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The design of a consumer information system in the supermarket environment Berman, Moira Elaine 1979

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THE DESIGN OF A CONSUMER INFOEMATION IN  THE SUPEBMABKET  SYSTEM  ENVIBONMENT  by MOIEA  ELAINE [BEBMAN  (BAENETT)  BSc(Math), U n i v e r s i t y of Witwatersrand,1969  A THESIS SUBMITTED IN P AB T l A L FULFILLMENT OF THE EEQUIBEMENTS FOB THE DEGEEE OF MASTEB  OF SCIENCE IN BUSINESS ADMINISTBATION  in The  F a c u l t y of Graduate  (Commerce and B u s i n e s s  We a c c e p t  tiiis  Administration)  t h e s i s as  to the required  c) M o i r a  conforming  standard  THE UNIVEESITY OF BBITISH April,  Studies  COLUMBIA  1979  E l a i n e Berman ( B a r n e t t ) , 1979  In presenting requirements  this for  thesis an  Columbia, I agree  freely  available  scholarly  for  allowed  of  the  reference  may  or his representatives. publication  this  w i t h o u t my  degree  that  f o r ,extensiye  purposes  partial  advanced  British  that permission  in  1  be  at  Library  and  copying  study. of  is  thesis  understood  for financial  of  shall  make  I further this  that gain  D i v i s i o n o f A c c o u n t i n g and Management I n f o r m a t i o n F a c u l t y o f Commerce and B u s i n e s s A d m i n i s t r a t i o n  of i t  agree  thesis  for  Division  copying  or  s h a l l not  be  permissions  The U n i v e r s i t y o f B r i t i s h C o l u m b i a 2075 Wesbrook P l a c e V a n c o u v e r , B.C. C a n a d a , V6T 1W5  the  the.University  g r a n t e d t o t h e . Head o f my  It  written  fulfillment  Systems  ABSTRACT  The  purpose of t h i s t h e s i s i s t o explore the  of c r e a t i n g and m a i n t a i n i n g The storage  concepts  a database i n the p u b l i c domain.  considered, r e l a t e t o general  of consumer goods i n f o r m a t i o n , a l l o w i n g  o f t h i s i n f o r m a t i o n t o the p u b l i c . Consumer  Information  System  with emphasis on p r i c e The  Product  automated  checkout  interest  dissemination  i n the grocery i n d u s t r y ,  data.  Code, and  include  the  the  subsequent  scanning  systems  advent  o f the  introduction in  of  supermarkets,  groups i n v o l v e d , one p o s s i b l e design o f the CIS, and  the f e a s i b i l i t y o f such a system.  The system i s  meet a minimum s e t o f o b j e c t i v e s of the i n t e r e s t Based feasible^ groups  computerized  The focus however, i s on a  (CIS)  major t o p i c s d i s c u s s e d  Universal  possibility  on  the  the  development  s u b j e c t t o the mutual c o o p e r a t i o n  involved;.  practical  analysis,  Suggestions  implementation  implications  and  of  possible  are the  made  ideas  research  of  designed  to  groups. of  a CIS i s  the  interest  with regard to the generated.  constitute  Future  the  s e c t i o n s of the t h e s i s ^  Thesis Supervisor  final  iii  TABLE OF CONTENTS CHAPTER I . THE NATURE OF THE PROBLEM . . . . . . . . A . . . i . . . . . . . 1 1.1 I n t r o d u c t i o n 1 1.2 M o t i v a t i o n F o r T h e ' S t u d y ................ 2 1.3 Summary Of The P r o p o s e d Study' ..... i . . 7 1.3.1 L i t e r a t u r e Review . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.3.2 Consumer I n f o r m a t i o n S y s t e m s . . . . . . . . . . . . . . 7 1.3.3 D e s i g n Of A S p e c i f i c C I S . . . . . . . . . . . L . . . . . . 8 1.3.4 R e s u l t s Of A n a l y s i s ..... ,i .. . 8 1.3.5 Discussion ... 9 CHAPTEE I I . LITEEATUBE EEVIEW . . . . . . i . . . . . . . . . . . . 10 i 2.1 H i s t o r y Of UPC And S c a n n i n g ...... i .... I ............ . 10 2.1.1 S c a n n i n g I n The U.S.A. . . . . . . . . . . . . . . . . . . . . 11 2.1.2 S c a n n i n g I n Canada 13 2.2 I n t e r e s t G r o u p s ..................................... 14 2.2.1 The Consumers' View 14 2.2.2 L a b o u r ' s View . . . . . . . . ......... L; L . : i .... 23 2.2.3 S u p e r m a r k e t R e t a i l e r s ' View . . . . . . . . . . . . . . . 24 2.2.4 M a n u f a c t u r e r s ' View . . . . . . . . . . . . . . . . . . . . . . . 30 2.2.4.1 M a r k e t i n g I n f o r m a t i o n System P o t e n t i a l . 31 2.2.5 Computer M a n u f a c t u r e r s ' View ... 32 2.2.6 Government's View 33 CHAPTEE I I I . CONSUMES INFORMATION ' SYSTEMS 35 3.1 Use Of E x i s t i n g I n f o r m a t i o n S e r v i c e s . . . . . . . . . . . . . 35 3.2 P o t e n t i a l On A N a t i o n a l S c a l e . . . . . . . . . . . . . . . . . . . . 37 3.3 A C I S I n The S u p e r m a r k e t E n v i r o n m e n t . i i . . . 38 3.3.1 Scope Of The System 39 3.3.2 G e n e r a l F e a s i b i l i t y Of The System 44 3.3.2.1 T e c h n o l o g y .. i':'.;. 44 3.3.2.2 P o l i t i c a l A s p e c t s ,. 44 CHAPTER IV. CONSIDERATIONS IN THE DESIGN OF A CIS . 47 4.1 D e s i g n I s s u e s . * j ........ . I 48 4,i 2 O b j e c t i v e s Of The I n t e r e s t Groups 50 4.2.1 G r o c e r y M a n u f a c t u r e r s . ,i..i,*........» .,i... 52 4.2.2 Retailers 54 4.2.3 Equipment M a n u f a c t u r e r s ................... 56 4,.2.4 Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4,4-2.5 R e t a i l Unions i . . . . . . . . . . . . i . . . . . . . . . . . . . . . 57. 4.2.6 Consumers . . . . . . . . . . . . . . . i . . . . . . . . . . . . . . . . . 57 4,.3 M e e t i n g , T h e O b j e c t i v e s ............................. 59 4.3.1 The G r o c e r y I n d u s t r y ' s O b j e c t i v e s ....... '59 4.3.2 The Equipment M a n u f a c t u r e r s ' O b j e c t i v e s . . . 60 4.3.3 Government O b j e c t i v e s 60 CHAPTER V.. DESIGN OF A S P E C I F I C C I S i i„ . 66 5.1 P r o p o s a l F o r A V a n c o u v e r D a t a C e n t r e . . . . . . . . . . . . . 66 5.1.1 P h y s i c a l L o c a t i o n ......................... 67 5.1.2 G l o b a l Systems D e s i g n i... i., i . 69 5.1.3 Database Desiqn ........................... 71 5.2 E c o n o m i c s Of The D a t a c e n t r e . . . . . . . . . . . . . . . . . . . . . . 85 ...5.2.1 . Development C o s t s . . . . . . . . . . . . . . . . . . . . . . . . , 85 5.2.2 Operating Costs '. . . i . . . . . . . . . . . . . . . 88 5.2.3 P o t e n t i a l S a v i n g s - By I n t e r e s t G r o u p s 89 s  iv  5.3 A n a l y s i s Of The C o s t s / B e n e f i t s Of The CIS ., CHAPTER V I . RESULTS OF THE ANALYSIS AND GENERAL DISCUSSION ...... .. , 6.1 F e a s i b i l i t y Of The CIS . . 6.2 S u g g e s t i o n s F o r D i v i s i o n Of C o s t s . . . . . . . . . . . . . . . . 6.3 S u g g e s t i o n s F o r P r a c t i c a l A p p l i c a t i o n . . . . . . . . . . . . 6.4 F u t u r e R e s e a r c h , REFERENCES. , ....... i ..... . ........... .  95 98 99 100 10 2 105 107  V  ACKNOWLEDGEMENTS  This study  would n o t h a v e been p o s s i b l e w i t h o u t  appreciated  help^  committee:  Dr. A l b e r t  Goldstein, In  a n d Dr.  advice,  and  encouragement  S. D e x t e r  fiichard  a d d i t i o n , I would l i k e  have  extending supportive  my  given  (chairman),  to o f f e r  special  during  me  the  opportunity  knowledge  and  abilities  atmosphere.  much  my t h e s i s Dr. R o b e r t  Pollay.  U.B.C. Commerce F a c u l t y members who, years,  of  the  the  of in  thanks to the  a  past  three  developing  and  congenial  and  1  CHAPTER I  THE NATURE OF THE PROBLEM  1.1  Introduction This  thesis  examines  the  events  e x i s t e n c e o f scanning systems i n r e t a i l grocery  stores,  leading  up  stores, i n  and t h e i r impact on the r e t a i l  particular  environment.  T h i s t e c h n o l o g i c a l advancement has not been without particularly  between  retailers  key-entry.  One  area  under  removal of i t e m - p r i c i n g from goods. reduced  price  awareness  conflict,  and consumers i n the area o f  automated checkout i n supermarkets using scanning replace  t o the  among  current There  devices  debate i s the  is a  consumers,  at  to  threat  a  of  time when  consumer advocates are s t r i v i n g f o r g r e a t e r awareness  through  inceased  to item  availability  of  information.  Opposition  p r i c e removal caused many r e t a i l e r s t o delay plans t o  install  these systems; Despite t h e present impasse, scanning systems seem to  become  controversy  a permanent f e a t u r e o f r e t a i l shopping.  are  n e v e r t h e l e s s slowly and q u i e t l y making t h e i r appearance.  Some  are  phasing  consumers are s t i l l of  these systems.  installed  scanners  supermarket  in  the  new  scanning  While the  systems  retailers  continues,  likely  technology,  unaware o f t h e e x i s t e n c e  or  yet many  significance  I n the g r e a t e r Vancouver area, three  stores  i n 1978 with a minimum of p u b l i c i t y .  The  2  q u e s t i o n i s not whether automatically,  but  retail  rather  goods  will  whether  or  accompanied by the permanent removal of  be  not human  checked this  out  will  readable  be item  prices;. R e t a i l e r s with scanning  systems are proposing  (or a l r e a d y  implementing) the e l i m i n a t i o n of item p r i c e s , without an e f f e c t i v e a l t e r n a t i v e f o r what i s considered information.  a vital  of  consumer  for  the t r a d i t i o n a l method of d i s s e m i n a t i n g p r i c e  be  sought  now^  offering source  I t i s preferable that a s u b s t i t u t e  while the UPC  systems are s t i l l  information i n the e a r l y  stages of development;.  1,i2 M o t i v a t i o n For The To date, the million  to  Study  grocery  develop the concept  (Assembly O f f i c e of Research that  some  $50  of the u n i v e r s a l product  code  industry  has  1977).  It  " r e t a i l p o i n t - o f - s a l e systems may  momentous  marketing  distributors,  on  innovations,  small  retailers,  marketing r e s e a r c h e r s "  (Moyer and  president  that  asserted  a n t i c i p a t e the profound point-of-sale  on  equipment"  has  been  become one  suggested of the most  consumers,  on  mass  on manufacturers,  Seitz 1975).  "few,  impact  invested  if  ...  (Steinberg  any  A  and  food  chain  developments  (of)  this  1972).  Time and money manufacturers  the  McKinsey  of  optimistic  studies  i n d i c a t i n g acceptance of the system,  (e.g. and  can  store-level  have been i n v e s t e d by grocery r e t a i l e r s and basis  on  subsequent  &  on Co.)  savings  3  for  the grocery i n d u s t r y ; Despite  a l l this  economic b e n e f i t s , slow; than  zeal,  and t h e a p p a r e n t  t h e advancement o f t h e s e  I n t h e U.S.A.  "... j u s t  r e g i s t e r s than  The  fear  o f government i m p o s e d  is  been  a major concern  elimination of  this  under  1975,  (about  maintain  of Research  legislation  in  associations  removal.  the  computer.  were Half  early  Massachusetts,  Michigan,  laws  (Coyle  dozen  requiring  1978).  to  states  New  the  system  1975) ] i s from benefits  the  pricing  itemized  of  1977). s t a t e s and * numerous'  1975).  in  both  with  contender  conspiring a  to  feeling  savings) i f  for  supermarkets  Legislation Canada  potential  wave  raise  of  charged  prices  the  item over  ... t h a t  secretly  by  Connecticut,  Y o r k , and Rhode I s l a n d be stamped  was  government  controversy  - California,  that prices  and  i n the debate over  many l a b o u r and consumer a c t i v i s t s  grocers  pass  "In  of items  25-35% o f h a r d  (Armstrong  h a v e been a p o w e r f u l  due  mandatory  level  less  1978).'  Their  "... p o t e n t i a l  "three  pricing  jurisdiction  Consumer  scanning,  sold"  i n fact  considered at a federal  backing  to  to  chains:  (Moyer and S e i t z  a r e reduced  made i t e m  their  U.S.A..  price  pricing;  are forced  cities",  being  sales  (Assembly O f f i c e  By U.S;  of  of item  system  retailers goods"  1%  (Coyle  mandatory'pricing  savings  been  have s o f a r been  the code"  t o supermarket  that a l a r g e p o r t i o n of hard  {.approximately  the  can read  has  considerably  1% o f t h e c o u n t r y ' s 33,000 s u p e r m a r k e t s , with  has  systems  208 s t o r e s ,  equipped  r e a l i z a t i o n of  -  rushed  on e v e r y  item  4  I s there a way awareness  in  the  to maintain  or  absence  item-pricing?  d i s c u s s e d t o p i c today,.  of  increase  consumer  price  T h i s i s a much  In f a c t , the need f o r a s s i m i l a t i o n  and  d i s s e m i n a t i o n of t i m e l y r e l e v a n t data i n a l l r e t a i l areas long  been  recognized.  In  question i s p a r t i c u l a r l y system  which  the supermarket environment, the  pertinent;  threatened,  in  The  1974,  automated  to  want  maintain  to  see  consumer  price  price  awareness  price  and  and  reaction  the response  to be  $10,000  protection,  would  (Armstrong  1977).  works  i n o r d e r to and  they  than  do  (Pappert 1978).  will  not  the  agree  advocates  With  consumers,  in  general;  "A  done i n c o n j u n c t i o n with  CAC  know  how  the  not  want the p r i c e removed  from  "It  is  food  on  consumer  money, but they can agree  a  of t h e i r r i g h t t o  enthusiastic  any  grade standards, or uniform help  avoid  been mixed, but s t u d i e s have shown  funded study,  and  consumer  1975).  found t h a t many customers s t i l l don't  containers"  uniform  (Jones  has  less  federally  (Quebec),  industry  looms;  continued  unjustified sacrifice  information"  themselves,  system  predictions.  removal of item p r i c e s i s seen by consumer  as an "unnecessary basic  tags  labeling  " p o s s i b l e abuse of consumer r i g h t s " The  the  c h a i n s are l o a t h e t o i n s t a l l the system while the  t h r e a t of l e g i s l a t i o n regarding groups  checkout  revolutionize  i n d u s t r y has hardly j u s t i f i e d even c o n s e r v a t i v e Supermarket  has  ironic uniform  packaging,  that  the  d a t i n g codes, any  of  or  which  decide on the best q u a l i t y f o r her on  a  uniform  labeling  system,  a  5  Universal  Product  consumer" of  Code  that  ( Y a u n a t t a 1975).  legislation  slowed  down  UPC.  Even  takes information  The consumer p r e s s u r e and  i n b o t h C a n a d a a n d t h e U.S.iA*  the i m p l e m e n t a t i o n o f automated in  1977,  away f r o m t h e  the  indefinite  have  threats  temporarily  checkout using the  postponement  of  the  w i d e s p r e a d u s e o f s c a n n e r s i n s u p e r m a r k e t s seemed i n e v i t a b l e particularly  in  supermarkets  Canada;.  In  were p l a n n i n g t o go ahead  s c a n n e r s and remove i t e m - p r i c e s objections. consumer feasible all  information  system  from t h e t e c h n o l o g i c a l  systems  are based:  taking  t h e s i s i s the proposal  of a  based  of  on t h e UPC, a s a  and  ensuring  retailers  developments  This objective  advantage  society b)  and  particularly  benefit  implement  fears  (CIS),  consumer  method o f b r e a k i n g t h e s t a l e m a t e groups,  that; c e r t a i n  with p l a n s t o  despite  The o b j e c t i v e o f t h i s  interest  a)  1978,, i t a p p e a r e d  -  and  that  consumers,  on which  the  UPC  encompasses:  available  technology  t o improve  generally  assuring the continued protection  of  consumers'  rights  specifically.  There  are  supermarket any  system  two  fundamental  which  are important i n the c o n s i d e r a t i o n of  i d e a s t o improve a)  basic  The i n h e r e n t key  storing creation  for  t h e consumer i n f o r m a t i o n standardization  product  comparisons  and u p d a t i n g t h e i n f o r m a t i o n . of  an  characteristics  information  system  of the  the  environment. code  across  provides  stores,  Without would  of  the  require  a  and f o r  UPC,  the  the p r i o r  6  establishment  of  such  a  p r o h i b i t i v e l y expensive,  codei  Not  only  would  but would r e q u i r e f u l l  this  be  cooperation  of  manufacturers and r e t a i l e r s i n i t s establishment. b)  Every  maintaining  store  a file  using  the  computerized  of products and  system w i l l  related price  be  information.  Thus, t r a n s f e r r i n g t h i s data to other systems f o r a v a r i e t y of uses  can  be  cooperation  done  two  s t r u c t u r e , and  lend  to  factors,  the  form  grocery  to  the  Information  and  standard of  effort,  if  the  comprehensive  code  individual  data  in  a d d i t i o n a l motivation  and  consideration  System t h a t can  store  of  a  computerized  provide d i r e c t b e n e f i t s  retailer.  CIS considered h e r e i n w i l l  pertain  largely  to  the  i n d u s t r y and w i l l meet a minimum s e t of o b j e c t i v e s of  the i n t e r e s t groups. suggestions  conflict  cost  provide  the consumer as well as the The  and  a  existence  processable  feasibility  Consumer  minimal  of the supermarkets i s secured.  These  machine  at  e;g^  Possible extensions w i l l  will  be  considered  made r e g a r d i n g a s p e c t s of p o s s i b l e  marketing the concept  groups; d e c i d i n g who  be  to  the  various  should bear the c o s t s of the  CIS.  interest  7  1.3  Summary Of The Proposed  113.1  Literature  Study  Beview  The i d e a presented i n t h i s t h e s i s i s o r i g i n a l i n t h a t the concept topic  was  only  recently  proposed  (Dexter and Howson 1977;  1978).  (The  paper  written  the  history  development various  of  the  UPC  Barnett, by  f r e e l y quoted i n t h i s t h e s i s ; )  as a p o s s i b l e r e s e a r c h Dexter,  Dexter  and  Howson  and Howson has been  Relevant l i t e r a t u r e r e l a t e s  in  Canada  and  the  U.S.A.;  of the supermarket system and i t s e f f e c t  to the  on  the  i n t e r e s t groups; and the economics i n v o l v e d i n such a  system as regards r e t a i l e r s and consumers.  1.3.2  Consumer I n f o r m a t i o n Systems G e n e r a l i z e d consumer i n f o r m a t i o n systems  operate  on  a  limited  etc.) and  exist,  b a s i s i n the p r i v a t e s e c t o r .  c o l l e c t e d from surveys., e.g. ratings,  do  Data i s  "market-basket" p r i c e s ,  distributed  to  service  i n t e r e s t e d consumers i n  p r i n t e d form  on  subscription  disseminated?  by  means o f p r i v a t e t e l e v i s i o n channels.  systems  basis.  Information  are d e s c r i b e d f u r t h e r i n Chapter I I I .  effectiveness  of  these  systems  on  and  a  The  national  also These  potential scale  is  considered;  In ' t h e supermarket  environment,  application  area  i s retail  information.  Not only i s there a need, but the necessary data  for  a  CIS  a  is  specific  grocery  price  8  already e x i s t s i n an e a s i l y a c c e s s i b l e and  political  feasibility  of  form.  setting  up  Tbe  technical  such a system i s  discussed;  1.3.3  Design Of A S p e c i f i c CIS In  as  order to determine t h e economic f e a s i b i l i t y o f  envisaged  in  Chapter IV, t h e design o f a s p e c i f i c  w i t h i n the bounds o f a given objectives the  of  a  the  environment  CIS  system  i s examined.  The  v a r i o u s i n t e r e s t groups as they r e l a t e to  supermarkets system are taken i n t o account, and an  effort  i s made to meet these o b j e c t i v e s w i t h i n the scope of the CIS. The detail,  characteristics  of  a  basic  b e a r i n g i n mind p o s s i b l e f u t u r e  system.  The  for  are described i n  enhancements  the  system  analysis. presents  The some  assignment difficulty  c o n s i d e r a t i o n i s given to t h e p o t e n t i a l s a v i n g s of  to the  c o s t s v s . s a v i n g s o f the CIS are s t u d i e d as t h e  f i n a l s t e p i n the f e a s i b i l i t y costs  CIS  and  of and  benefits  t h e i n t e r e s t groups i n v o l v e d .  1.3.4  R e s u l t s Of A n a l y s i s The  analysis  of  Chapters IV and V i s used as the b a s i s  for  c o n s i d e r i n g the f e a s i b i l i t y o f the CIS.  the  o p e r a t i o n of the system; from a p r a c t i c a l p o i n t of view are  made.  Suggestions f o r  9  •1.3.5  Discussion  The  implications  information  of  publication  p o s s i b i l i t i e s f o r future  such are  a  system .on  discussed,,  research,  along  the f u t u r e of with  the  10  CHAPTER I I  LITERATORE  2.1  History The  (UPC),  Of  And  Scanning  introduction  in  1973  of the  a s a s t a n d a r d method f o r u n i q u e  products, earlier  has  l e d t o much r e l a t e d  technical  1960's and checkout levels  early  of  the  the  venders,  cash  Grocery  o r g a n i z a t i o n s and feasibility  IBM,  NCR,  large the  electronic be  s y s t e m s had  advantage cash  connected  of  registers  to a  large  use  developed  and,  1  Association^  in  in  at  I t was  late  the various  and  Sweda.  of  automated  major  1966 1970,  hardware  that  time  other  trade  began t o d i s c u s s t h e purposes  product information to  -  i.e. a  eliminate  register;  capable of performing as w e l l  also  made j t h e i r  in-store was  of  Code  retail  i n the  throughout  of coding products f o r scanning  Powerful "minicomputers"  1970,  merits  manufacturers  f o r "machine-reading"  made  More s p e c i f i c a l l y ,  manual k e y i n g o f p r i c e s a t t h e c a s h  earlier  and  of  were i n t r o d u c e d by  Manufacturers equipment  specification  .implicit  were  registers  including  the  systems  Product  Specifically,  grocery industry.  scanning  electronic  method  achievements.  1970's,  Universal  research  s y s t e m s were b e c o m i n g a p p a r e n t  general  that  UPC  REVIEW  minicomputers  realized.  centralized  appearance.  These, processor  to  In  control  i n turn, which  as  could would  11  allow  f o r p e r t i n e n t i n f o r m a t i o n t o be r e l a y e d  computers products had  simultaneously. carried  developed  by  manufacturers  a  mid-1973,  any m a c h i n e - r e a d a b l e  markings,  NCB,  Semiconductor, By all  manufacturers  IBM,  the f i g u r e  Data  no  grocery  and s c a n n e r s The  both  UPC  two  years  fiamo  at  equipment..  G e n e r a l C o r p o r a t i o n , Data  Bunker  was  r e t a i l e r s and  were making t h i s  U n i v a c , and S i n g e r  October  grocery  representing  o f t h e f o o d i n d u s t r y , and w i t h i n  companies i n c l u d e d  Systems,  f o r use a t c h e c k s t a n d s ;  committee  l e a s t n i n e computer The  to  y e t t o be d e v e l o p e d  Prior  to a l l in-store  Corporation,  Terminal National  Company.  1975 i t was e s t i m a t e d t h a t , i n Canada, 45%  items  were UPC marked a n d , i n t h e U n i t e d  was p u t a t 60%.  UPC s c a n n e r s , and t h i s  A p p r o x i m a t e l y 30 r e t a i l  was f e l t  as just  the s t a r t  of  States,  s t o r e s had  of a popular  trend;  2;1.1  Scanning In  Of-Sale Inc.,  did  t h e U n i t e d S t a t e s , Safeway (POS) and UPC s y s t e m s and  justify  justify less  benefits  Finast 1974  Data  by  Dymo  G e n e r a l C o r p o r a t i o n i n 1973,.  the  POS  to savings,  s c a n n i n g system and  not  quantifiable,  easily  several  I n Massachusetts  better  Industries  They c o u l d n o t although  inventory ("soft"  scanning t e s t s they  Point-  they  on t h e b a s i s o f f a s t e r  stocks-outs,  S t o r e s conducted  -period.  S t o r e s began t e s t i n g  developed  the o p e r a t i o n with r e s p e c t  checkout* i.e.  I n The U.S.A.  in  began t e s t i n g  control benefits). the  1973-  the Univac  12  Accuscan tests and  scanning  the  NCR  Scanning  255  System.  Stores  Ltd.  also  System i n 1974.  supermarket  extended 280  725  with  25  1977  month-end; electronic  were t h e in  planned  of  system  bothered  by  checkstand  the  "... showed  test  that  the removal by  marketing  management  (Armstrong  the  resulted  t o use  in a  Late i n Marsh  scanning  in  States over  an  conducted  of a t o t a l  units  of of  will  scanning  on  an  NCR  1975) .  was  Giant  173 a  at  Food, August  further  more t h a n  1,500  double  the  installations.  s t o r e o p e r a t i o n s i n t h e U.S.  the  majority  of the p r i c e s  University  questioned Oct;  was  s u r v e y s i n t h r e e U.S.  conducted  housewives  Accuscan  counter.  United  purchase  number o f G i a n t s t o r e s h a v i n g  new  first  the  Their test  installations  scanner  inconclusive.  procedures  industry leader i n scanning  Their  Results  Univac  system.  the  scanning  the  checkout.  IBM's 3660 S u p e r m a r k e t System.  p e r i o d of time.  In  tested  System,  conclusively  at the  at the checkout  environment  scanning  scanning  Store Information  Their test  increase in productivity t h e y began t e s t i n g  ran  A l l systems t e s t e d ,  S u p e r m a r k e t s i n T r o y , Oregon the  other s t o r e s they  10-15% i n c r e a s e d p r o d u c t i v i t y  Kroger  1975  In  u s i n g Bunker Ramo's E l e c t r o n i c  demonstrated  14%  system.  program were  of  yet  Southern  t o do  testing  of s h o p p e r s  -.."/  revealed  willing  stores  were  "...  the  were n o t a  survey  California's  that  only  without  food  1.5%  price  of  tags"  13  2.1.2  Scanning  In  Canada  Steinberg's Ltd., a large supermarket system test and  by  in  Canada  t h e end  of  operations  the  Ontario  maintaining In Ltd,,  on  1977  They a r e r e l y i n g  priced.  appeared  checkout  ( P a p p e r t , 1978). in  to  and  be  A t k i n s o n , Feb. implementation  no  scanners. Atkinson,  Mart,  with  scanning  scanning  Both  test  April  1978),  to  Delhi, while  94%  at  Toronto  by S t e i n b e r g ' s  British  was  t o be  point; from  i n 1978,  A Super-Valu  a  o f the i t e m s c a r r i e d  people appear  Early  of S t e i n b e r g ' s  data gathered  This event  planned  in  system  system  on  the  the  a limited  prior  item a  in  subsequently  full  the  Safeway*s  s t o r e i n Vancouver,  registers,  food  (Evans-  f o l l o w e d by  of Canada  to  general,  supermarkets  closely  i n one  contrary  with  Prices,  are  s c a n n i n g most  level  Columbia  item-pricing.  electronic  began  wished  IGA  a subsidiary  of a s c a n n i n g system  s t o r e s i n Vancouver; equipped  the  lower than i n the l a r g e r 1978).  who  themselves.  up t o t h i s  Richmond,  scanning  i n D o r v a l , Quebec  i s down a p p r o x i m a t e l y 25%"  system  a OPC  only  goods.  Approximately  "The  opened  scanning  on  I t i s not f a s t e r  efficiency scanning  using  full  the  I t e m - p r i c i n g was d i s c o n t i n u e d  goods  Miracle  began o p e r a t i n g a  products.  store  the  started  Dorval operation; item  implemented  store  1974.  p r i c e t a g s on t h e  August  store,;  The  c h a i n was  were p r o v i d e d f o r c u s t o m e r s  prices  recently  have  1975.  i n July  grease p e n c i l s  write  to  supermarket  already installed  to d i s c o n t i n u e i t e m - p r i c i n g  (Evans-  14  2; 2 I n t e r e s t  Groups  Supermarket different  groups  favourable. had  systems -  not  In regions  occurred,  or  received  the  attention  a l l of the attention  where i m p l e m e n t a t i o n  appeared  imminent,  of  many  however  of these  reaction  being  systems  was s w i f t i n  coming.  2.2.1  The C o n s u m e r s In  system.  It  exception,  view  was  -  any  decrease  retail  They  In  the  government legislation made  jurisdiction  as a basic  felt easy  U.S.,  i n "three  (Armstrong  the  t o which t h e y of  i t s  OPC took  natural  that  this  right* not a p r i v i l e g e .  makes  that  shopping  (Maurizi  objected  1972).  strongly to  information  a t the  c o n s u m e r s would be l e s s  prey  at  comparison  be done  price  f o r unscrupulous  consumer  states  mandatory  of  I t was f e l t  both c o u n t r i e s  intervention  pricing  removal.  consumer  c o n s c i o u s and t h e r e f o r e  one  generally  t o consumers' r i g h t s and p r o t e c t i o n .  in  in visible  itself  of  of item-pricing  groups  introduction  system  and, t h u s , l e s s w i l l  level;  owners.  the  effect  i s viewed  lack  Consumer  the  a threat  information  more d i f f i c u l t  the  item-price  would c o n s t i t u t e  example,  toward  not  rather  consequences,  For  View  b o t h C a n a d a and t h e 0,S., consumer a d v o c a t e s  took a negative  Price  1  unions a l l  were  levels;  for 1975),.  supermarket  pressing and  and 'numerous' U.S; supermarkets . Legislation  price  by  for 1975,  c i t i e s ..*" under was  their being  15  c o n s i d e r e d a t the f e d e r a l l e v e l i n the United S t a t e s  at  that  time. Despite Canadian  loud  f e d e r a l government was  matter.  However,  and was  a definite  Consumer systems  legislation  carefully.  arising  is  now  to  interfere  to  the  exists  in  the  was b e i n g c o n s i d e r e d here too  watching  the  The R e t a i l C o u n c i l  Committee from the  loathe  p o s s i b i l i t y should the need be  Associaton  Steering  There  p r o t e s t from the Consumer A s s o c i a t i o n , the  progress of  felt.  The  of  new  Canada  the  set  up  make p o l i c y recommendations on implementation  of  scanning  a  issues  systems.  a Pubic A d v i s o r y Committee t o the S t e e r i n g  Committee: "Our  group, together with  from  the  a  Technical  Advisory  Committee  equipment manufacturers and supermarket  industry,  conducts an ongoing d i a l o g u e i n an e f f o r t t o implement system  (if i t  is  to  be  implemented)  a way  that i s  b e n e f i c i a l to s t o r e and  customer  (Mary  (Ontario) Chairman of the Committee  Pappert  dealing It  is  CAC  with the Computerized  should be mentioned  alike"  in  this  Supermarket  of  supermarket  the  provision  U.S.  however,  of  1978)i  System).  itself  Vancouver  was  praised  not the  scanning with e i t h e r price-^marking or  grease  pencils  (Wise  1976).  In  the use of grease p e n c i l s f o r customers  products themselves i s not c o n s i d e r e d for  Checkout  t h a t the automation  c r i t i c i z e d and a consumer advocate i n advent  (Pappert  a  suitable  the  to mark  substitute  p r i c e - m a r k i n g i n s t a t e s were l e g i s l a t i o n has been passed.  16  How  do  consumers t h e m s e l v e s  react  t o the implementation  of t h e s e systems?  S e v e r a l s u r v e y s have been made o f  attitudes  installed  unit of  toward  prices  marked on t h e g r o c e r y i t e m s .  item p r i c e  In a t y p i c a l customers  UPC s y s t e m s b o t h  removal  consumer r e a c t i o n  U.S. s t u d y  (Gylling  o f one s t o r e ,  the system.  87% e x p r e s s e d  The a d v a n t a g e s  - faster  checkout  -  descriptive  -  accuracy  mentioned  the  w i t h and w i t h o u t  With  the  exception  h a s been f a v o u r a b l e . of  a  sample  of  150  favourable reactions to were  (42% o f a l l r e s p o n d e n t s )  time  (32% o f a l l r e s p n d e n t s )  sales slip  of  1976)  consumer  computer  (12%  system  of a l l  respondents) However,  consistently,  identified  as a dominant  acceptance taken  of  UPC  the  negative  systems,  by consumer a d v o c a t e s .  admitted  concern  implementation conversation Until chain  about  i  Canada  from  previously,  support  in  of item  member -  overall  manager  i n s a l e s revenue  CAC b o a r d  is  f o rthe stand  A Vancouver supermarket  since the prices  (A  1978). supermarket  t o have p l a c e d s c a n n e r s a t t h e c h e c k s t a n d . reportedly  informal  favourable,  surveys.  a CAC s t u d y showed t h a t  studies  of shoppers  providing  prices  S t e i n b e r g ' s L t d . was t h e o n l y  unaware o f how t h e s y s t e m The  item  consideration  a decline  with t h e l o c a l  Consumer r e a c t i o n , largely  of  of scanners and t h e removal  recently,  in  removal  works  mentioned  as expressed  had  However,  been as  many c u s t o m e r s  (Pappert  gleaned mentioned  are  still  1978):  above c o n c e n t r a t e on t h e a t t i t u d e s  on s u r v e y  questionnaires.  They  are.  17  of  course,  surveys was  to  the  drawbacks  ( s u b j e c t i v i t y , bias, e t c . ) .  undertaken at Michigan State  beyond  the,  behavior,. work  subject  on  attitudes  subject.  University  shoppers  based  on  a  The  to  (MSU)  that  a study  which  went  i n v e s t i g a t e shopping be  the  r e p o r t from MSU  study  i n opinion  However, i n 1976,  For t h i s reason,; i t i s f e l t t o the  removal,  of  inherent  led  definitive  criticized  to  four  price  general  conclusions: a) Item  p r i c e removal may  shoppers who and b)  reduce p r i c e awareness of  become l e s s a l e r t t o  price  changes  price trends,  There i s p o t e n t i a l inconvenience as shoppers have to  match products t o s h e l f p r i c e s and  make p r i c e  comparisons at d i f f e r e n t p o i n t s w i t h i n the c)  There i s a l o s s of p r i c e i n f o r m a t i o n as  items  on  the  kitchen  store,  i n the  home  s h e l f no l o n g e r have  marked p r i c e s , d) There i s a danger of i n a c c u r a c y are  not  kept c u r r e n t to r e f l e c t  charged by the computer and The  if  system  shelf  prices  prices currently (Harrell,  Hutt,  A l l e n 1976). issue  of  item-price  addressed, comparing behavior without c o n v e n t i o n a l  removal  was  specifically  of shoppers i n s t o r e s  i t e m - p r i c e data.  with  In summary, i t s u p p o r t s  the f o l l o w i n g hypotheses: elimination  of  item  and  p r i c e s reduces the s h o r t term  18  p r i c e awareness o f shoppers support  (There  was  weak  f o r a r e d u c t i o n o f l o n g term awareness.)  shoppers i n an environment without fewer  only  price  difference  comparisons in  the  item p r i c e s make  (although  percent  of  there  was  shopper using  no unit  price information). I t would appear from t h i s l a s t statement t h a t shoppers f i n d i t more inconvenient shelf  t o compare p r i c e s  i f they  p r i c e as an i n f o r m a t i o n source.  (when provided) why  no  was  found  issue.  