider Coinstar have signed an agreement which will allow shoppers to cash in their coins for free when they choose the retailer's gift card option at Coinstar kiosks.

The no fee option will be available in around 1,000 SuperValu stores in the US, including Acme, Albertsons and Farm Fresh outlets. The retailer and Coinstar began their collaboration on the gift card project in around 80 Albertsons stores located in Washington and Oregon in January 2010.

| read more

TESCO Fresh & Easy rewards shoppers using location-based app

Tesco-owned Fresh & Easy in the US is rewarding shoppers who share their whereabouts via a location-based mobile app, spokesman Brendan Wonnacott told Supermarket News. Customers who visit the company’s newest stores and register their arrival are awarded a coupon for a free item. Fresh & Easy is considering expanding the scheme to additional stores. “Currently it's just for new stores, but it's something that we may branch out a bit with,” said Wonnacott.

Meanwhile, Fresh & Easy has launched a range of eco-friendly household cleaning and paper products called ‘Green Things’. The range uses natural cleaning agents and sustainable paper resources. "We set out to develop Green Things as an affordable range of environmentally friendly household cleaner and paper products,” said John Burry, Chief Commercial Officer for Fresh & Easy.

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WALGREENS migrates from Unix to Linux

US drugstore operator Walgreens has selected the enterprise operating system SUSE Linux Enterprise Server from Novell. Previously, the retailer ran many of its business-critical applications on a Unix operating system. Walgreens is now running its proprietary pharmacy application, as well as certain third-party applications in a virtualised SUSE Linux Enterprise Server environment on a mix of IBM and HP servers.

| read more

WEGMANS selects Cardtronics for ATM provision

US grocer Wegmans has selected Cardtronics for the exclusive provision of ATM services across its store network. Installation of the ATMs has already begun, with the roll-out to be completed by early summer. Some of the machines will be located in Wegmans’ administration offices for staff, and some stores will have more than one machine. In total, 86 ATMs will be rolled out. | read more

WELTBILD selects SAP Retail

German media retailer Weltbild has selected the central merchandising system solution from SAP to replace its legacy system. The project comprises solutions for accounting, procurement and Weltbild’s mail order business and is based on the SAP solutions IS Retail and IS Media.

The different modules will be implemented gradually. The SAP modules FI (Financial), CO (Controlling), PS (Project System), MM (Materials Management), BI (Business Intelligence) and GTS (Global Trade Services) will be deployed in 2011.

The roll-out of CRM (Customer Relations Management), SD (Sales & Distribution) and LE (Logistics Execution) for Weltbild’s mail order business in Germany, Austria and Switzerland will start in 2012. The implementation partner for the project is Ciber.

| read more

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Supply chain

AMAZON expands DC in Werne, Germany

Amazon will expand its distribution centre facilities in Werne (North-Rhine Westphalia) up to 100,000 square metres. The retailer will move into an already existing warehouse adjacent to its current DC in Werne in July 2011. Only recently, Amazon has announced the construction of two further distribution centres in Germany. One DC will be located in Graben, near Augsburg. The other one will be located in Rheinberg (North-Rhine Westphalia). Both facilities will have a surface of 110,000 square metres and are scheduled to open in the fourth quarter of 2011.

| read more

AMAZON to open new China DC

Amazon will open its eighth logistics base in China, The Financial Express reports. The 100,000 square metre facility will be located in the Kunshan Huaqiao Economic Development Zone in the city of Kunshan, Jiangsu Province.

The two warehouses will be put into operation in July and September 2011 and will deal with all orders in the Yangtze River Delta region. Upon completion, the logistics base will be Amazon’s largest in the country. So far, the retailer has opened seven logistics bases in Chinese cities including Beijing, Shanghai, Guangzhou and Suzhou.

| read more

AMAZON to open new US distribution centre

Amazon is to open a new a new fulfillment centre in the US. The 500,000 square foot (46,000 square metre) facility will be located in Sumner, Washington and is expected to be completed in summer 2011. | read more

AWG considers Louisiana DC

US retailer Associated Wholesale Grocers (AWG) is reportedly looking to build a 700,000 square foot grocery distribution warehouse on a 68-acre site in Peal River, LA. According to Slidell Sentry News, the project is expected to create 588 temporary jobs and 299 permanent jobs.

The plans would be funded by the sale of up to USD75 million in revenue bonds, a move which has received preliminary approval from the state bond commission. AWG would pay the bonds back over a 30-year period, the company said.

| read more

C&S WHOLESALE to make 200 redundancies at DC

US retailer C&S Wholesale is to make up to 200 people redundant at a distribution centre in Jessup, Baltimore, The Baltimore Sun reports.

The distribution centre mostly serves Giant Food stores but the retailer outsourced the dry goods area to C&S Wholesale last year in a move to save costs.

C&S said the redundancies were part of deal brokered with labour union Teamsters Local 730, and that workers would be offered buyouts and employment in other parts of the business. The retailer had initially planned to close the dry goods area entirely and transfer the processes to a facility in Pennsylvania which uses robotic technology and less manpower, however alongside the 200 redundancies workers have also agreed to a USD3 an hour pay cut and will contribute 25% of their health insurance.

