Computerized merchandising system takes guesswork out of buying,selling

October 16, 1990|By David Conn

In Giant's 50-year anniversary magazine, there's a story from George Messakian, who started working at Store 1 on Georgia Avenue in Washington in 1939, the year it opened.

The store closed long ago, but Mr. Messakian, a checkout clerk there, still remembered the procedure that required the customer to carry a card to each department, where clerks would check off the items selected. Another clerk would total the purchases on an adding machine, and Mr. Messakian would collect the cards before the customer left.

"People would try to get out without paying for their groceries," he recalls, "and all day long I got slapped in the face, I don't know how many times."

Now the checkout procedure is sleek and electronic. But the scanners and cash register computers have done a lot more for Giant than prevent facial contusions.

The newest cash registers include built-in scales that weigh produce automatically. Every transaction at every store eventually is forwarded to the headquarters building in Landover, where the data-processing department takes up two full floors.

There are 40 people developing the computer program that handles all of Giant's sales and purchasing information, coordinates it with inventory information from the warehouses and massages it into forms the buyers can call up on computer.

The 4-year-old program is called the Giant Merchandising System, or GMS. "Basically, it takes the complexity of buying all this different product . . . and allows the manager to make sure he's buying it in sufficient quantity and has enough of it on

hand," says Robert W. Schoening, senior vice president for data processing.

The system also makes the company less reliant on market information provided by Arbitron and A. C. Neilsen.

The program, actually thousands of smaller programs, took five years to develop,beginning in late 1981, and it's still evolving, Mr. Schoening says. "It's so complicated that even the top guys in our buying and merchandising department have trouble getting their arms around it," he says.

Unlike most chains, Giant retrieves sales data from its stores every day, via computer-telephone links. GMS uses that information to track the movement of every product in every store. It allows buyers to factor in seasonal trends when deciding how much to buy, and it can make recommended product distributions by store and district.

Before, buyers acted on "gut feel" -- at best they had a record of how much product was purchased for the last sale, Mr. Schoening says. But "there was no data that validated whether the quantity of the product delivered was sufficient to meet the historical needs of the store," he says.

One of GMS' most important functions is tracking all active sales and promotions. It calculates how effective various deals were, factoring in advertising expenditures and generating bills to manufacturers.

"A lot of the money we make really comes from the effectiveness of the buyers in selecting certain deals from the manufacturers," Mr. Schoening says. "You could make an argument that that's really where a lot of our profits come from. "The key to our business is information."

But Giant Chairman Izzy Cohen says the company owes its success to its people, Mr. Schoening is reminded. "I don't disagree with him," Mr. Schoening responds, "but you've got to give your people the power to be successful."

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