used comparison  In g e n e r a l , u n i t  shelf  is  price  indicator;  The automated system allows almost i n s t a n t a n e o u s  the  an  price  Consumers a r e concerned t h a t  prices  may  from the computer-stored b)  Onit p r i c e i n f o r m a t i o n  m i s t r u s t of supermarkets by consumers i s a l s o  changes t o be e f f e c t e d ; a)  the  i n the percentage of customers  using t h i s i n f o r m a t i o n f o r comparison,.  General  only  has been p r i n t e d on the shelves only which  difference  is a little  have  be d e l i b e r a t e l y  different  price  o l d stock may be s o l d a t new p r i c e s .  Comparison shopping across supermarkets i s made more d i f f i c u l t because p r i c e i n f o r m a t i o n i s no l o n g e r t r a n s p o r t e d along the  with  product. More  Canada:  recently,  these  f e a r s have been manifest i n B.C.,  19  L e g a l l y , " . . . a l l r e t a i l e r s , i n c l u d i n g those in the food i n d u s t r y , have t h e r i g h t t o i n c r e a s e t h e p r i c e of o l d s t o c k a s h i g h e r - p r i c e d new s t o c k comes i n ... What's a n n o y i n g consumers i s the fact that the absence of price tags i n s c a n n e r s t o r e s means no p r i c e b r e a k on t h e s h e l v e s where a l l u n p r i c e d i t e m s , o l d and new, i n c r e a s e w i t h t h e t w i d d l e o f a computer dial. Under t h e s y s t e m where goods a r e i n d i v i d u a l l y price-marked, t h e p r o c e d u r e o f p e e l i n g away o l d t a g s and s t i c k i n g on new, h i g h e r p r i c e s has often been deemed t o o t i m e c o n s u m i n g a n d . c o s t l y t o b o t h e r w i t h " (Parton, August 1978). In addition to this, e x e c u t i v e s o f B.C. s u p e r m a r k e t s e x p r e s s e d the view t h a t c o n s u m e r s a r e not v e r y p r i c e c o n s c i o u s anyway. They said price is s e v e n t h o r e i g h t h i n consumer shopping priorities topped by "... t h e store's general a p p e a r a n c e and c l e a n l i n e s s , t h e a t t i t u d e o f t h e s t a f f , t h e p r o x i m i t y and a v a i l a b i l i t y o f p a r k i n g and o t h e r c o n v e n i e n c e c r i t e r i a " (Parton, September 1978) .  An while  Irish  "price  survey  i s one  Dublin  housewife  would  appear  are  simply  result not the  not  of  being  (Irish  of the  Business,  major f a c t o r s  a  price perceptive".  emphasizes  that its  that  s u b s t a n t i a l number o f  showed  that  influence  the  Dublin  housewives as  a  of housewives p e r c e i v i n g l a r g e supermarkets  as  c h e a p p l a c e s t o shop.i  fact  1975)  when d e c i d i n g where t o shop f o r g r o c e r i e s , i t  that  30%  Nov.  "this  T h i s c o n c l u s i o n came  The  particular  inexpensive  result type  prices  occurred of  grocery  through  frequent  1977  Angeles  despite outlet media  advertising". Of  concern  which w h i l e  is  the  result  not c o n c l u s i v e , bears  of  taking  Los  into  survey,  account:  Interviewers there recently wandered through supermarkets asking c u s t o m e r s what t h e y l o o k e d f o r most when t h e y were s h o p p i n g * Nearly three-quarters of them s a i d low p r i c e s and the remainder wanted short checkout counter l i n e - u p s .  20  "The i n t e r v i e w s were r e c o r d e d on t a p e , however, and t h e t a p e was l a t e r p l a y e d t h r o u g h a v o i c e p i t c h a n a l y s i s machine - a t y p e of l i e d e t e c t o r , "The r e s u l t was t h a t 56% were more concerned about checkout c o u n t e r l i n e - u p s , and o n l y 43% were r e a l l y w o r r i e d about food prices" (Evans-Atkinson* J u n e 1977) . Are Are  they  their to on  consumers less  choice  perhaps not  p e r c e p t i v e than  of supermarket  o b t a i n and  retain?  place  once  considerations  e t a l - 1977)  concern  o f c o n s u m e r s and  a trend  serious  on  would  food  be?  to believe?  Is  is  in of  government.  the  really  only  store?  These  Michigan  study  importance,  meriting  I t i s the  price  p r i c e s and  the  easy  supermarkets  comparison  findings  less  like  should  i s i t t o compare  shopper  even  as t h e y  information that i s  o f even g r e a t e r  toward  impact  easy  the  (Harrell  that  they  or d o e s p r i c e  the  make  concerned  b a s e d on  How  the b a s i s of p r i c e ;  take  as  author's  awareness  could  u l t i m a t e l y augment  the view have  general  inflation. A survey  was  carried  determining  the  choice  supermarket.  IBM  of  and  automated  sensitivity  Steinberg's checkout  1978a, D e x t e r  out  and  in in  Barnett  by  Steinberg's  Ltd., directed  of f a c t o r s t h a t a f f e c t  T h i s formed 1972-1973 the  part of a oh  supermarket  1978b).  See  the  Exhibit  consumers'  joint  study  feasibility  (Dexter 2.1.  at  and  by of  Barnett  EXHIBIT CANADIAN  SUPERMARKET  Factors i n attracting supermarket. Importance  2.1  SURVEY  (PARTIAL RESULTS)  p e o p l e t o shop  at a p a r t i c u l a r  Rating Store L o c a t i o n Pricing Policy Store Personnel Product Assortment Parking Speed T h r o u g h C h e c k o u t Reputation Service Level Car Order P i c k - u p Institutional Advertising S t o r e D e s i g n and D e c o r a t i o n Special Sale Advertising Cheque-Cashing Non-advertised Specials  8 .6 8 .0 7. 2 7 .0 6. 9 6. 8 6 . 7 6 .5 6. 1  5. 1 5 .0 4. 1 4. 1 3 .4  F a c t o r s i n p e r s u a d i n g p e o p l e t o buy once the supermarket. 8.0 7.5 7.3 6.9 6.4 6.3 6.2 6.1 6.0 5.4 5.2 5.0  '  they  are i n  Price Service Level Assortment B r a n d Name R e c o g n i t i o n Store Services S h e l f Space A l l o c a t i o n L o c a t i o n on S h e l f Store Layout D i s p l a y of M e r c h a n d i s e P o i n t of S a l e P r o m o t i o n Special Sales Substitution Offered  The C a n a d i a n S u p e r m a r k e t r e s u l t s s i t e d a r e b a s e d on a s u r v e y (by t h e s u p e r m a r k e t and IBM), w h i c h r a t e d t h e e l e m e n t s on a s c a l e of 1 t h r o u g h 9. The s u r v e y q u e s t i o n n a i r e was answered by s u p e r m a r k e t managers and specialists. R e s u l t s were compared w i t h t h o s e o f a  22  EXHIBIT  2.1  (Cont'd)  U.S. study conducted by t h e N a t i o n a l A s s o c i a t i o n o f F o o d C h a i n s , A. C. N i e l s e n C o m p a n y , a n d T h e P r o g r e s s i v e Grocer Trade Magazine. C o m p a r i s o n s were f a v o u r a b l e i n mo s t c a s e s .  Source:  D o c u m e n t a t i o n o n t h e s t u d y p r o v i d e d by S t e i n b e r g ' s L t d . , f o r use i n the p r e p a r a t i o n of " S t e i n b e r g ' s L t d . " ( D e x t e r and B a r n e t t 1 9 7 8 B ) .  23  2.2.2  Labour's An  the of be  early  labour  View  protagonist  union  i n the i t e m - p r i c i n g  was  movement which was t r y i n g t o p r e v e n t t h e l o s s  j o b s i n supermarkets,. able  controversy  "Stores  adopting scanner systems  t o c u t j o b s 10 t o 1535 i f i t e m - p r i c i n g  somewhat l e s s i f i t i s r e t a i n e d "  may  i s d r o p p e d , by  (Assembly O f f i c e o f  Research  1977). In forces In  many o f t h e O i S . s t a t e s with  consumer g r o u p s t o l o b b y  f a c t , "Thomas  National  Zaucha,  Association  Public  of  Food  consumer push f o r l e g i s l a t i o n charged  that  "the  initiating  price  (Armstrong  1975).  had  other clerks* seen  October  f i t to  Director  laws.  f o r the  C h a i n s i n t h e U.S. c a l l e d t h e instigated".  movement  was  legislation  in  i t s e f f o r t s f o r item other than the  push f o r s u c h  Retail Clerks  scanners  would  evidence  on  neutrality."  costing  joined  a measure  also  responsible some  30  for  states"  "the R e t a i l  price one  He  Clerks  l e g i s l a t i o n and  in  Philadelphia,  (Supermarket  News,  1977).  "The  removal  Affairs  However, more r e c e n t l y ,  union,  Union  f o r item-pricing  , labor  labor  marking  U n i o n h a s abandoned no  the R e t a i l Clerks  be  that The  International  bad  and  retreated  Union  "dropped  any  jobs"  to  a  posture  i t s opposition  when i t came t o r e a l i z e t h a t  statistical  feared  f o r employment, h a s r e c o n s i d e r e d  point  i t s members  Union, which had  t h e new e q u i p m e n t  (Coyle  1978).  data a v a i l a b l e t o prove or disprove  the of  to price wasn't  T h e r e i s no  t h i s viewpoint  24  but, had  lately little  2.2.3  i n both to  say  the  on  Supermarket  U.S.  the  and  Canada,  labour  unions  have  issue.  B e t a i l e r s ' View  "Whatever the i m m e d i a t e f u t u r e may h o l d , t h e r e a r e s e v e r a l reasons f o r b e l i e v i n g that scanning has now reached the tipping point where i t w i l l be i n c r e a s i n g l y d i f f i c u l t f o r s t o r e s to r e s i s t the p a y o f f from this investment and increasingly d a n g e r o u s t o i g n o r e t h e t h r e a t o f an a u t o m a t e d c o m p e t i t o r " (Coyle 1978). In  1978  pricing UPC  i t appears t h a t ,  laws  gives  utilizing  1974  the  for his belief a)  "...  the  would  and  1977,  available stated  grocery  scanning  than  above  —  whereas  rather  than the  These U.S,  have  14 c h a i n s food  a  store  14 at  Coyle  further  installed  of  foresaw a  least  sales  stores  possibility by  i m p l i c a t i o n of top  20  one  food  about  (Coyle  1978).  the  stores,  the  above  chains  automated  for  1975).  of  number o f s c a n n e r  the  account  into  scanners  consideration  changes the  Namely  reasons  10,000 s u c h s t o r e s  that  U.S.  had  M c K i n s e y S Co.  suggests  facts,;  The  U.S..supermarkets  stores  drastically  ahead  only  f i v e Canadian  o f between 5,000 and  going  automated  208  of  are  (In March,' F o r b e s  and  chains,  of  over  implementation  1978).  that  Coyle  i s already  number  (Coyle  uncertainty  are  industry  the  imply"  retailers  technology;  Magazine r e p o r t e d  the  the  t h a t c a u s e d a slowdown i n t h e  s y s t e m s between  and  despite  30%  in  store. of  all  A  number  without  of  stores  scanners  e l e c t r o n i c checkout  have  automated  i.e,. t h e r e  exist  systems i n U.S.  which are upgradeable  checkout 50,000  supermarkets  to f u l l scanning .  In both Canada and the U.S., a few of the c h a i n s have q u a n t i f i e d the c o s t s and savings i n v o l v e d i n scanning and i n some cases have made p u b l i c informations E x h i b i t 2:2,  U.S. f i n d i n g s while  shown i n E x h i b i t 2.3.  the  are  Canadian  this  presented  in  findings  are  26  Exhibit  _.2  ( S o u r c e : C o y l e 1978)  A.  Giant  Food I n c .  typical  store  Savings  areas:  $140,000 p e r week i n s a l e s  volume  Reduced c a s h i e r Elimination  625  labour  227  of underrings  530  Others  $1,382 p e r week  Total  Elimination  of price  marking  would  save  an a d d i t i o n a l  $686  a week i n l a b o u r c o s t s p e r s t o r e  B.  Ralph's  Grocery Co.  Typical  store  Savings  areas:  Shrinkage  volume $160,000 p e r week i n s a l e s  control  ($33,000 p e r y e a r )  $660 p e r week  No o t h e r d o l l a r f i g u r e s a r e a v a i l a b l e f o r Ralph.'s G r o c e r y although benefit Data  -the "impact  i s being e s t a b l i s h e d , i n  areas".  based  on 80% o f , a l l  many o f t h e s o f t  items being source  Co.  marked.  27  E x h i b i t 2.3. S t e i n b e r g s Ltd.. 1  Typical  s t o r e volume $105,000 p e r week i n s a l e s .  Savings  areas  scanning  :  due  to  use  of  automated  Labour  12  Perishables  Steinberg's also  701  $841 p e r week  discovered other  achieved, but d i d net s p e c i f i c a l l y  Source:  Steinberg's Ltd.  without  (128  Underrings  Total  checkout  areas  where s a v i n g s c o u l d be  guantify these  ( D e x t e r and B a r n e t t  savings.  1978b).  28  Exhibit  2.4,.  depicted  Shows  the  breakdown  i n t h e s t u d y by  Assembly  of potential Office  of  s a v i n g s as  Besearch,  1977,.  Exhibit Savings P o t e n t i a l  o f t h e UPC  Checkout Price  2.4. • system  and b a g g i n g  marking  Begister  43%  b a l a n c i n g and 22%  ordering  9%  Eguipment r e p l a c e m e n t  Total  Source: Study  Assembly  Category  23%  Onderrings Boutine  by E x p e n s e  Savings  Office  of Computerized  3%  100%  of Besearch, C a l i f o r n i a  Checkout  Systems i n Food  Legislature,  Stores,  1977.  29  The  non-quantifiable  "soft" the  benefits)  studies  savings  (which w i l l  a p p e a r e d t o be  c a r r i e d out  R a l p h ' s G r o c e r y Co.: product  by  listed mix  and  fairly  the these  -  p r i v a t e - l a b e l ^ l i n e - e x t e n s i o n and  -  item  and  configuration,  stores, "A  key  stores an  area  inventory  being  i s the  ability  s u c h as  and  store  been a v a i l a b l e i n News,  October  b e n e f i t s as  accurate  above.  standard  order  techniques;  comparisons  of  like  controls.  audit food  mechanical  17,  by  1977).  a communicating system  which  network  will  s t o r e - l e v e l negotiable stamps i n a way environment Steinberg's  that "  study  -  e;g,i b e t t e r new better analysis effectiveness.  item of  assets  has  Service  never  (Supermarket pinpointed  tracking, advertising  c o n t r o l - t h i s i n c l u d e d the areas of direct delivery, coupons, b o t t l e d e p o s i t s , and d e p a r t m e n t p l a n n i n g  Corporate  of  provide  follows:  Merchandising  Store  a  to  evaluation;  scheduling  cash-accounting  c a s h , c o u p o n s , and  according  mentioned  evaluation,  addressed  t o c o n t r o l and  as  shelf allocation;  development, improved l a b o u r front-end  to  as:  proper  -  referred  extensive  retailers  -  introduction  be  f u n d s c o n t r o l and reporting potential savings for t h e company a s a whole amounted t o $94,600 per year and included supplies related to o r d e r i n g ($28,600 p e r y e a r ) and the daily courier service to the EDP c e n t r e ($66,000 per y e a r )  l e v e l - i t was d e t e r m i n e d t h a t with better inventory control, percentage s t o c k o u t s c o u l d be r e d u c e d f r o m the  30  existing 9% ideal level t o a 5% l e v e l ( D e x t e r and Barnett 1978b),. While e s t i m a t e s o f s a v i n g s vary, the statistics quoted above and i n Exhibits 2.2 through 2.4, in general, bear out the f i n d i n g s o f o t h e r s o u r c e s (Moyer and S e i t z 1975, Assembly O f f i c e o f Research 1977). The estimated 23% o f s a v i n g s b e i n g attributed to elimination of pricemarking i s widely accepted (Coyle 1978), and many c h a i n s f e e l s c a n n i n g is "impractical without price r e m o v a l ( S u p e r m a r k e t News, A u g u s t 1, 1977)i Costs of systems vary with installation. Estimates place the conversion of a supermarket from manual registers t o scanners at between $100,000 and $130,000, w i t h some r u n n i n g as h i g h as $300,000 ( F o r b e s 1978, Mahoney 1 9 7 4 ) .  2.2.4  Manufacturers The  grocery  View  9  product  manufacturers  have i n v e s t e d much  and  money i n t h e UPC and view a u t o m a t e d  next  step;  standard  I n 1970, t h e f u n d s industry  Manufacturers $50,000 e a c h By million  1977 to  (Mahoney the  large  i f  scale;  policing  of  up  logical  U.S. s t u d y  by  the  on a  Grocery  t h e Super M a r k e t I n s t i t u t e  industry  the concept  o f Research  the r e t a i l One  and  put  as a  —  1974).  grocery  develop  f o r the i n i t i a l  were  Association  (Assembly O f f i c e benefit  code  scanning  time  cents-off  some  $50  o f the U n i v e r s a l Product  Code  1977).  outlets  potential  had  area  The  employ  manufacturers  scanning  f o r hard  couponing.  invested  will  e q u i p m e n t on a  savings  is  in' the  At p r e s e n t , consumers a r e  31  a b l e t o redeem c o u p o n s on g o o d s n o t a c t u a l l y p u r c h a s e d . may  be  done  knowingly data for  by t h e c a s h i e r ;  suggesting a third  industry could of  inadvertantly  that  Blair  Besearch  o f a l l coupons cashed  estimates.  dollars"  Misuse  (Grey M a t t e r  the  peak  periods)  recently  "consumer m i s r e d e m p t i o n  transaction  potent  or  presented  alone  i n - f a r higher  of t h i s  be c o s t i n g m a r k e t e r s  coded,  (e.g. during  This  accounts  than  earlier  marketing  weapon  w e l l i n t o t h e hundreds of m i l l i o n s  1977).  As  can  validated  be  coupons  could by  be  UPC  the computer  system;  2:2.4;1 By  Marketing being  information  able,  to  information,  hitherto  manufacturers  should  strategies.  For  System P o t e n t i a l  obtain  detailed  available be  able  example,  only  to  product on  refine  information  a  movement  broad  their could  basis,  marketing be  obtained  regarding: -  a c t u a l movement  at the  point  of  sale  (item  by  item) -  consumer simply  buying  because the data  information daily - new  is  literally always  may  n o t , of course,  and  other  overnight,  current. be r e q u i r e d  The on a  basis;  product  (fast, accurate - the  behavior,  effects  test  market  experiments  feedback) of  advertising  and  promotional  32  -  activity  on s a l e s  perhaps  even  relationship The and  scanning i twill  and  dollar  of marketing  systems  will  for  Under  present  to  manual  payout  to sales.  