Giant Food will continue to run the fresh foods part of the facility, alongside the recycling and transportation areas. Giant reportedly helped C&S maintain its occupancy of the DC by cutting the lease charge C&S pays, agreeing to offer free driver training to dry goods area employees and giving preferential treatment when hiring in the transport department. An agreement has also been made under which Giant has promised not to outsource the fresh food work for three years.

| read more

COLRUYT SPAR sets up new headquarters in Mechelen

Belgium-based Colruyt’s neighbourhood store chain SPAR has acquired an industrial area in Mechelen in order to set up its headquarters there, retaildetail reports. The distribution centre will move to the city in the north of Brussels by 2013, offices will follow by 2014. The whole procedure will call for an investment of EUR50 million (USD66 million). | read more

JOHN LEWIS Waitrose to open RDC in Lancashire

John Lewis-owned Waitrose in the UK is understood to be looking to open a regional distribution centre in Chorley, Lancashire with an investment of GBP35 million (USD54.6 million). The chain has signed an agreement with Evander Properties for a 30-acre site in Matrix Park, Buckshaw Village.

The site will include a 360,000 square foot (33,445 square metre) warehouse, 50,000 square feet (4,645 square metres) of office space and a vehicle maintenance unit, enabling Waitrose to service up to 80 branches in the North of England and Scotland.

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METRO GROUP Media-Saturn fights out-of-stocks

Metro Group’s consumer electronics arm Media-Saturn and consultancy ZLU have teamed up to create a software tool with which the retailer can better measure shelf availability, Lebensmittel Zeitung reports.

Media-Saturn uses the instrument, which calculates the difference between a store’s stock availability and shelf availability to optimise its supply chain. The two indicators can differ due to high shrinkage rates or if products are still in the goods receiving or on the wrong shelf.

On a daily basis, the retailer’s Department Managers receive a list with the top 1,000 products which are out of stock, in danger of becoming out of stock or where certain indicators suggest that they could be out of stock. Store Managers get a weekly overview of all departments while Country managers and Regional Managers receive the relevant information at store level.

To quantify how out-of-stocks impact sales, the tool takes into consideration additional indicators at store level as well as customer and employee surveys. The ‘total loss of sales’ determines the percentage where out-of-stocks result in sales losses and is calculated at department and country level.

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TESCO to increase rail transportation

Tesco plans to increase the use of rail freight at its new distribution centre in Daventry, Logistics Manager reports. The retailer’s new 800,000 square foot (74,000 square metre) facility is located at the Daventry International Rail Freight Terminal and is scheduled to open this summer.

Once fully operational it will be able to handle eight trains a day. The warehouse in Daventry will replace Tesco's current grocery distribution centre at Fenny Lock, Milton Keynes, which is no longer able to cope with the volume of products required.

| read more

TOYS ‘R’ US to open US e-commerce distribution centre

Toys ‘R’ Us has announced that it will open a new e-commerce distribution centre near Reno, Nevada, to support its growing online business. The 300,000 square foot (27,870 square metres) facility will increase fulfilment capacity to the western US states and is expected to open in July 2011.

The facility is expected to utilise technology to streamline both inbound and outbound transport and to make shipping processes more efficient. A robotic picking system will be employed to move and complete outbound orders.

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WEIS MARKETS reduces energy usage 30% in distribution centre

US based grocer Weis Markets has announced that its Milton, PA distribution centre has upgraded its lighting to low watt fluorescent and LED lighting. The upgrade means a 30% reduction in the 1.1 million square foot (102,193 square metre) building’s energy usage. While the old lighting system of metal halide and high pressure sodium used 6.4 million kilowatt hours per year, the new lighting system will only use 1.3 million kilowatt hours annually. The new lighting system has a total cost of USD870,000 and should benefit from PPL Electric Utilities’ E-Power rebate programme.

R Kevin Small, Vice President, Construction and Development stated: “With the help of PPL, we’re able to reduce our distribution centre’s carbon footprint and lower our lighting system’s annual kilowatt hours usage by 80% and its overall energy costs by 30%, which translates into nearly half a million dollars in annual savings. The energy we save could power three of our supermarkets for an entire year and is also the equivalent of three months energy usage for our distribution centre.”

In 2010, Weis Markets recycled 47 million pounds of cardboard and 1.6 million pounds of plastic bags, as well as building three stores with store refrigerator systems that use 60% less energy than a typical store.

| read more

WEIS MARKETS to increases fuel efficiency with trailer skirts

US-based grocer Weis Markets has announced the installation of 16 truck trailer skirts, which are proven to reduce fuel consumption up to 5%. The skirts are installed on the side of a trailer in order to increase aerodynamics by redirecting airflow. The trailer is stabilised by preventing air from hitting the undercarriage, which reduces drag and sway. These changes create a smoother drive and increase fuel savings. Kevin Small, Vice President of Store Development commented: “The installation of the truck skirts is just one effort of our sustainability initiatives that demonstrates strong environmental leadership and corporate responsibility where we can protect the planet and positively impact our bottom line.”

| read more

View more Supply chain

Supplier collaboration

C1000 expects its suppliers to communicate via EDI

C1000 has announced that it expects all suppliers to label their pallets with Serial Shipping Container Codes (SSCC) and to give notice of their shipment with the EDI message Despatch Advice from 1 July 2011. The Dutch retailer implemented the paperless processes over the course of its Oracle Retail implementation for merchandise management. With the new process, which follows the GS1 standards, C1000 promises its suppliers less data errors and shorter waiting times for truck driver at its distribution centres.

| read more

WOOLWORTHS (AUS) sells shopper insights to brand owners

Australian grocer Woolworths (AUS) has invited its suppliers to pay to access customer data collected from the retailer’s Everyday Rewards programme, The Age reports. The retailer said that it was not distributing any private customer information from its 5.6 million cardholders, but rather data that groups people by their buying habits to reveal exactly what is in their supermarket basket. The data could ultimately result in supermarket products being delisted or enable gaps in the market to be filled.

Woolworth said that brand owners are being charged for the service because it causes the retailer costs to pull the data from its systems. Actual charges for the service have not been disclosed.

| read more

View more Supplier collaboration

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