The Best of Creative Computing Volume 1 (published 1976)

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Why Supermarkets Are Going Bananas Over Computers (1974 introduction of UPC codes, bar code scanners)

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longer be leery of the computer, the magical machine that's cut costs, beefed up
production and delivered decision making data for so many other industries in
today's business community. In boardroom after boardroom, food chain executives,
who've traditionally resisted automation for a handful of reasons, are making
major decisions to commit mammoth amounts of capital in a last ditch attempt to
fatten their wafer-thin profit margins.

The Postage Stamp Code
But for the first time, food chains are possibly finding it a little easier to
make that "go or no go" decision. lt all appears to hinge on a code the size of
a postage stamp that is revolutionizing everything. lt's called the Universal
Product Code, and thanks to a massive cooperative effort by virtually every
American grocery product manufacturer, the UPC will be "source marked." ln other
words, the price code is put on at the plant, not stamped on at the store. This
alone should result in considerable savings (some say 20 percent) in labor

 Not surprisingly, UPC implementation is not happening overnight. Nevertheless,
the Uniform Grocery Product Code Council, with its 1300 company members
representing a collective $63 billion in annual retail sales, has pulled out all
the stops to get it moving.

Spurred on by an outfit called Distrihution Codes, Incorporated, tabbed to
ramrod the project, the code adopted industrywide in April, 1973, should be on
the labels or packages of 50 percent of the stores' shelf stock by year end. If
all goes according to plan, 80 percent of the products should be source marked
by midyear to fall of 1975. Once source marketing hits 80 percent, many scanning
equipment makers think the food chains will be banging on their doors.

Meantime, there is plenty of groundwork to be laid. Manufacturers of the Point
of Sale (POS) equipment have lots of selling to do. Many of the equipment makers
have proven the benefits of POS. including scanning, to the general merchandise
or nonfood sectors of retailing. Singer, whose Business Machines Division claims
the leadership position (with over 50 percent of the market) in POS, has long
served retailing giants like J.C. Penney and Sears, Roebuck; now it's scrambling
for supermarkets.

Also in the race is Litton Industries' Sweda International Division, a major
factor in retailing POS systems here and abroad; Sperry-Univac, which conducted
the historic Kroger test and thus the first maker to scan a code; the ESIS
Division of Bunker Ramo, said to be the leader in electronic information systems
for supermarkets; and National Semiconductor Corporation, a highly aggressive
Santa Clara, California concern. Then, of course, there is NCR Corporation (new
name for National Cash Register, a retailing household word that is reportedly
number two in POS).

Almost all the foregoing firms offer a modular approach-an electronic cash
register (either stand alone or hooked to a minicomputer in the backroom) that
can be upgraded to a scanner setup when the store, the manufacturers and the
public are ready.

All or Nothing
A comparatively late entry to electronic POS is giant IBM Corporation, which has
introduced both a supermarket and a general merchandise version. As might be
expected, IBM is taking an altogether different marketing approach, at least in
the grocery field. The big computer maker produces the terminal or cash register
and the scanner but it will not sell them separately, Its supermarket system,
dubbed the 3660, also includes a "store controller," a backroom minicomputer
that monitors and memorizes the activities of up to 24 terminals and scanners.
Buy the whole package or forget it.

Other firms are going their own way, too. MSI Data Corporation of Costa Mesa,
California, has welded together a team of grocerymen and data processing types
and are wooing supermarket accounts exclusively. The hardware, ofcourse, is
heavily pitched, but the company also stresses a series of software programs
aimed at showing the manager how to use his newly collected data. Still others
that have developed supermarket scanner systems include Data Terminal Systems,
Incorporated, of  Maynard, Massachusetts, and Norand Corporation of Cedar
Rapids, Iowa. But the POS makers realize that selling the retailer is only half
the sale. Most companies are vitally concerned with the reaction of the shopper.
Electronic cash registers have made some headway in speeding up the lines at the
cash register but the scanners should make them move even faster. believes
Charles S. Adams, senior vice-president marketing for Sweda International in
Morristown, New Jersey. "lt should also provide for greater accuracy at the
checkstand and fewer missrings since the terminal automatically 'looks up' the
price of each item."

No More Waiting?

Some retailers also think the scanner systems will put an end to many of their
customer complaints. "Studies have indicated that waiting to be checked out is
high on the list of customer aggravations."  says .John Rob..

[IMAGE] Scanning foodstuff becomes a piece-of-cake for checkers,  with no need
to line up item and machine.

Photo courtesy of NCR Corp.

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