make t h e n e c e s s a r y  e.g. through coupon c o n t r o l ,  item tracking  dollar  investments  be up t o t h e m a n u f a c t u r e r s  information. assessment  a  data  make  use  systems, i s almost  available of  the  promotion impossible,  difficult.  "The. s p e e d and e x c e p t i o n a l s e n s i t i v i t y o f s c a n n e r spawned data were recently documented by TeleResearch, Inc. ... f i n d i n g s presented t o an American M a r k e t i n g A s s o c i a t i o n meeting i n mid-June (1977) showed how t h e i n f o r m a t i o n (on a weekly o r even daily basis) could be used to assess advertising and m a r k e t i n g effects previously lost because o f long intervals (usually two months) between audits. I t s TRIM d i v i s i o n ( T e l e - R e s e a r c h I t e m Movement) i s a b l e t o •monitor the slightest tremors i n sales and s h a r e , where o t h e r s c a n o n l y p i c k up t h e e a r t h q u a k e s * * a c c o r d i n g t o Tom Mindrum, vice president i n charge o f t h e New York o f f i c e " (Grey M a t t e r 1977),.  2.2.5  Computer M a n u f a c t u r e r s *  View  S e v e r a l computer m a n u f a c t u r e r s development Among  these  obviously  were i n v o l v e d  in  original  o f t h e UPC by s u b m i t t i n g p r o p o s a l s f o r i t s f o r m a t . companies  saw t h e  were IBM, NCR, S i n g e r , and RCA who a l l  potential  market  f o r automated  checkout  eguipment. The  advancement  anticipated  of  these  systems  and t o d a y "IBM w i t h 5 7 % o f  was f a r s l o w e r  the  U.S.  market,  than and  33  with 2 5 % lead a f i e l d  NCH  1978),.  This  small  representative  of  manufacturers  U.S.  must  recently  continue,  about $ 2 0 0 million  of  equipment  Canadian  manufacturers  market  as  well.  indeed be cheered by the renewed areas  For  example.  Giant  1 , 5 0 0 electronic  ordered  u n i t s from IBM. trend  number the  i n the supermarket  of f i v e major manufacturers " (Coyle  The manufacturers  would  like  in  the  checkstand  to  see  this  f o r although " l a s t year food r e t a i l e r s spent  million  on  checkout  equipment,  went f o r scanners" (Forbes 1 9 7 8 ) , ;  less  the p r i c e of the scanner"  (Forbes  than  $10  T h i s key-entry and  other s i m p l e r p o i n t - o f - s a l e equipment " c o s t s only of  The  activity  Food  scanner  is  a  fraction  1978).  Government's View  2.2s6  While  not  wanting  to  interfere  supermarkets' o p e r a t i o n s , governments level,  both  in  Canada  on  and the U.S.,  unduly local  and  the  federal  have been pressured by  consumer and labour unions t o take a c t i o n i n the controversy.  in  item-pricing  T h i s a c t i o n * i n the form o f l e g i s l a t i o n t o f o r c e  i t e m - p r i c i n g i n scanning s t o r e s had taken place (as p r e v i o u s l y mentioned) i n many U.S. Legislation U.S.  at  a  c i t i e s and s t a t e s by federal  1975.  l e v e l i n both Canada and the  was being c o n s i d e r e d i n 1 9 7 5 but, t o date, there has been  no f e d e r a l legislation elimination  stand to of  on  the  protect item  issue. consumers  prices  would  Governments where  they  lead  to  have felt  passed that  unchecked.  34  indiscriminate p r o t e c t labour jobs has  price  hikes  where they  were threatened;  by  felt  that  Canadian  in  established its  i n 1975  and  concerned  i f i t was  Both the recent  AIB  and  i . e . the  replacement,  Inflation  Productivity  supermarkets could  monitoring any  would  for  would  the  (Mackie 1978,  the with  Board body,  Study  certainly place i n  p o s s i b l y l e a d to unchecked p r i c e  newspaper a r t i c l e s  in  This  f e l t t h a t the changes t a k i n g  the CSIP are p r e s e n t l y  be  deal  income;  Centre  (CSIP),  p r i c e hikes  Anti-Inflation  to c o n t r o l p r i c e and  "watchdog"  employees'  particular,  Government agencies have been formed t o issue,  to  1978) .  industry.  particular  or  both these groups  at  or  minimum by  (Coyle  by  concerned  this  a  government,  owners;  supermarket  However, l o b b y i n g  d i m i n i s h e d , i f not the f e a r s The  supermarket  be the  increases.  a c t i v e as borne out Teasdale  of  1978).  by  35  CHAPTER I I I  CONSUMER INFORMATION SYSTEMS One p o s s i b l e a l t e r n a t i v e to c o n v e n t i o n a l methods o f p r i c e publication  i s to  information  systems, paid f o r d i r e c t l y by consumers, do e x i s t  and  these  be  considered.  must be considered  contemplated  will  along  discussed  telecommunications .  consumer  as a b a s i s f o r f u r t h e r d i s c u s s i o n  of the s p e c i f i c CIS be  Presently,  herein;  with  new  Existing  ideas  in  systems  the  area o f  T h i s w i l l l e a d t o a d e s c r i p t i o n of a CIS  i n the supermarket environment, as w e l l as g i v i n g i d e a s pn the f u t u r e p o t e n t i a l o f such a system,;  3,1 Use Of E x i s t i n g Information The forms and  Services  n o t i o n of a consumer i n f o r m a t i o n  i s hardly the  new.  Canadian  consumers  with  N a t i o n a l l y , the U.S,  Consumer  their  system  Association  buying  decisions  p u b l i c a t i o n s such as "Consumer Reports".  in  various  Consumers Union  endeavour  to  by s u p p l y i n g  yearly  are  rated  q u a l i t y and t h e i r a t t r i b u t e s are d i s c u s s e d ,  On a  l o c a l l e v e l , member-funded o r g a n i z a t i o n s e x i s t o f f e r i n g '  local  on  overall  market  information  form of Consumer "Checkbook",  a  (products, s e r v i c e s , venders, etc.)  guides.  Examples  periodical  Washington Center f o r the Study published  Products  help  of  published of  the  latter  quarterly  Services;  and  i n the include by  the  "Vector",  monthly by a p r i v a t e l y run concern i n San Diego*  36  On with  a n a t i o n a l s c a l e , p u b l i c a t i o n s must of n e c e s s i t y d e a l  product  rendering  data  the  that  will  not  date  too  quickly,  i n f o r m a t i o n o b s o l e t e before consumers have-had  an o p p o r t u n i t y to u t i l i z e i t . For example, "suggested p r i c e s are o f t e n l i s t e d , and be  major  thus  purchase  the items being  articles  L o c a l l y , i n f o r m a t i o n systems area-dependent  attributes  p r i n t e d i n f o r m a t i o n can  considered  (e.g. household can  handle  (such  as  be p u b l i s h e d  retail"  appliances).  more  food  will  volatile  prices)  more f r e q u e n t l y  and  because and  use  can be made of l o c a l mediae For  example,  newspapers prices;  to  consumer  publish  in  a  Montreal,  groups  will  "market-basket" food  price  cities,  consumers  can  have  of  the  local  grocery  comparisons  p e r i o d i c a l l y on a p u b l i c access t e l e v i s i o n U.S.  use  channel;  access,  item appear  in  f o r a f e e , to a  p r i v a t e t e l e v i s i o n channel o f f e r i n g a range of t o p i c s of interest.  Even  these  local  some  information  local  systems  have  drawbacks: a)  In  product local  of  many  cases,  voluntary  information),  c o l l e c t the necessary Canada). these  the  information  associations  systems  (acquaintances  or o r g a n i z a t i o n s u t i l i z i n g data  ( e i g . the Consumer  are who  pool  volunteers  Association  Both r e l y on the c o n t i n u i n g energy and  the  to of  enthusiasm of  volunteers. b)  Even  the  professional,  commercial  organization  possesses f a c t o r s l i m i t i n g the q u a n t i t y of data c o l l e c t e d  and  37  published,  i;e. financial  c o l l e c t i o n and the  c)  time  required  c o l l a t i o n ; r e s t r i c t i o n s t h a t are a  publication  publication  resources;  media  (e-g. p h y s i c a l  space  for  product  of  available,  deadlines)  In any system, the i n f o r m a t i o n i s only as a c c u r a t e  as  the method of data c o l l e c t i o n which i s prone to human e r r o r . d)  In most c a s e s , the success  questioned.  The  those  peole  1977).  who  The  minimal and limited  3.2  any  access  range of  P o t e n t i a l On The  on  Here,  search time and  run out of energy and  are w i l l i n g to pay  depends  calculation.  been  enthusiasm"  f o r the i n f o r m a t i o n  to  they  However, whether such a system i s  the the  the  commercial o r g a n i z a t i o n s appeal  r e q u i r e i n decision-making. utilized  systems has  v o l u n t a r y a s s o c i a t i o n tends to f a l t e r "as  dominant e n t h u s i a s t s f i n a l l y (Maynes et a l ,  of these  consumer's marginal  service  fee.  marginal  net  gain  c o s t i s a f u n c t i o n both of So,  unless  charges  are  i s simple, the system w i l l have appeal  to a  people*  A National  drawbacks  of  Scale  existing  developments  i n telecommunications o f f e r a l t e r n a t i v e forms of  publication (see above)*  Using  mentioned.  of  have  dissemination.  been  publication  information  information  already  nationwide  However,  t e l e v i s i o n as a v e h i c l e  of i n f o r m a t i o n on a l o c a l l e v e l  i s already i n use  Implementing t h i s i d e a on a nationwide s c a l e  begun t o appear f e a s i b l e .  for  Canadian T e l e v i s i o n and  has  Cablevision  38  e x e c u t i v e s r e c e n t l y took note of developments i n Britain,. systems  have  appeared  there,  and  a  description  Two  from  a  newspaper a r t i c l e i s given below: "In i t s simplest terms, the BBC, IBA system i s an i n f o r m a t i o n s e r v i c e that uses e x i s t i n g channels on a B r i t i s h t e l e v i s i o n s e t t o make a v a s t range o f printed information a v a i l a b l e to the viewer; This c u r r e n t l y i n c l u d e s news f l a s h e s , s p o r t s results, weather c o n d i t i o n s , food p r i c e s , an entertainment guide, and t r a n s p o r t a t i o n i n f o r m a t i o n ... To get at i t , a t e l e v i s i o n owner needs a c o n v e r t e r fixed to h i s s e t and a hand-held d i g i t a l keypack resembling a pocket c a l c u l a t o r . With the keypack* t h e viewer can interrrupt h i s r e g u l a r programs by punching up an index of i n f o r m a t i o n a v a i l a b l e over e i t h e r networks (BBC, IBA), then request s p e c i f i c d e t a i l s . Within seconds, pages of p r i n t e d i n f o r m a t i o n f l a s h on the screen. & touch of the f i n g e r t i p s switches him back to h i s program" (Gray 1977). 1  J o i n t l y , these British  homes  systems a r e c u r r e n t l y i n use i n over 6,000  and  offices.  The  author  telecommunication developments as the important existing future  limited-scope easily  Information  3.3  information  accessible,  sees link  publication  potentially  powerful  these between  systems and Consumer  Networks,;  A CIS In The Supermarket Environment The  supermarket environment lends i t s e l f t o c o n s i d e r a t i o n  of the development of a CIS s i n c e the i s s u e o f item p r i c i n g i s topical problems.  and  the  e x i s t e n c e o f the UPC e l i m i n a t e s many '  design  39  3.3.1  Scope Of The Initially,  System  the system i s envisaged  device f o r the s t o r a g e , and product  the scanning most  rather  simple  subsequent p u b l i c a t i o n , of  grocery  price information.  as  a  T h i s data c u r r e n t l y e x i s t s w i t h i n  computer systems of the  p r i c e changes are i n i t i a t e d  supermarkets.  Because  from the c h a i n ' s head  office  (except  for instore s p e c i a l s ) , pertinent price information  stored  in  a central location.  is  In the case where c h a i n s have  s t o r e s with automated checkout, t h i s  centralized  information  system must be automated f o r communication purposes. Thus, p r i c e i n f o r m a t i o n available  for  use  i n the supermarket environment i s  i n other  spheres.  statement j u s t made i s d i s c u s s e d is  possible  to  store  this  (The f e a s i b i l i t y  of the  i n more d e t a i l below.) I f  information  it  on a system i n the  p u b l i c domain, then consumers p o t e n t i a l l y have access t o p r i c e i n f o r m a t i o n on a l l products accuracy  and  existing  problem  information  currency of  of data  the  data  i s assured.  collection still  is a  and  the  Thus, the  eased;  difficulty.  however, is  suggested t h a t p u b l i c a t i o n o f p r i c e i n f o r m a t i o n be through  the  a)  is  set)  It  following  dissemination  (not j u s t a s e l e c t  channels: local  newspapers  (e.g. weekly  market-basket  p r i c e comparison) b)  printed  lists  of product  p r i c e s and/or  p r i c e changes d i s p l a y e d p u b l i c l y supermarkets  e.g.  product  libraries,  no  c)  p u b l i c t e l e v i s i o n channels  d)  C e n t r a l I n q u i r y Centre, able t o  telephone  and  i.e.  consumers w i l l be  enquire  about  specific  prices. At  the s t a r t , only p r i c e i n f o r m a t i o n w i l l be s t o r e d , but  the p o t e n t i a l o f t h i s system as a u s e f u l and powerful Information  System  supermarket  environment  information.  This  information*  but  is  worth  considering:  alone,  there i s a need f o r " b e t t e r "  does  not  information  Within  necessarily  in a  form  consumer i n making r a t i o n a l d e c i s i o n s . a)  Consumer  imply  that  not  always  vs. f l u i d  consistent  ounces);  and  more  a s s i s t s the  For example:  u n i t p r i c i n g i s g e n e r a l l y a v a i l a b l e although is  the  (e. g.  i t, is  i t  millilitres  not  used  by  a  m a j o r i t y of shoppers. b)  nutritional  information  i s listed  packages, but the number  of  become  therefore  overwhelming  and  on most food  items  listed  useless, i f  more than two or three items are being A d d i t i v e s are a l s o compounds their  are  listed,  meaningless  potential  harmfulness  but to  can  compared.  these  chemical  most people, and  generally  i s not  known: An  attempt  i s b e i n g made i n t h e U.S.A.  make n u t r i t i o n a l i n f o r m a t i o n  simple  s e t t i n g up a s i n g l e r e l a t i v e  •nutritional  to  t o compare by score'  41  see E x h i b i t 3.1.  Along with t h i s , i n f o r m a t i o n  on a d d i t i v e s i s being made more warnings  regarding  substances c)  meaningful  the harmful e f f e c t s of these  - see E x h i b i t 3.2.  consumer r a t i n g s of the s t o r e s themselves handled could  i n any formal manner a t present. be  with  based  cleanliness,  on  a  subjective  service-levels  a b i l i t y t o handle peak  i s not Ratings  measure  of  (i-e,. s t o c k o u t s ,  periods)  helpfulness of  employees, e t c . Information  i n the  future  could  s e l e c t i n g a t e l e v i s i o n channel. computers able  to  i n the key  supermarkets  in  be  With  obtained  the  advent  by  simply  of  micro-  home, the consumer o f t h e . f u t u r e should be a  shopping  list  and  get  a  display  of  i n the area and a comparison of t o t a l c o s t s f o r  the items s e l e c t e d i  He/she  may  also  have  the  option  a u t o m a t i c a l l y p l a c i n g an order with the most convenient  of  store.  42  E x h i b i t - 3._ 1 Nutrition  Scoreboard*  The foods are given " R e l a t i v e N u t r i t i o n a l Values". i s no  perfect  nutritional e.g.  two  score,  value  but  than  higher  scores  lower s c o r e s .  plums have a r a t i n g of 18.  indicate  Ratings can be  The  chart  There greater added,  advises:  "A  d i e t must be balanced as w e l l as generous". Examples: Nutritional Score P r o t e i n Foods:  2 oz  172  2 oz  158  3. 3 oz  116  b r u s s e l s p r o u t s (frozen)  3. 3 oz  73  skim  8 oz  39  whole milk  8 oz  39  strawberries  1. 5 cup  50  plum  1  9  oatmeal cookie  1  -4  milk c h o c o l a t e  1 oz  -27  Chuckles  1 package  -74  beef  liver  chicken Vegetables:  Dairy:  Fruits:  Snacks:  liver  broccoli  (frozen)  milk  candy  i From the book N u t r i t i o n Scoreboard by Dr; Michael Jacobson. Posters produced by Centre f o r Science i n the P u b l i c I n t e r e s t (CSPI) Washington D.Ci,. 1978  43  Exhibit-3.2 -  Chemical C u i s i n e * T h i s , c h a r t l i s t s many o f the common food attempt to inform  a d d i t i v e s , i n an  consumers a s to what the chemicals  do, which  ones are s a f e and which are poorly t e s t e d or dangerous. colours  are  used  on  the  poster:  Green  -  Three  s a f e , yellow -  c a u t i o n , and blue - avoid* Examples: Ascorbic  Acid  (green), n u t r i e n t - o i l y d r i n k s , cured  Caffeine Calcium  foods,  cereals,  meats.  ( b l u e ) , s t i m u l a n t - c o f f e e , t e a , cocoa, s o f t Propionate  soft  drinks  (green), p r e s e r v a t i v e - bread, r o l l s ,  pies,  cakes Quinine  (blue)  f l a v o r i n g - t o n i c water, q u i n i n e  water,  bitter  lemon Along with the listing  above  characteristics  a of  short the  narrative  chemical  and  is  provided,  any known or  p o t e n t i a l hazards i n i t s use.  