Supermarket giant grows, and cuts costs

With hundreds of thousands of different items flowing through the various stores of Progressive Enterprises each month, knowing what every product is and where it’s located is vital to success.

The key to retail success is getting the right product on the shelf for the customer, and most of a retailer’s IT initiatives are usually directed to that end. Progressive, having mostly digested the infrastructural components of a recent merger with Woolworths’ parent, Foodland Associated, could be expected to have stumbled along the way. But Progressive has instead overdelivered, says IT head Alan Hesketh.

The company has achieved growth both organically and as a result of the merger. For the first half of the 2004 financial year its sales have topped $1.8 billion. Most of the stores the company has rebranded — Foodtown, Woolworths, Countdown, Fresh Choice and Super Value are part of the New Zealand group — have increased sales. While it has closed six stores — the website notes 216 — Progressive has increased its retail floor space to 283,000 sq m. It has reduced its distribution costs, cutting the number of distribution centres from 22 to 12 and extending the large Mangere centre. The combined Onecard numbers 1.3 million with 700,000 in use each month.

But the company still has some “disparity” in IT, says Hesketh.

Better integration of data and systems will help that disparity, Hesketh told the annual conference of the EAN NZ numbering body in Auckland last week. The conference was focused on the supply chain, in particular synchronising data using common standards.

IT initiatives will help the company tailor its offerings to customers both in stores and online. A new merchandising package is currently being chosen, which will allow for better category management. A single point-of-sale system is planned across stores. Progressive aims to “leverage” its telecommunications better by, for example, “backhauling” Eftpos transactions.

Progressive’s iPro internet-based promotional planning and management system, which won the technology innovation category in last year’s Computerworld Excellence Awards, will be expanded and extended to better link supply chains together.

Other projects include improving B2B links with Progressive’s 1500 local partners, improving warehouse management and experimenting with radio ID tags in the company’s meat processing plant in Otahuhu (see Kiwi firms radio in RFID progress).

Removing uncertainty in the supply chain is key — knowing what the demand is and the location of stock in store and transit — and listing new products, selling existing ones and deleting those that have reached the end of their use.

Challenges ahead for more e-trading — critical to cutting costs, says Hesketh — include rolling out certificate-based electronic invoicing, hiding back-end complexity from partners and integrating these disparate systems. All while handling the 10 million interactions with partners and the 70,000 SKUs (stock keeping units).

Says Hesketh: “We’ve got to get a lot smarter about this.”

The EAN conference, held at the Sheraton hotel, attracted more than 100 attendees to some sessions.