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Food for thought: how Arizona grocer upgraded its network.

Americans are becoming more demanding than ever when it comes to customer service and return for the dollar.

 Although most Americans still make

their weekly trip to the grocery store, the especially narrow profit margins in these economically tight times require that retailers make every cent count. In recent years, many grocery chains have begun turning to high-tech industries, such as telecomm networks, to find innovative ways to cut costs.

 One such company is ABCO Supermarkets

Inc., a chain based in Phoenix, Ariz. ABCO was founded in 1984 after local store managers staged a $47 million leveraged buyout of 33 supermarkets from American Stores Co., of Salt Lake City.

 ABCO quickly earned a reputation as

a no-nonsense, service-oriented grocer and made deep inroads into the hotly competitive Phoenix food market. During the next several years, five new stores were added to the chain. Then, in June 1988, ABCO doubled its size overnight by purchasing all 38 of the Lucky Stores Inc. supermarkets in Arizona.

 At that point--in terms of outlet numbers--ABCO

became the second-largest grocer in the Grand Canyon State.

 "We had been conducting all of our

communications through dial-up lines," says Gerold Johnson, ABCO's vice president of management information systems. "But the Lucky Stores were equipped with electronic funds transfer, and we realized that we had to have dedicated lines throughout all of our stores. So we went out looking for the best way to do that, and US West seemed to have the best answer to our problem.

 The first step was to install a digital data

service network system which used computers and multi-drop lines (digital lines run from the computer with numerous store addresses on each network) to link all ABCO stores to the central data processing locations.

 Because ABCO's operations center is

located in the center of Phoenix, it must go through the inter-LATA network and incur toll charges when calling stores in Tucson for data transmission or even voice communication.

 As a result, ABCO had a very large

long-distance usage bill for calls between Phoenix and Tucson. So the next part of the package was installing a city-wide custom Centron system in Phoenix and another in Tucson to tie stores together through one custom Centron common-block.

 Today, ABCO has a custom Centron

in Phoenix that ties all the Phoenix-area stores together, another in Tucson that ties all of the Tucson-area stores together, and these two Centrons are tied together by a long-distance T1 facility.

 "We brought all of our stores closer to

our main carrier's office," says Johnson. "We have complete access to all of our outlets on a round-the-clock basis, and this comes in handy when you're open 24 hours a day."

 Because of this initial installation,

ABCO was able to position itself for the transition into the next level of services--ISDN--with no major changes in their operations and no huge incremental costs.

 Rollout for the ISDN network is scheduled

to take place this year, with completion in two years. ABCO now has 80 stores, with another five stores planned for the next two years, and the ISDN network will easily accommodate ABCO's growth.

 "To a data person, bandwidth is the

limiting factor in the amount of data transmitted over a medium at any given time," says Pat Sylvester, ABCO's current account manager.

 "With ISDN, ABCO will be getting

almost four times the amount of bandwidth to perform the functions they want with their computers. Keeping in mind that they are actively trying to move from a manual and paper environment to one that is data controlled, the more applications they can write and use on their computers, the more they can modernize and streamline their operation."

 Every separate data application requires

its own overlay in the network, so by taking all of these overlays and combining them onto an ISDN basic rate line, ABCO eliminated the expense of using numerous cable pairs.

 According to Johnson, the integrated

telecomm systems have allowed him to operate many of his data applications (some of them already existing) more efficiently and cost effectively.

 For example, ABCO's operations

center can now keep track of how much of each product is sold daily at each store in a much more efficient manner. The telecomm transport modes have decreased the cost of performing this process, which already existed among ABCO's data functions.

 ABCO cash register scanners, tied to

a data processor at the store level, read the bar code of each product sold by using the UPC number. Totals are tallied automatically by their IBM minicomputer and then fed into the mainframe IBM 3090.

 "Our main goal was to save time and money."

 Product sales are determined nightly,

so managers know exactly how much of each item was sold, and reordering is completed by simply keying in the quantity of items they want. This also assists in instantly communicating price changes on certain products.

 Johnson notes that one of the hassles

most markets run into involves figuring whether vendor bills are accurate. The ISDN network integrates a system that will count products delivered through the use of a coding wand.

 The wand will count the number of

boxes delivered and through the database, and via the bandwidth on the connecting link, it will register the receipt of the order, key it into the accounting program and proceed with payment to the vendor.

 Another current data function that will

be made more efficient by the ISDN network is Electronic Funds Transfer, a system that allows customers to use their EFT cards to purchase groceries.

 "This system alone has allowed us to

draw upon a different group of customers," says Johnson. "We just installed a new credit system in which customers who have a valid Valley National Bank credit card can charge their groceries at any of our stores."

 "We're leaps and bounds ahead of our

competitors, because we've done more with our communications and voice network with our communications and voice network than most of them," Johnson says.

COPYRIGHT 1992 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Centrex/CO LANS; ABCO Supermarkets Inc. installs data lines, automates
Publication:Communications News
Date:May 1, 1992
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