A poster produced by Center f o r Science i n the P u b l i c I n t e r e s t , Washington, D.C,:, 1978 Source: Michael Jacobson's E a t e r ' s D i g e s t , Anchor Paperback* 1  44  3.3.2  General F e a s i b i l i t y Of The The  economic f e a s i b i l i t y  However,  System  is  discussed  there are t e c h n o l o g i c a l and  which must be taken i n t o  3.3.2.1  in  Chapter  p o l i t i c a l considerations  account.  Technology  Computer hardware and software requirements up  the  initial  storage  and  the UPC  makes  publication  can  with  make  a  view  use to  (described above; Gray 1977)  Political has  identification  of more  of  existing  scanners;  is  sophisticated  techniques  i n the f u t u r e .  Aspects  been  said  about  the ease with which a p r i c e necessary  s t o r e d by the supermarkets i n a r e a d i l y usable form.  S e c t i o n 3.3.1 from  data  telecommunication  i n f o r m a t i o n system could be c o n s t r u c t e d because the data  Using  and/or a c r o s s grocery c h a i n s i s assured.  Data c o l l e c t i o n i s f a c i l i t a t e d by the use  Much  computerized  r e t r i e v a l of information straightforward.  w i t h i n manufacturers  3s3.2.2  setting  The f a c t t h a t  as a r e c o r d key, c o n s i s t e n c y of product  methods,  for  CIS are a v a i l a b l e a t present.  the grocery i n d u s t r y has developed  the UPC  V.  above.  However, c o o p e r a t i o n  must  be  obtained  the g r o c e r s i n order f o r t h i s data to be o b t a i n e d . Why  information  should on  the a  retailers  regular  basis  agree for  use  to  provide in  the  price central  45  database? a)  We  must c o n s i d e r two  There  is  a  brought t o pricing,  important  possibility  bear  on  either  that pressure  retailers  informally  Retail  grocers,  collection They can role It  of  other  will  retain  be  item  consumers,  or  legislation.  competitors,  pay  stores' price  information.  however, s i m p l y  be  of consumers needing  for  considered  price  the  in  the  information.  f o l l o w s f r o m t h e above t h a t i t i s h i g h l y p r o b a b l e  retailers  to  alternative a)  view  the  to item  i.e. b)  have t h e benefits  the savings  Retailers,  due  price  P u b l i c a t i o n of price a form  Within environment formation  scope  i s being a  to  of  from  p r i c e s has  not  &.q.  refrigerators  a  viable  the  scanning  and  system,  have e a s y  access  information. i n f o r m a t i o n can the  this  etc.)  automated  become an  full  to item-price e l i m i n a t i o n .  seen  only the  playing other  a  as  checkout yet  or  systems. (with  i t probably  supermarket  part  retailers  have i n s t a l l e d ,  i s s u e as  stoves,  be  retailers.  thesis, as  However,  sales,  install  item  and  opportunity to r e a l i z e  discussed  CIS.  automobile  potential  advantageous  o f a d v e r t i s i n g by  the  of  as  as c o n s u m e r s , w i l l  to competitors' c)  CIS  for  pricing:  Retailers potential  stores,  as  to  from  more f o r m a l l y f r o m government b)  points:  in  the  (department have  the  Removal bulk  of  items  never w i l l ) ,  but  46  these  r e t a i l e r s must be  information CIS  into  areas  account: complex scope  is  s t o r e d on beyond t h e  It  is  policy of  considered  left  aspects  these  their  f o r the  s y s t e m s , and  supermarket to  future  involved  issues  take  research  be  Valuable  expansion of  should  in this  will  future.  this  into  to consider  endeavour.  confined  to  Herein the  the  the the  grocery  industry. The  timing  of  the  CIS  political  consideration.  operating  two  systems.  Consumer r e a c t i o n , p a r t i c u l a r l y  being  put  present,  Vancouver, the  scanner stores apiece,  to  the  formal  advocates  In  development i s a very  as  suggested  shopping  as  have  elsehwhere.  go  Once expression impossible  with  a signal  not  the  majority  of  o b j e c t i o n by  and  scanners f i r m l y supermarkets w i l l  voiced  all  stores  boycott  be  less  and  likely  of  a CIS.  Government w i l l  it  is felt  consumers passed  be up  express of  grocers  item  their  as  interpreted  stores too  prices  on  to i n t e r f e r e opportunity  a by  . the  may  late.  t o cooperate i n the  loathe  their written  via legislation  be  At  consumer  have been c o n v e r t e d ,  may no  removal, i s  but  t a k e n by and  test  feature.  lack  of scanner  objection  entrenched  few,  stores  to i n t e r f e r e of  other  could  be  chains,  s t o r e s as  price  This  signal  government a s  any  consumers  wrongly or r i g h t l y , c o u l d ahead  to  been  objection, to  major  view these  much  complaints  have  d i s a p p r o v a l by  test  two  important  be With  goods, formation  this late i f for action.  47  CHAPTER  CONSIDERATIONS IN In  a  changing  information  processing  to  meet  new  of o f f e r i n g  over  challenges.  to  have l e s s e n e d  and  may  and  consumer g r o u p s '  love  with  two  major  retail  scanners"  studies  each  behind  an  dispersion,  1978). have  food  price  of  the  situation  that  a  stalemate  tension still  of  the  ignored down  appears  prevalent, study  by  even  though  **  perhaps  two  Vancouver, Canada, scanner  equipped  once a g a i n  in  where  stores,  being  voiced  methods o f  pricing  1978b).  supermarket  or h e i g h t e n i n g  and  In  particular  products) ,  and  consumer a w a r e n e s s i s t h u s a  major  establishment  of p r i c e i n f o r m a t i o n  change  presume t o speak f o r have f a l l e n  to existing  which s u p p o r t  and  feasibility  of  have " q u i e t e d  alternative  (in  the  findings  p r i c e removal are  1978a, P a r t o n  goods  method  ((1976) c a n n o t be  (Coyle  chains  maintaining thrust  Allen  consumers they  Offering  at the  Although the  The  o b j e c t i o n s may  o b j e c t i o n s to item (Parton  looks  consequence  exists.  attitudes  required to  I I , i t appears  justified.  Hutt,  because the  a  CIS  r e c e n t l y , consumer f e a r s are  w e l l be  Harrel,  still  a l s o he  alternative As  A  people's  C h a p t e r IV  c o n s u m e r s an  pricing  DESIGN OF  methods may  i n C h a p t e r s I and  item  THE  environment,  information-gathering,; presented  IV  the  of  a  expectation  CIS. that  There  also  widened p u b l i c a t i o n  would r e d u c e b o t h a v e r a g e  also price discrepancy  are  p r i c e and  price  between s t o r e s o f  the  48  same c h a i n s areas  & study  where  both  significantly  lower.  supported  drug  advertising  unrestricted,  Studies  on  by  the  prices  of  1976)  prescription  prices  Devine  (Cady  and  (1976,1978)  showed t h a t  drug  prices  in was  price  dispersion  were  the  Ottawa-Hull  area  in  hypotheses t h a t p u b l i c dissemination  of  market  information a)  reduced  b)  decreased  c)  lowered  From t h e price  the  d i s p e r s i o n of p r i c e s across  price variations within  the  average p r i c e l e v e l  above we  are  publication  o v e r and  left  offers  above e x i s t i n g  a d a t a b a s e o f consumer environment - a CIS,  4.1  Design The  outset. on  the  with  the  stores;  i n the  distinct  significant  stores;  market; impression  advantages t o  methods o f i t e m - p r i c i n g . price information  appears  in  the  The  that  consumers need  for  supermarket  warranted.  Issues objectives  Bettman  t h i s CIS  should  p r o v o k e s t h o u g h t s on  objectives  Environments"  of  (Bettman  of  the  "designing  be  made c l e a r a t  i s s u e , and Consumer  the  comments Information  1975) .  "A s y s t e m i s s a i d t o be 'processing* normative i f i t is intended o n l y . t h a t consumers s h o u l d be a i d e d i n p e r c e i v i n g and p r o c e s s i n g t h e a p p r o p r i a t e i n f o r m a t i o n * b u t t h e r e i s no commitment t o how o r even i f c o n s u m e r s use s u c h i n f o r m a t i o n . Osage i s a s u b j e c t i v e i n d i v i d u a l consumer d e c i s i o n , and t h e s y s t e m d o e s not t r y t o d i r e c t t h a t d e c i s i o n other than by providing information i n a fashion f a c i l i t a t i n g processing. A system is 'policy* n o r m a t i v e i f the i n t e n t , b a s e d upon  49  some n o t i o n s o f r a t i o n a l b e h a v i o r , i s that information be used i n a p a r t i c u l a r manner* i f t h e r e i s a p o l i c y o r g o a l o f •educating' the consumer to make 'better' purchase decisions".  The a u t h o r a g r e e s w i t h Howson and D e x t e r (1977) t h a t "In t h i s c o n t e x t the objective of a consumer information database is p r o c e s s i n g n o r m a t i v e (however) s p e c i f i c a n a l y s e s and methods o f d i s t r i b u t i n g i n f o r m a t i o n e x t r a c t e d , c o u l d have e i t h e r processing or p o l i c y normative o b j e c t i v e s . "  This  is  being  shrugged  needs use  not  can  the  be  say  off;  satisfied  o f the  'policy' or  desired  (Bettman  not  i n the  the  way  i t was  one  same).  outcome  those  in  consumer  specifically  intended.  It  is  question  becomes  or s e t of  outcomes"  satisfy  consumer  fact,  o f consumer a d v o c a t e s p u r p o r t i n g  Section  4.2.  the  p u b l i c a t i o n methods  T h u s , the  will*  consumer i s  that  consumers  proposed  "specific  1977)  (or  i s made  whether or n o t  author t h a t the  objectives the  point  normative i n nature.  whether  and  that r e s p o n s i b i l i t y f o r the  Rather, the  information  intention be  to  discusses  these  to  be  objectives  further. The  design  issues  supermarket environment a) interest  Scope o f t h e groups a r e ,  information b) only  Content  price  consumers  and  the  as will  be  system; and  UPC  and  their  relate  considered.  who  the  to  the  These  CIS  the  include  prospective,  o b j e c t i v e s with  in  users  regard  to  and price  ( S e c t i o n 4.2.),. accessibility  information and  they  retailers  will  be  while  o f the  stored;  system; direct  d e s i r a b l e , i s not  initially access  by  feasible  in  50  the e a r l y stages c)  of operation  E c o n o m i c s ; an a t t e m p t i s made  savings  of  such  a s y s t e m and  f o r m a i n t a i n i n g the  4.2  O b j e c t i v e s Of The  basic  ( S e c t i o n 4.4.). to  a s c e r t a i n where  costs  responsibility  The  I n t e r e s t Groups  Information  System,  requirements  i . e . one  In order to formulate groups  this objective set* (Exhibit  4.1.)  are  the  of  a  which meets a t  l e a s t a minimum o b j e c t i v e s e t o f t h e v a r i o u s i n t e r e s t  the i n t e r e s t  and  system s h o u l d l i e .  p r o p o s a l o u t l i n e s t h e f e a t u r e s and  Consumer  assess  groups.  objectives  considered.  of  EXHIBIT  Interest  Grocery  Manufacturers  Government  Labour  Manufacturers  Organizations  Unions  Consume r s  and T h e i r  Representation in  Grocery  Products  Canada  Manufacturers  of  Canada  R e p r e s e n t e d by i n d i v i d u a l s u p e r m a r k e t and by t h e R e t a i l C o u n c i l o f C a n a d a  Retailers  Equipment  Groups  4.1  5 major manufacturers m a r k e t ) a n d NCR ( 2 5 % )  Statistics  Canada  Department  of Consumer  chains  l e d by I B M ( 5 7 % o f ( C o y l e , 1978)  and C o r p o r a t e  R e p r e s e n t e d by t h e R e t a i l I n t e r n a t i o n a l Union  U.S  Affairs  Clerks'  R e p r e s e n t e d by c o n s u m e r s i n g e n e r a l , a n d the Consumer A s s o c i a t i o n of Canada i n particular  by  52  4.2.1  Grocery The  Manufacturers  grocery  straightforward directly,  as  considerable (and view  the  product  analysis. do  manufacturers  present  They  stand  the r e t a i l e r s .  money and  effort  standardization  not  most  to  benefit  However, t h e y have  invested  i n the  introduction  of  of information l a b e l l i n g ) ,  scanning as the next l o g i c a l  manufacturers  do  the  advance.  o b j e c t i v e s i s presented  The  in Exhibit  the  OPC  so  they  hierarchy 4.2.  of  EXHIBIT HIERARCHY  Grocery  4.2  OF O B J E C T I V E S  Manufacturers  I—  Improved  sales  (greater  marketing  Improved  sales  information  efficiency)  Object ives  Means (with automated checkout)  Product Movement Tracking  New Product T racking  P romo t i o n a 1 Sales Measurement  Coupon Control  CM  54  The  supermarket  systems  allow  the  manufacturers  e f f i c i e n c y i n the d i s t r i b u t i o n of t h e i r products as mentioned  i n s e c t i o n 2.1.3.  f a c t , scanning  is  adopted  greater has  been  But t h i s i s only p o s s i b l e i f , i n by  a  large  percentage  of  the  supermarkets.  4.2.2  Retailers R e t a i l e r s w i l l b e n e f i t d i r e c t l y from the use of  checkout, with f u l l  p o t e n t i a l being r e a l i z e d  automated  once item p r i c i n g  i s no l o n g e r r e q u i r e d *  The h i e r a r c h y of r e t a i l e r s *  i s presented i n E x h i b i t  4.3.  objectives  EXHIBIT  4.3  HIERARCHY OF OBJECTIVES  Grocery R e t a i l e r s  More p r o f i t a b l e  operation  Objectives Tangible  savings  Improved  efficiency  Means (with automat ed checkout)  Pricing of Goods Aut o m a t i c Reordering  Reduction of Errors  I Sales Analysis  WareHousing  Ordering Ef f i c i e n c y  Faster Checkout  Labour Scheduling  56  4.2.3  Equipment The  the  Manufacturers  objective  of the equipment  automated checkout  market  potential.  a v a i l a b l e and over  systems i n q u a n t i t i e s  Both  hardware  represent large  t h e p a s t few Reaction  4.2.4  i s to  sell  that r e f l e c t  the  software  are  by  these  may  be  readily  suppliers  years.  to  Electronic  and  investments  the  supermarket  o f the f u t u r e success or f a i l u r e e.g.  manufacturers  system  an  indication  of other important  concepts,  Funds T r a n s f e r .  Government The  government  a t the  same t i m e ,  to  sure  be  change  in  equipment required  avoid excessive i n f l a t i o n . competition i s not reduced  the  environment,  and is a  I t has  f o r the  t o s t i m u l a t e t h e economy  that  the way  interference,. 1978.  would l i k e  Study  been of  function  is  to  barrelled  function  elimination of  The  e.g.  AIB  as a r e s u l t  introduction  of  operations  Inflation monitor  Productivity  post-controls.  to analyze price  a p p e a r t o t h r e a t e n the c o u n t r y ' s  and  without  end  a  objectives  (Teasdale  1978).  of  Centre  (CSIP)  "CSIP has  any  undue  whose double  c o s t developments  economic  productivity"  of  What i s  a "watchdog" a g e n c y , t h e and  like  scanning  C o n t r o l Program e x p i r e d a t t h e  r e p l a c e d by  s t u d y ways o f i m p r o v i n g  T h e y would  of i t e m i z e d p r i c i n g .  monitoring  but,  and  that to  57  4.2.5  R e t a i l Onions The  Retail  Clerks  International  Onion  in  S t a t e s has s t a t e d t h e i r o p p o s i t i o n to the scanning  the United equipment.  T h e i r o b j e c t i v e i s t o avoid l o s s o f employment f o r members due t o change i n the industry,; the o b j e c t i o n s are no longer  4.2.6  (However,  as  mentioned  earlier,  voiced i n many o f the s t a t e s ) .  Consumers The consumers are discussed  significant  and  interesting,  Canada and t h e United represented  by  l a s t because they form a very yet  complex,  S t a t e s , consumers*  associations;  group.  needs  Locally,  generally  are  therefore,  the  o b j e c t i v e s of the Consumer A s s o c i a t i o n of Canada considered^  (See  Exhibit  a l t e r n a t i v e t o itemized  4.4.).  The  Both i n  need  to  be  suitability  of  an  p r i c i n g w i l l be judged by t h i s agency.  EXHIBIT  HIERARCHY  Consumers (Consumer  OF  4.4  OBJECTIVES  Associations)  Protect  Consumers'  Interests  Obj e c t i v e s ' P o l i c i n g ' of Supermarkets  Heighten (or at least maintain) Consumer Awareness  r Means  |  I  Increased Ease of I n f orma t i o n Search  Increased Quantity of I n f orma t i o n Increased Qua1i ty of I n f o rma t i o n  Reduce Interstore Price F luctuations Highly Vis ible I n f ormat i o n  Monitor Level of Comp e t i t i o n  Reduce Interchain Fluctuations  00  59  4*3 Meeting The O b j e c t i v e s T h i s t h e s i s proposes t h a t t h e simultaneous implementation of a CIS with the supermarket meet the  objectives  groups:  If  of  scanning systems w i l l r e a s o n a b l y  the  previously  mentioned  the CIS i s indeed a f e a s i b l e s u b s t i t u t e f o r item  p r i c i n g , then, i n the s h o r t r u n , we w i l l see present impasse imposition  an  to  the  In the long run, the CIS  makes p o s s i b l e the c o l l e c t i o n and a v a i l a b i l i t y to  consumers  marketing boards information  end  on t h i s i s s u e , without e i t h e r s i d e f e e l i n g t h e  of an u n f a i r compromise.  information  interest  will  be  and  other  assisted  on volumes produced  of  groups;  in  their  even  For  more  example,  collection  of  and s o l d , consumers w i l l have  the p o t e n t i a l to get n u t r i t i o n a l i n f o r m a t i o n on food p r o d u c t s , and g r o c e r y manufacturers and r e t a i l e r s have the p o t e n t i a l get a c c u r a t e market-share  4.3.1  information.  The Grocery I n d u s t r y ' s O b j e c t i v e s It  4.2.1.  is and  obvious 4.2.2.)  retailers'  goals  scanning systems not  to  from that  the p r e c e d i n g d i s c u s s i o n the  grocery  (Sections  manufacturers  and  are achieved through the use of supermarket to o b t a i n t h e i r i n f o r m a t i o n .  While  this  is  d i r e c t l y a t t r i b u t a b l e t o the Consumer I n f o r m a t i o n System,  the i n d i r e c t  i n f l u e n c e i s as f o l l o w s : Reports on  at t h e f r o n t  end, movement of products, and buyer p r o f i l e s are  of  both  use  to  previously  retailers  (or e a s i l y )  and  productivity  manufacturers, and were n o t  a t t a i n a b l e using  manual systems.  With  60  automated  checkout f o r a l l goods being s o l d , t h i s i n f o r m a t i o n  i s e a s i l y obtained.  Machine-reading  e f f e c t i v e form of data c o l l e c t i o n . their  marketing  information  the  OPC  is  scanner f o r a l l encoded  w i l l be incomplete and p o s s i b l y  products.  g o a l s t h e r e f o r e , i s dependent objectives  in  a  way  other  most  The r e t a i l e r s f e a r much of  i n c o r r e c t i f checkers can key i n the p r i c e r a t h e r the  the  on the than  than  using  The a t t a i n i n g of t h e i r satisfying  the  of  consumer  maintainence o f item  pricing.  4.3.2  The Equipment Manufacturers' O b j e c t i v e s If  the  hardware  retailers  suppliers  purchase  increase  supermarket  their  volume  systems, of  the  sales.  If  scanning equipment i s part o f the purchase, t h e r e i s a f u r t h e r i n c r e a s e i n both hardware and software s a l e s . in  Forbes  (1978)  potential  wealth  supermarket  "Market  system.  Government O b j e c t i v e s  There a r e v a r i o u s governmental  stores*  agencies who  systems.  the  With access t o the data generated by the  agencies such as S t a t i s t i c s Canada c o u l d Basket"  realize  o f i n f o r m a t i o n gathered and s t o r e d by these  information  more  r e t a i l grocery i n d u s t r y .  produce  efficiently;  agencies too could save money on t h e i r monitoring the  quoted  puts NCE's lowest p r i c e d scanner at double  the c o s t of t h e i r key-entry e l e c t r o n i c checkout  4.3,;3  Prices  the  watchdog  process  of  Present manual systems are time  61  consuming Prices  and  therefore limited.  Board's  information  "weekly  example,  p r i c e survey,  s e t up  t h a n t h a t o f f e r e d m o n t h l y by  consumer p r i c e i n d e x " 8 cities  For  (Armstrong  was  limited  1975).  The  to give  5 and  covered  68  Food  speedier  Statistics  t o between  survey  Canada's  Canada's  8 stores in f o o d s and  26  • non-foods'. With  the  CIS,  have t h e  opportunity  effort,  and  f o r the  to  monitor  opens  cooperation,  (e:g.  up  the  scope of t h i s  supermarkets' access  how  are  well t h e i r  measure  wll  how  information  provided  end,  of  4.2.4):  effort  This,  of  government/supermarket  of these  However* t h e will  of  There i s p o t e n t i a l  detail  be  privacy, topics i s  related issue  discussed  not  much  representing  a f f e c t e d by a CIS.  o b j e c t i v e s are be be  Realistically,  accurately  groups  See  The  data  directly  consumer a w a r e n e s s s h o u l d  paper.  minimum  i s s u e s of information  study.  to the  a  in  of  Chapter  5.1.  Consumers  the  area  accuracy.  Section  with  concerned  vsi prices i n their  CSIP,  c o n t r o l over data  beyond t h e  with  the  attendant  This  prices  undue i n t e r f e r e n c e , .  the  assess  government a g e n c i e s  government t o m o n i t o r c o s t s  course,  V,  various  without  t o impede i n f l a t i o n  and  the  used  (if by  the  the  e f f e c t i v e n e s s o f any  (Harrell  attempted  i t  is at  And,  possible consumers as  a l t e r n a t i v e to  a 'measure' al.,  scope o f to will  who  item  studies already  will  pricing. carried  of  1976). this  predict use  the  mentioned, i t i s  consumer i n t e r e s t  i t i s useful to consider  et  w i t h i n the  not all)  CIS;  satisfied,  I d e a l l y , to  the  decide To out  on  this in  62  the  field. There  have  i f anything, levels;  can r e p l a c e i t e m - p r i c i n g and  However,  individuals*  there  purposes.  information  attributable recall,  and process  which maintains  to  utilize  consumers the  of  has  information  shown  i f , f o r example,  an e n t i r e product  too, it  stated can  be  attributes 1975). make  This  is  processing  parsimony  as l i t t l e  that  rational  unit  c l a s s (Russo  price  (Haines  decisions  are  information  for  (and c e n t r a l l y et  data  al.,  displayed)  1975).  Bettman  t h a t "both on t h e o r e t i c a l and e m p i r i c a l grounds, argued can  improved  that  help  facilitation  to  of  processsing  s i m p l i f y c h o i c e processes"  by  (Bettman to  d e c i s i o n s of c h o i c e i f t h e p r e s e n t a t i o n of the  data i s improved over the c u r r e n t i t e m - p r i c i n g  It  in  Haines has  I t would appear then t h a t consumers should be a b l e  proper  with  on the  information.  u n l i m i t e d amounts of data.  d i f f e r e n t brands and s i z e s i s l i s t e d for  depends  i n order t o make r a t i o n a l d e c i s i o n s "  Research  facilitated  concerned  t h a t "consumers seek t o process  i s necessary  (1972).  studies  i n p a r t t o the l i m i t s of an i n d i v i d u a l to a t t e n d  postulated a principle  as  been  awareness  The u l t i m a t e b e n e f i t of changes  available  individual's a b i l i t y to  to,  have  maintain  what,  methods of p r o c e s s i n g comparative i n f o r m a t i o n f o r  decision-making the  not been s t u d i e s d e a l i n g d i r e c t l y with  method.  Kith  design the CIS w i l l be able to o f f e r t h i s a l t e r n a t i v e . i s suggested  t h a t supermarkets l i s t item  p r i c e changes a t a convenient price l i s t s  be p u b l i s h e d  location  in  the  p r i c e s and  store;  that  i n l o c a l newspapers, p u b l i c b u i l d i n g s  63  (e.gs  libraries),  groups  and  s u c h a s t h e CAC  However, information pricing,  i f  will  we  be  then  that  these l i s t s  support  assume  we  must  (Stigler  that  consumers'  consider  information of price costs  1961)  from t h e CIS  dispersions  Stigler  that  would  by b o t h s e l l e r s More  individual  s e a r c h e s and  buying  and  argued  dispersions  for  1976)  showed t h a t  public  will;  price  to  with  information price  lower  Studies  by  from  To  Devine the  level  prices  the  of  price  results  information;  of p r i c e s across within  and,  suggest  improved  reiterate,  o f market  price  engage i n more  lower-priced  anticipated  variations average  the  in  products.  decreased p r i c e  1976,1978)  the c o s t of s e a r c h f o r p r i c e  experienced  dissemination  the  improved  is  search  be  b)  (of  There  (Devine  seller.  reduced the d i s p e r s i o n  lowered  be met.  empirical  shift  a)  c)  still  objectives  p r o d u c t s , consumers w i l l  can  food  whether  specifically,  t h e same e f f e c t s  of  the  source  that exactly  information  of  and b u y e r s i s a s i g n i f i c a n t  more e f f i c i e n t  (Cady  uses  r e d u c e a v e r a g e p r i c e s and  that  ultimately,  drugs  to  no more o r l e s s t h a n a t p r e s e n t w i t h i t e m -  f o r the expectation  publication  made a v a i l a b l e  and t h e consumer a d v o c a t e s .  c o n s u m e r s and consumer g r o u p s ) w i l l theoretical  be  stores;  stores; i n t h e market  (Devine  1976). Results introduction  of D e v i n e ' s e x p e r i m e n t s to  store comparisons  Chapter  IV  are d i f f i c u l t  above.  were  mentioned  Devine  in  the  p o i n t s out  that  f o r consumers t o  make.  "For  64  the  most  part,  experiences and stores or  must  rely  from  shopping  observations  on  their at  government  reports  which  provide  Commercial  store  comparison  are g e n e r a l l y not a v a i l a b l e " ;  Earlier  experiments i n the Edmonton market revealed  p a r t i c u l a r f i r m was  competitive  price  a dominant p r i c e l e a d e r  for  all  regions  in  the  p u b l i c a t i o n caused a s u b s t a n t i a l change i n dominant  personal  alternative  i n making t h e i r s t o r e s e l e c t i o n d e c i s i o n s .  information  "one  consumers  firm  announced  setting city".  the  market.  to  there  f i r m , and  p r i c e s f o r the e n t i r e c i t y . .  was  a general  Most i m p o r t a n t l y ,  "The  of A l b e r t a began p u b l i s h i n g comparative weighted indices  each  s e l l e r s and used  the  week.  There was  buyers to the  increased  performance  concludes  that  information  assume  supplied  because  of  c h a r a c t e r i s t i c s of the information price  may  be  comparisons  the  a  defined  and  lack  that of  Consumers  s e l l e r s used  minimum of market  a  under most  minimum  market  will  serve,  Thus,  may  be  the  Devine  is  not  incentive,  the  product would suggest t h a t r e t a i l  a p u b l i c good".  supermarkets  level  evaluation".  widely  price  advertised  at a minimum, t o ' p o l i c e ' the  supermarkets, thereby p r o t e c t i n g the consumer example,  University  price  i s necessary f o r 'workable' competition  contemporary market s t r u c t u r e s  decline in  information.  i n d i c e s as a benchmark f o r we  able  a p o s i t i v e response from both  p r i c e i n d i c e s t o s e l e c t s t o r e s , and  "If  The  i t would charge i d e n t i c a l p r i c e s i n v a r i o u s competitors were  this  the Price  i t s s t o r e s throughout the c i t y * underprice  that  deterred  interest.  from r a i s i n g  For prices  65  i n d i s c r i m i n a t e l y i f they run the r i s k of p r o t e s t ; t h i s r i s k i s higher  i f t h e r e i s wide p u b l i c a t i o n  obviously  of  information,  and  lower i f consumers are not aware t h a t i t was  is  taking  place. The : question  exists  as.  :  to  what  constitutes  a d v e r t i s e d ' p r i c e data.  Some p o s s i b l e means of  'Market  lists  basket*  weekly b a s i s , advocates  items..  could  with  Vancouver Sun) The  price be  altered  published  newspaper  could p u b l i s h considerations  in  columns their  own  discussed  'widely  dissemination:  on a d a i l y , or even a newspapers; ( e . g s Nicole choice in  this  of  consumer Parton, selected  chapter  mentioned again i n Chapter V to the extent t h a t they a f f e c t s p e c i f i c design - a CIS i n the Vancouver area.  are a  66  CHAPTEE V  DESIGN OF Taking  into  considerations contemplated  as  CIS  account the r e l e v a n t s t u d i e s and the  of  Chapter  IV,  a  specific  the  database  suggested g l o b a l design.  economics of such a data c e n t r e ,  design  system  Section leading  5»2 to  a  a n a l y s i s i n S e c t i o n 5.3.  The  d i s c u s s e d at a r e l a t i v e l y  high t e c h n i c a l l e v e l .  5,41 Proposal  design  design aspects  design  as  considers  the  cost/benefit  of the system  study  the  feasibility  examines  environment  one  will  objective  of such a system i s s t u d i e d .  potential  system,:  This  specific  be d e f i n e d , and c h a r a c t e r i s t i c s with  t o hardware and software The  components w i l l be  supplying  t i m e l y and convenient pricings  in  control  perceived  supermarkets.  order  At  price  maintain  or a  The CIS  discussed. the  i n f o r m a t i o n t o consumers oh a  b a s i s , i . e . a replacement to  CIS  regard  i n i t i a l system i s a b a s i c consumer database with of  are  For A Vancouver Data Centre  In order t o demonstrate the economic v i a b i l i t y of the proposal,  is  S e c t i o n 5.1 l o o k s at  f o r the area of Vancouver.  the p h y s i c a l l o c a t i o n and well  A SPECIFIC  for  itemized  consumer awareness and/or to  potential  advantage-staking  by  minimum, t h i s r e q u i r e s , a h i g h l y v i s i b l e  method of data p u b l i c a t i o n .  67  5.1.1  Physical Location The  area chosen i s Vancouver,  practical grocery  CIS f o r t h i s chains  Vancouver  in  have  as h a v i n g  environment.  the  been i n c l u d e d ) .  thus,  the  24-hour  A 'grocery  that 6 chains  Vancouver  i s  four largest  based  that  f o r over 1974).  store  1  economic  are  and,  excluded.  The  market  in  " i n western Canada t h e  90 p e r c e n t Within  calculations  statistics.  West  variety  of a l l  this  will  be  These  statistics  grocery  retailers;  grocery  definition  60 s t o r e s a r e i n c l u d e d i n t h e p r o p o s e d and  and  6  s t o r e s i n the area; the  stores  the fact  (Mallen  approximately Design  on  a  chain' i s defined  are representative o f the  f i r m s account  sales  (North  m u l t i p l e checkout  convenience  assumption  •average  region  a minimum o f 4 member r e t a i l  are of the self-serve,  a view t o d e s i g n i n g  There a r e aproximately  Vancouver  stores  store  with  system. based  on  were d e r i v e d  from: a)  i n t e r v i e w s with  b)  what  Safeway  (Business c)  local terms  an  •efficient  store',  Week, March 1977) ;  Steinberg's  Model  Store  (Dexter  and  Barnett  1978b). Pertinent E x h i b i t 5.1.  information o f the t y p i c a l  store  i s  given  in  EXHIBIT  5.1  'AVERAGE STORE'  Store  22,000  size  Number  of checkout  Weekly  sales  Gross Number  STATISTICS  - 27,000  square  feet  8 - 1 0  lanes  $100,000  - $140,000  p e r week  20%  margin of g r o c e r y items  The above sources:  i n store  e s t i m a t e s were  6,000 -  reached  based  10,000  on s t a t i s t i c s  from  the following  Cady, 1978; D e x t e r & B a r n e t t , 1978b; C o n v e r s a t i o n s w i t h t h e l o c a l head o f f i c e s of Safeway, S u p e r - V a l u , and IGA.  ON OO  69  5-1.2  G l o b a l Systems The  overall  Design  system  flow  consisting  of input data  reporting  to  g r o u p , and  data p u b l i c a t i o n  chart.  Exhibit  to  supermarkets  5.2.).  is  update and  the  c o n c e p t u a l l y very the  database,  datacentre  f o r consumers.  (See  simple, periodic  controlling system  flow  EXHIBIT  5.2  Local Access 1 nteractiv e rmina 1  D a i l y Update t a p e s / d i s k e t t e s from Supermarkets  Weekly Price List  Public Service TV  Available in: (i) Public Libraries (ii) Consumer Bureaus ( i i i ) Weekend Newspapers (iv) Local Supermarkets L i s t s a r e by p r o d u c t w i t h i n for supermarket chains e.g. D a i r y i t e m 1 ,P 1 P2 .... item 2 Pl P2 . . . . Produce item 1 Pl  P2  type,  Allows for (i) I n p u t of (a) D a t a Changes (b) " S p e c i a l s " I n f o rma t i o n ( i i ) Q u e r i e s on t h e Database.  71  Based  on  information  gleaned  from 3 l o c a l g r o c e r y  volume o f p r i c e c h a n g e s v a r i e s f r o m Chain-wide weekly The  price  changes  basis, implying  l a r g e spread a)  in  especially b)  across  are handled  on  occur  meat  in this  and  day  per  the  chain.  either a daily  100-200 c h a n g e s p e r  t h a t can  changes  20-40 per  chains,  week  per  or  a  chain.  f i g u r e i s due  to:  p r o d u c e p r i c e s which  are  volatile,  the  board  price  changes  by  a  grocery  manufacturer.  The the to  frequency  media used the  CIS  with  t o communicate t h e  datacentre.  CIS  information  Initially*  Price  changes, o r i g i n a t i n g a t a c e n t r a l s i t e , central site  tape or  d i s k e t t e and  possible  on  means o f  data  future  daily  Database 'Database*  indicate  or  s t o r e s can  to  the  CIS  b a s i s , with On-line  which  be  datacentre.  communication result discussed  in  diskette entry-  communicated  written to  d i s k e t t e being  could  This w i l l  be  or  grocers  magnetic This  the  is  simplest  i s a natural instantaneous  i n Chapter  VI.  Design rather  t h a t i t i s the  structures  the  transferral.  updating.  the  most e c o n o m i c a l f o r m o f d a t a  sent  consideration  information  5.1;3  a  by  from  magnetic tape  be  the  e a s i e s t and  i s u p d a t e d depends upon  will  to  the  which t h e  w i l l not  be  than  'file'  design  i s used h e r e  author's  belief  that t r a d i t i o n a l  practical  i n the  long  run.  to  file  Maintenance  72  and  control  of the system envisaged  d i f f i c u l t as the s i z e and complexity Also,  the  w i l l become i n c r e a s i n g l y of  the  system  grows.  present design o n l y c o n s i d e r s 60 supermarkets i n a  s i n g l e c i t y - the p o s s i b i l i t y of a country-wide be ignored;  Thus, any  network cannot  design must meet present  needs,  allow  f o r the c o n t i n g e n c i e s mentioned above, and must a l s o take account  future  innovations  (DBMS) and d i s t r i b u t e d Whatever f i l e  in  Database  into  Management Systems  processing.  design i s chosen, p r o v i s i o n should be  made  for: a)  i n c r e a s e i n the number of s t o r e s and  b)  changes  products;  i n , and a d d i t i o n s t o , p r i c e i n f o r m a t i o n  stored; c)  implementation  of s e c u r i t y c o n t r o l measures ( f o r  s e n s i t i v e data s t o r e d ) ; d)  access to i n f o r m a t i o n on  a  variety  of  fields  (keys). Thus, the •basic* system should be along the l i n e s of a formal database start,:  -  even i f access i s v i a c o n v e n t i o n a l methods a t the  The  data  will  be  described  according  to  r e l a t i o n s h i p s t h a t e x i s t among the data items because: a)  these r e l a t i o n s h i p s form the b a s i s i n the of  a  database  standard  models  relational. described categories  system  utilizing  e.g. network, (Database  as  belonging  one  one  of  the  hierarchical  systems to  design  of  or  have  been  the  three  mentioned, a c c o r d i n g to the design of  the  the  schema  (model).  e x p l a n a t i o n see Date  For  a  more  (1977).  the r e l a t i o n s shown can be regarded in  a  'file*  detailed  f o r conventional  as 'records'  access methods;  s p e c i f i c a l l y t h i s design lends i t s e l f t o the of secondary  indexing.  use  EXHIBIT  LOGICAL CONSUMER  STRUCTURE  5.3  OF THE  INFORMATION  SUPERMARKET  SYSTEM  DATABASE  ( R e l a t i o n s h i p s between elements are d e p i c t e d , as w e l l as k e y s t h a t a r e n e e d e d for information l o o k up)  Supermarket-Price  Relation  Key  iupermarket  Chain  T>  Regular  Price  Special Price Info, (if i t exists) Product  Code  Branch-Price  Supermarket  Relation  Chain In store s p e c i a l price information  Branch Product  "Specials" Notation  Code  Notation regarding existence of any i n - s t o r e specials. W i l l be l i n k e d to s p e c i f i c s t o r e ( s ) .  EXHIBIT  5.3  (cont d) 1  Supermarket-Branch  Supermarket  Relation  Chain  Location Location  —  and Codes  Branch  *  Possible future fields e.g. (a) Consumer R a t i n g of (b) E x i s t e n c e of o t h e r (in store bakery)  store services  I t s h o u l d b e n o t e d t h a t t h e d a t a b a s e c o n t a i n i n g t h e i n f o r m a t i o n i s i n no way considered complete or s t a t i c . F o r example o t h e r consumer i n f o r m a t i o n relating t o p r o d u c t s c o u l d be s t o r e d , as shown b e l o w :  Product  Relation  Product  Code  Description  Relat ive quality rating >  Vitamin  r Calories  Needed i n P r e s e n t S y s t em  C content  Possible  per  future  gram  enhancements  Nutritional Inf ormation  ^4  76  The l o g i c a l s t r u c t u r e o f the database 5.3.  The  apparent  redundancy  in  d i a g r a m m a t i c a l l y , but not n e c e s s a r i l y form  where  linking  cf  i s shown i n E x h i b i t this  in  design  exists  stored  record  the  records i s p o s s i b l e .  Points t o note  r e g a r d i n g access o f the database: a)  For d a i l y p r i c e updating, access o f the database w i l l be by supermarket  chain  (and  branch  when  required) ; b)  For p r i c e l i s t s , (or  c)  access  w i l l be by  product code  description);  S p e c i f i c q u e r i e s on the database  w i l l be random,  and access w i l l be by supermarket or product code description. Some e f f i c i e n t initially. the  form o f i n d e x i n g can be used t o access the data  I n d i c e s w i l l be r e q u i r e d on f i e l d s other than  •primary' a t t r i b u t e —  Exhibit  5.3  gives  the  which i s the logical  UPC  in  this  the  database.  a  keys  line,  price  r e q u i r i n g access to  a  requiring  number  of  of a p a r t i c u l a r  access  to  a  specific  item).  The f o l l o w i n g examples of  a t t r i b u t e s used as index keys d e m o n s t r a t e . p o t e n t i a l  record  accessing  requirements: a)  to  (e.g. by product c l a s s , by supermarket, etc.) or e l s e  single  (e.g.  as  I n f o r m a t i o n obtained from the database  may be i n the form of l i s t s records  case.  s t r u c t u r e of the ' r e c o r d s ' ,  simply showing the a t t r i b u t e s we may wish t o use access  just  Index by product code w i l l g i v e d i r e c t i n f o r m a t i o n on the item,  access t o  (product r e l a t i o n )  77  b)  Index by product d e s c r i p t i o n allow  access  to  e.g. 'beans'  will  a l l makes of beans, g i v i n g the  user the c h o i c e s by which to s p e c i f y f u r t h e r . c)  Index e.g.  by  'Campbell's  i n a) above d)  of  attributes, a)  manufacturer  tomato' allows access as  where UJ?C i s not known,  #  e.g.  'Area  6'  (Representing  MacDonald t o Alma) w i l l produce  supermarkets  will  within  soup,  Index by l o c a t i o n Broadway:  It  product  a  list  i n t h a t area.  also be u s e f u l t o l i n k  the  "files  on  8  certain  e.g.  product  and  l i n k e d on  supermarket-price  'product code'.  pointers to a l l relation)  (product r e l a t i o n ) .  could be  This amounts t o having  supermarkets  that  files  carry  a  (supermarket-price particular  T h i s type of  product  linking  saves  search time cn product q u e r i e s . b)  b r a n c h - p r i c e and supermarket-branch linked  on  relation).  'branch' This  will  p a r t i c u l a r supermarket c)  (in  f i l e s can be  supermarket-branch  link  all  branches  chain.  supermarket-price and b r a n c h - p r i c e f i l e s can linked  on  of a  'product-code*.  This w i l l  be  facilitate  f i n d i n g p r i c e s of a  particular  product  in  various  Note  in  Product  Relation,  branches.  'description*  that is  also  the a  key.  the  The  description  is  unique  when  used, e.g. L i b i y * s beans, unique  shortened  However,  in  possible, allows  there  'beans  immediately stored. the  to  full title is  oz,. can  e.g. L i b bns 16 oz.)  make  specific  'bns' t o  produces  a  list  printed  as  given.  might  be  the  information determine  query that  be  entered  of  bean products  A p a r t i c u l a r product can be  list  (or some  i s a need to have an index or  8  16  version  order  the  chosen,  (Users  CAC,  and  in  of  or this  order  to  a l l types of beans a v a i l a b l e ; i . e . , as  the f i r s t  step f o r a p r i c e comparison).  could a l s o s p e c i f y a  subset  by  The user  qualifying  the  d e s c r i p t i o n e.g. . ' s t r i n g beans*,. This  r e q u i r e s two refinements t o t h e method  of i n d e x i n g ; a l l o w i n g f o r phonetic  searching  i.e.  'bns' =  • beans', e t c . the  attribute  values  i . e . descriptive  q u a l i f i c a t i o n s a s s o c i a t e d with a product  (such as  o u t l i n e d above) w i l l need t o be s t o r e d i n such way  as  t o be r e t r i e v e d  without having t o access  the a c t u a l r e c o r d s , i . e . i t may  be  possible  s t o r e t h i s i n f o r m a t i o n along with the index. example,  when  looking  particular  product,  attributes  (type,  a  the  in  the  index  possible  size,  etc.)  to For  for a  qualifying will  be  79  simultaneously  obtained.  Making use of the  logical  design  system f i l e s t a t i s t i c s were developed tc  produce  statistics  a  viable  were  requirements.  hardware  used Using  to  establish  5.3  ( E x h i b i t 5.4).  direct  storage  access  calculated.  the  I n order  the  t h e average s t o r e s t a t i s t i c s ,  storage the d a i l y Direction  producing E x h i b i t 5.5 was obtained from P h i l Lamb, a l o c a l  independent systems a n a l y s t . was  ExhiMt  configuration,  t r a n s a c t i o n and p r i n t i n g volumes were in  in  given  to  a  few  responses, a hardware  This  hardware  information. vendors  configuration  with i t s c o s t e s t i m a t e s .  was  Exhibit  5.5  and, based on t h e i r established,  along  EXHIBIT  STORAGE  ESTIMATES  Product  OF B A S I C  SYSTEM  Information  M a x 13 c h a r M a x 30 c h a r  50 c h a r / r e c o r d X 1 5 , 0 0 0  Supermarket-Branch  20 40  Data  60 c h a r / r e c o r d X 60 b r a n c h e s  Supermarket-Price  char  char char  = 3,600  char  Information  C h a i n Name Product P r i c e Data Keys t o Branches Allow  p r o d u c t s * = 750,000  Information  * * C h a i n Name Branch Address Allow  STATISTICS  REQUIREMENTS  P r o d u c t Code Description Allow  5.4  50 c h a r / r e c o r d X 1 5 , 0 0 0  5 char 20 c h a r 25 c h a r products  X 5 c h a i n s = 3,750,000  char  CO  o  EXHIBIT  5.4  ( c o n t ' d) Branch-Price  Information  B r a n c h Name Product Price Allow  25  Direct  char/record  access  X  storage  5 20  Data  char char  8,000 p r o d u c t s * requirements  X 60 b r a n c h e s =  f o r the data  12,000,000  char  stored, approximately  16,500,000  char,  Indexs: If access i s a v a i l a b l e then the index storage  on a l l p e r t i n e n t f i e l d s as i n d i c a t e d i n E x h i b i t r e q u i r e m e n t s a r e a p p r o x i m a t e l y 5,000,000 c h a r .  5  ( W h i l e t h e a m o u n t o f d a t a s t o r e d i n a r e c o r d may i n c r e a s e d r a m a t i c a l l y i n t h e f u t u r e , t h e number of r e c o r d s s t o r e d w i l l n o t , so t h e i n d e x requirements w i l l not change s i g n i f i c a n t l y . ) Storage  requirements  Contingency  factor  f o r the a p p l i c a t i o n 16%  21,500,000  char  3,500,000 25,000,000  char  *  N u m b e r o f p r o d u c t s c a r r i e d b y a n a v e r a g e s t o r e i s 8,000 b u t t h e r e t a i l c h a i n c a n o f f e r a v a r i e t y o f 1 5 , 0 0 0 p r o d u c t s , t h i s b e i n g t h e s e l e c t i o n c a r r i e d by a l a r g e s t o r e (Cady, 1978)  **  I t i s f e a s i b l e f o r t h e c h a i n name t o b e s t o r e d o n c e ( i n o n e r e l a t i o n ) a b b r e v i a t i o n u s e d i n o t h e r r e l a t i o n s ; s i m i l a r l y f o r b r a n c h name.  and  an  EXHIBIT  5.5  SYSTEM  SPECIFICATIONS  access  storage  Storage (i) (ii)  From E x h i b i t  5.4; D i r e c t  requirement  21.5  A l l o w an e x t r a 1 5 % f o r w a s t a g e due t o ; e . g . d e v i c e characteristics, space f r a g m e n t a t i o n , e t c . : Total  million  bytes  3.0 m i l l i o n  bytes  24.5 Approx.  25  million million  bytes bytes  Volumes (i)  Batch  processing:  Input:  Daily  updating  Output:  Daily  p r i n t i n g of p r i c e l i s t s ; P r i c e changes 2 0 0 X 100'  Weekly;  of f i l e s ;  approximately  M a r k e t b a s k e t 100 X 5 0 = P r o d u c t group ( e . g . D a i r y ) 100 X 50 X 10 g r o u p s =  200  20,000  J  Periodic the peak  will  be p r i n t e d  d u r i n g an 8-hour  r e p o r t s w i l l be p r i n t e d p e r i o d s above.  on r e q u e s t  lines  5,000  lines  50,000  lines  55,000 - Lists  transactions  lines  p e r day  p e r week  shift  and c a n be h a n d l e d  at times  other  than  to  EXHIBIT  5.5  (cont'd)  (ii)  On-line  Processing:  Input:  Specific 4.4.3 Average  Output:  Price  queries  on t h e d a t a b a s e  as d e s c r i b e d i n 750* p e r day  length  of t r a n s a c t i o n  on a s p e c i f i c  o f a l l makes o f b e a n s  List  of s t o r e s  c a r r y i n g an  above  could  item  result  As t h e volume o f t r a n s a c t i o n s i s s m a l l expected to cause a b o t t l e n e c k .  A s i m p l e q u e r y l a n g u a g e ( o r some these o n - l i n e t r a n s a c t i o n s .  form  char  1  line  item  List  The r e q u e s t s l i s t e d being produced.  30  of prompting  expected  i n any one o f t h e s e  this  volume  30  lines  max  60  lines  max  output  of p r i n t i n g  max  lists  i s not  program) w i l l  be r e q u i r e d  t o be h a n d l e d  from  to handle  *  T h i s i s t h e maximum n u m b e r o f r e q u e s t s i n t e r a c t i v e CRT t e r m i n a l .  the s i n g l e  ^  These storage requirements a r e a r e v i s e d e s t i m a t e , ( F e b r u a r y 1 2 ) , and p r o p o s e d c o n f i g u r a t i o n s h a d a l r e a d y b e e n o b t a i n e d f r o m some v e n d o r s o n a s s u m p t i o n t h a t 45 m i l l i o n b y t e s w o u l d b e r e q u i r e d .  co  EXHIBIT  5.5  (cont'd)  2 Lists  printed  f o r 60  supermarkets  and  list  sent  40  other  locations  e.g.  libraries,  etc.  3  Assumes  this  type  of  will  be  t o 50  strategic  locations  e.g.  News  Media  oo  85  5.2 Economics o f The In  order  Datacentre  t o assess t h e economic f e a s i b i l i t y of the CIS,  the c o s t s and p o t e n t i a l s a v i n g s must be considered^. complicated  by  This  is  the f a c t t h a t the users of the present system  are not n e c e s s a r i l y the d i r e c t economic c o n t r i b u t o r s , i . e . the consumers.  Any attempt t o do  therefore  have  a  limitations.  cost-benefit  The i s s u e of who  analysis  should pay f o r  the CIS i s d i s c u s s e d i n Chapter VI, but there i s made  no  a t o f f e r i n g the s o l u t i o n , only s u g g e s t i o n s .  savings  accrue,  i t would be presumptuous to  against  the  d i r e c t l y o f f s e t the analysis  is  one  extremely  other.  whom  However,  the  the  with the c o s t of  some  alternative,  a CIS.  5.2.1  Development C c s t s The  CIS  as  outlined  range computer system with direct-access time-sharing government  storage  above r e q u i r e s the use o f a s m a l l a  fairly  available.  or  the  use  of  run  EDP  operation)  substantial on  an  centre  System.  a  are  amount  of  test basis, either  existing  However, with an eye t o the f u t u r e , t h i s data  to  p e r t i n e n t i f the present c o s t o f item  p r i c i n g i s to be compared e.g.  show  Thus, while  the  benefits)  and  pretence  the a n a l y s i s can o u t l i n e (and  costs  will  system  viable  (e.g. a  alternatives.  thesis  considers  a  s e t up s p e c i f i c a l l y f o r the Consumer  Information  F o l l o w i n g d i s c u s s i o n s with l o c a l hardware  suppliers,  the hardware c o n f i g u r a t i o n envisaged  i s as f o l l o w s :  86  CPU DASD - Magnetic disk Printer Diskette  drives  I n t e r a c t i v e t e r m i n a l s or other input/output  devices  - f o r system c o n t r o l - f o r development and maintenance CRT t e r m i n a l - f o r query purposes - a d d i t i o n a l CRTS t o be added as need a r i s e s . D e t a i l s of hardware c h a r a c t e r i s t i c s as s u p p l i e d by vendors are given  in  different required screens  Appendix vendors  allowing  I.  are  Configurations  similar  output  i s also a future  to  in  be  operational considered  figures  on  costs. on  a  by  the  design.  The  hardware  displayed  via  television  consideration.  Hardware c o s t s have been estimated industry  suggested  lease  (These purchase  using,  basis  costs  and  could  basis).  representative  shown  under  the  alternatvely  be  Quotations r e c e i v e d are  given i n d e t a i l i n Appendix I . Software needed i s d i v i d e d i n t o two a p p l i c a t i o n software. operating  and  system/compilers,  - telecommunications under o p e r a t i n g c o s t s . to  system  The system software which i n c l u d e s  - database management system  alternative  groups:  (or f i l e handling  software, (As  leasing).  with  software),  w i l l a l s o be accounted f o r hardware,  purchase  i s an  The s p e c i f i c a p p l i c a t i o n , although  87  unigue i n i t s e l f ,  is  retrieval  complicated  system  between r e c o r d s .  really  a  file-update  only  For t h i s reason, i t  was  Management  developed  (see system software above) t o software.  be  by the c h a i n i n g r e q u i r e d  Database  application  System  information  obtained  suggested  interface  with  with  the  The development c o s t s then, are based  the a p p l i c a t i o n software.  discussions  a  from the vendor or  on the estimated time r e q u i r e d f o r the design.and of  that  systems  programming  (Estimates were obtained analysts  currently  through  involved  in  systems development i n industry) . Major a p p l i c a t i o n s : a) update the database b) p r i n t d a i l y p r i c e  with data from the t a p e s / d i s k e t t e s lists  e) f i l e access f o r s p e c i f i c o n - l i n e q u e r i e s d) p r i n t  'market-basket* and other s p e c i a l i z e d  e) management f)  file  lists  r e p o r t s , e.g. s t a t i s t i c s o f p r i c e changes  management  Major phases: System design Program design, c o d i n g , and t e s t i n g System t e s t i n g and data c o n v e r s i o n  (A s i n g l e time estimate i s given because some f u n c t i o n s of the different  phases may be c a r r i e d out c o n c u r r e n t l y ) .  Man-days r e q u i r e d : 400, i . e .  f o u r people working 20 days  month each w i l l take about f i v e months t o s e t up the CIS.  per  88  approximate without time.)  attempting  figures  a breakdown o f  take  average  systems  T o t a l Development C o s t s :  Operating  1978  salaries  analyst/programmer  1978  $30,000  Costs  Operational on  (These  5 months a t $1,500 p e r month x 4 = $30,000  Estimated  5.2.2  costs:  costs  are c a l c u l a t e d  f o r one y e a r  and  based  figures.  System hardware and  software;  Lease costs Supplies  (paper,  tapes,  $2,500  p.m.  $28,000 p,.a.  e t c ) : $1, 000 p.m.  $12,000 p . a .  $580 p.m.  $7,000 p . a .  Maintenance: Data c e n t r e  staff:  1 o p e r a t o r programmer 1 clerk  (queries, l i b r a r y ,  Managerial not  the  requirement  and  be under t h e a u s p i c e s o f  CAC)  Total  Estimated  e t c . ) $11,000 p . a .  s u p e r v i s i o n (This i s  a fulltime  could  $13,000 p . a .  Staff  $ 6,000 p . a . Costs:  $30,000 p . a .  operating costs:  $77,000 p . a .  Note: I t has been assumed t h a t c o s t o f p u b l i s h i n g d a t a w i l l minimal esgw  be  or f r e e ;  Newspapers - p u b l i s h e d such  in  Consumer  Advocate's  as t h a t of N i c o l e Parton,  columns  V a n c o u v e r Sun  89  -  "Hamilton  Spectator"  approximately  70  commentaries on  items  prints weekly,  prices along  on with  "good buys" e t c .  T e l e v i s i o n - some channels, e.g.  Channel 10 i n Vancouver  d i s p l a y p u b l i c s e r v i c e messages during  certain  hours - public food  s e r v i c e channels i n O n t a r i o  item  prices  requirements with  Tom  reduction its  this  analyis,  "savings"  applications.  d e f i n i t i o n , the CIS  i s seen as an  Grocery Manufacturers:  With  and  highly  Consumer  a  cost  i n t r o d u c t i o n of the CIS  and  is  Within  defined  the  as  scope  of  this  a l t e r n a t i v e t o item p r i c i n g .  fully  r e f l e c t i o n of r e a l i t y .  are u n q u a n t i f i a b l e  (Conversation  Groups  automated  grocery manufacturers can be c o n f i d e n t accurate  CETC  1979) .  t h a t i s a r e s u l t of the  potential  the  Saskatchewan  P o t e n t i a l Savings - By I n t e r e s t For  fulfill  for t h e i r licences Sogers,  a f f a i r s , Jan,  5.2.3  to  display  the  t h a t data capture i s an  However, any  variable.  checkout,  derived  savings  90  Grocery R e t a i l e r s : Savings due to depending  on  the  source.  $16,000 p.a.  d i f f e r e n t sources Therefore,  removal  varies  A minimal saving i s considered to  the s a l a r y of one person f o r an i,e.  item-price  average  (Conservative  e.g. Coyle  size  estimate  supermarket  based on data  1977, Dexter and Barnett  y e a r l y savings f o r the t e s t  60 x $16,000  from  1978b).  area:  $960,000 p.a.  Note : a)  One l o c a l c h a i n s t a t e d t h a t saving's due to price year  item  e l i m i n a t i o n would be $70,000 per s t o r e per (Brown 1978).  While i t i s u n l i k e l y that t h e  60 s t o r e s i n t h e area could save year  $4,200,000  per  i n t o t a l , the i n d i c a t i o n i s t h a t f i n d i n g an  alternative  to  item-pricing  is a  worthwhile  endeavour. b)  An important  i m p l i c a t i o n to the r e t a i l e r s i s the  c o s t c f any p r i c e r e d u c t i o n . attempted  to  quantify  Devine the  supermarkets when comparative is  published.  While  i n c o n c l u s i v e , one study in  retail  price  index  period  (Ottawa-Hull  study  the  test  results  were  to  the  information  are  felt  t o be  showed a r e d u c t i o n of  7%  over the f i v e week t e s t  showed  g r e a t e r p r i c e r e d u c t i o n than (prices  price  experiment);  area  (1976, 1978)  cost  and i n a an  the  average control  second 1.8% area,  generally d e c l i n i n g during the s i x  month Saskatchewan P r o j e c t . )  ,  91  In h i s subsequent price  reduction  of -0.2 (based 1973)  which  on work by Kulshreshtha  this  significant  4%.  a"  20%  Holub  decrease  The average gross margin on (Business  Week,  1977).  If  l o s s of revenue would r e p r e s e n t a reduction  supermarkets.  used  and  r e s u l t s i n a s a l e s revenue  rs  correct,  Devine  of 5%, a food demand e l a s t i c i t y  of approximately groceries  analysis  in  However,  profits  for  i t i s not c l e a r whether  Devine takes i n t o c o n s i d e r a t i o n i)  the  breakdown  of  food  supermarkets and r e s t a u r a n t s . industry's  share  of  The "food s e r v i c e "  1977) .  There  i s no  that any change i n t h i s r a t i o , due t o  p r i c e r e d u c t i o n s , i s taken use  between  o f the American food d o l l a r i s  about 42% (Business Week, indication  dollars  the  price  into  account  elasticity  of  food  i n the i n the  analysis. ii)  the  possibility  buying drop  of  a  change  h a b i t s i n the long run. of  demand  5%  (guantity),  and  i n revenue  -0.20).  The p o s s i b i l i t y over  consumers*  In the a n a l y s i s a  i n p r i c e s l e a d s t o a 1% i n c r e a s e i n  decrease  increase  in  the  thus  an  overall  4%  ( e l a s t i c i t y of demand i s t h a t consumer demand may  long term i s not c o n s i d e r e d ,  ( i . e . consumer spending  returns  to  the  initial  92  l e v e l i n terms of d o l l a r eventual  return  revenue.  Obviously, t h i s has  the  important  to  value.)  the  This i m p l i e s t h e  original  l e v e l of the  thus  f a r ignored  v a r i a b l e , gross p r o f i t .  a n a l y s i s d e a l s only with revenue, but an  (Devine's opinion  of the e f f e c t on gross p r o f i t f o l l o w s i n order to complete the c o s t / b e n e f i t a n a l y s i s . ) Based  on i ) and i i ) above, an average  s a l e s revenue i s used  and Devine*s  revenue decrease f o r average  o f 2% r e d u c t i o n i n  analysis  repeated.  Sales  of $1,600 p.m.  (based  supermarket:  $8,000 per month T h i s r e p r e s e n t s a gross p r o f i t decrease on  gross  margin  gross p r o f i t  of  20%, E x h i b i t 5.1).  For 60 supermarkets  decrease: $96, 000 p.m. approx 0.4% o f present  sales.  Without the b e n e f i t of s u p p o r t i v e evidence i t i s that  the  revenue  l o s s i s reduced  hypothesized  l o s s d i s s i p a t e s , and t h a t t h e gross  t o a monthly amount  of  $30,000  on  profit  average,  approx 0.1% o f present s a l e s which i s  $360,000 p.a.  Equipment Manufacturers: sale  of  scanners  While t h i s group may b e n e f i t from the  rather  than  the l e s s expensive  key-entry  93  checkout  devices, there  However,  as  electronic vs.  is  checkout  and  involved  in  obtained  from  the  (Rogers  (Forbes  defined  of  data  above.  t h a t NCR's  " c o s t s only  $4,500  - even a f t e r  NCR's  1978).  Both  I t i s estimated  means o f d a t a c o l l e c t i o n year  scanner  agencies:  collection  the CIS.  scanning  priced  prices"  Consumer  as  i t s h o u l d be n o t e d  system without  20% c u t i n s c a n n e r  Government  savings  a c o s t comparison,  $9,600 f o r NCR's l o w e s t  recent  pec  no  these  bodies  which c o u l d e a s i l y that surveys  p r e s e n t l y c o s t approximately  $20^000  Therefore, savings  per agency  $20,000 p . a .  for 3 agencies  $60,000 p . a .  Note : a)  Cost for  f o r t h e Saskatchewan experiment  five  months.  consultant proposed any data  Of t h i s  data  must s t i l l  s a v i n g s t o be r e a l i z e d collection.  Rogers  will  of d a t a . be  b)  Assume  to c o l l e c t  Consumer  the Vancouver  the data  agencies  Affairs)  Tom this  agency  at present.  carrying  a r e a i n any one  so  be i n t h e a r e a o f  B a s e d on c o n v e r s a t i o n s w i t h  (Saskatchewan  three  On t h e  published  amount i s e s t i m a t e d t o be $20,000 f o r any desiring  $57,275  a l a r g e p o r t i o n was f o r  f e e s and p u b l i c a t i o n  system  was  year  be  and o t h e r  1979).  potential  are  out surveys i n  94  i . e . - S t a t i s t i c s Canada - some monitoring body - government B.C. The  sponsored  chapter of the  Consumers:  An  study  by  the  CAC.  "American  economist  Donald  showed t h a t each shopper would have t o pay only $2.27 to have a l l g r o c e r i e s marked with the p r i c e s " However,  the  variability  supermarkets* necessarily  pricing save  of  this  policy  and  cost  Snyder a  year  (Pappert 1978).  is  t i e d up i n the  consumers  will  not  t h i s amount i f supermarkets remove p r i c e s .  (The supermarkets have made no o f f e r t o maintain  item-pricing  a t t h i s cost to consumers). Potential savings  that  competition  savings accrue  to consumers w i l l be a p o r t i o n o f the  to  the  supermarkets.  If  and lower p r i c e s r e s u l t from the formation of the  CIS, then savings w i l l i n f a c t be r e a l i z e d by the The g e n e r a l b e n e f i t s of a depth  increased  throughout  Chapters  CIS  III  have  and  been  IV,  consumers. described  in  (e.g. p o l i c i n g  of  supermarkets' p r i c e increases) and j u s t i f i c a t i o n f o r the itself.  Most  are  intangible  but  o b j e c t i v e s o f the v a r i o u s i n t e r e s t  assist  groups.  in  meeting  idea the  95  5.3 A n a l y s i s Of The C o s t s / B e n e f i t s Development Costs (All  Yearly Costs  c o s t s based  30,000  just  clearly limited nor  is  Yearly Savings  on 1978  figures)  77,000 360,000  960,000 60,000  60 s u p e r m a r k e t s i n v o l v e d outweigh  the  to to  costs.  i n the system, the  Of  course,  b e c a u s e t h e s a v i n g s do n o t a c c r u e t o a  single  user  retailers government  $1,020,000  $437,000  $30,000  With  Of The CIS  bearing  the  savings  this analysis i s a . single  costs  user;  of the system.  F u r t h e r m o r e , i t i s n o t at a l l o b v i o u s t h a t t h e r e t a i l e r s approve issue  the o f f s e t  i s elucidated  However, this  complex  an  other  the  initially.  a r e made w i t h r e g a r d  supermarkets i n the g r e a t e r t o the cost  cost  is  Yet,  each  alternative  to item  in  pricing  limit  will  adds  savings.  mean t h a t a s e c o n d s y s t e m o f such of  an  setting  supermarket t h a t  t o the " c o l l e c t i v e "  development  of the o p e r a t i o n  incurred  year  the d e t a i l s  costs.  This  i s offered.  t o coping  with  situation.  add l i t t l e  much o f  savings against the  i n C h a p t e r V I ; and no s o l u t i o n  recommendations  Adding will  of their  would  occurrence  a network  Vancouver  area  o f t h e system up  the  system  " j o i n s " t h e system  an a d d i t i o n a l  as  $16,000  as per  E x p a n s i o n beyolrd a c e r t a i n " must be s e t up. and  must be l e f t  the  However,  possibility  for consideration  of at a  96  future  date.  Within benefits  t h i s a n a l y s i s , other  must be  their a  of  a source  scanners.  Not  of  the  t h i s be  W i t h some  time.  of  a  trend  independent scanning  cf  grocers  and,  It  been n o t e d  which  thesis, Of how, prices herein  has  when p r i c e  foremost at  are were  a l l , the indeed  computer  an  carried  supermarkets  will  with t h e  daily  to  the  follow even  reduce  the  that a  making  a  profit  customers) becomes  advantagel  be  is  the  While time  store  relies  may  be  scope o f  The this  studies.  consumer,  studies  on  forced  fierce.  advantageous.  out i n d i f f e r i n g  chains'  and  i n more i n - d e p t h  study  will  the  the  with  'marginal'  a r e beyond  ignored  large  at  small  opportunity to operate  1976)  in this  prices  hardware,  competition  CIS  scanning  attributable  scanner  situations  concern  with  supermarkets-  without  "specials"  to a t t r a c t  i t c a n n o t be  is  o n l y have s p e c u l a t i v e v a l u e  i f  (Devine  price  c o n s o f such  though  i f  chains  thus,  difficulty  other than  business and  but  retailers  give these  planning,  w i l l have the  equipment  has  and  information  the  benefits  other  advantage.  pros  are  CIS,  competitive  out o f  over  In t h e l o n g run,  downward  costs  used t o r e p l a c e a p o r t i o n o f  i t would  creative  These  price  for  o p p o r t u n i t y t o match t h e i r  implementation  variables  but  advantage  "markets-basket".  (one  and  advertising  only could  competitive  have  this  product  a d v e r t i s i n g budget,  eguipment.  quantifiable  considered.  Publications certainly  less  lower  and food  discussed  f r a m e s , and  long'  97  term e f f e c t s are i n c o n c l u s i v e , the e m p i r i c a l t r e n d w i l l he toward lower p r i c e s .  data suggests the  98  CHAPTER VI  RESULTS OF The  THE  GENERAL DISCUSSION  purpose of t h i s chapter i s to review the  t e c h n i c a l analyses chapters; the CIS  ANALYSIS AND  and  and  results  presented  in  economic the  and  previous  to d i s c u s s some of the i s s u e s to be r e s o l v e d i f  i s to become a  reality.  From  detail  presented  in  Chapters IV and V,  i t - a p p e a r s t h a t the CIS i s f e a s i b l e from  overall  point  economic  of  view e s p e c i a l l y i f the  an  retailers  view i t as -  an a l t e r n a t i v e to maintaining  i t e m - p r i c i n g and/or  - p r o v i d i n g " f r e e a d v e r t i s i n g " and/or - a n a t u r a l consequence of the  age  of  electronic  technology.  For  the  consumer,  definition), steadily is  the  CIS  may  provide  a v i a b l e a l t e r n a t i v e to item  disappearing  realized)  conveniently  the  d e s p i t e p r o t e s t ; and  CIS  will  from home,.  The  enable  Topics CIS,  and  system.. are  pricing,  which  is  (if i t ' s potential consumer  c r e a t o r s of the  f i n g e r s do the walking" could bave had extensions  the  ( i n i t s narrowest  to  shop  phrase " l e t your  no i d e a of the  possible  t c i t s meaning! discussed the  h e r e i n i n c l u d e d i v i s i o n of c o s t s of  problems  Future extensions  suggested.  in  the  p r a c t i c a l a p p l i c a t i o n of  t o the b a s i c Vancouver Data  the the  Centre  99  6.1  F e a s i b i l i t y Of The  CIS  T e c h n i c a l and p o l i t i c a l f e a s i b i l i t y been  discussed  in  3.3.2.  A  of a CIS have a l r e a d y  major unresolved i s s u e i s the  c o o p e r a t i o n of the d i f f e r e n t groups, p a r t i c u l a r l y that of supermarkets supermarket stores.  releasing  information.  c h a i n s have scanners i n s t a l l e d i n  Most  large  of  their  some  They are gauging consumer r e a c t i o n to the removal of  item p r i c e s . through  price  the  In Vancouver,  consumer  vocal objection  advocates  has  taken  place  (e.g. Parton 1978a, 1978b).  The  B.C.  government r e a c t i o n has been to s t a t e t h a t consumers have  the  option  to  intervention  shop  elsewhere,  i s planned  and  that  no  official  T h e important  (Evans-Atkinson 1978).  aspects to bear i n mind i n t h i s regard are t h a t a) i f c o o p e r a t i o n sought  it  of  the  are  suitable  is  to  be  should be contemplated i n these e a r l y  days of automation. sides  supermarkets  still  The  reason  is  that  both  a c t i v e l y involved i n finding a  solution,  and  this  will  assist  in  r e a c h i n g a compromise. b)  At  present,  consumers  do  have  alternative  s t o r e s i n which t o  should  noted  be  stores  prices this longer  install great  exist,  and  shop;  though  it  t h a t l o c a t i o n convenience i s a  high p r i o r i t y when choosing more  the option of  a  supermarket.  scanners  freedom boycott  of  As  and remove itemchoice  will  no  w i l l no l o n g e r be a  100  viable  means  of  expressing  then,  w i l l be t h e v a l u e  "you  simply  that  uses  items if  i f  o f Bafe  Mair's  What  suggestion  do n o t have t o shop a t a s u p e r m a r k e t  scanners  and  you don't  want t o ...  the public  the  opposition.  doesn't  wants p r i c e t a g s  s t o r e s t h a t don't  price-rtag i t s i n other  i t should  h a v e them"  words, boycott  (Evans-Atkinson  19 78)? It is to  i s clear  economically item  and  Savings  interest  groups  net  only  t h e a n a l y s i s i n s e c t i o n 5.3 t h a t t h e C I S  f e a s i b l e , i f i t be r e g a r d e d  pricing,  directly.  the  from  the  costs  and b e n e f i t s taken  issues  and  outweigh  as a whole. in  this  a s an  alternative  savings  be compared  the  costs  to  the  Unfortunately, these a r e  complex  situation  and  as  m e n t i o n e d , o t h e r a s p e c t s must be c o n s i d e r e d .  6.2 S u g g e s t i o n s Which  For Division  groups  should  Of C o s t s be  included  costs,  and i n what p r o p o r t i o n s h o u l d  groups  will  a  benefit  directly  CIS - namely t h e g r o c e r y  consumers  in  they  as a r e s u l t retailers,  this  be  d i v i s i o n of  borne?  of t h e development o f  government a g e n c i e s and  (see S e c t i o n 5 . 2 ) .  - Consumers: groceries  The c o s t t o  marked  with  this  group  prices  is  $2.27 p e r s h o p p e r p e r y e a r  These  (Pappert  to  have a l l  estimated 1978).  t o be  However,  consumers probably indirectly policies. unlikely  pay more as the charge  through Despite that  the  supermarkets'  item-price  consumers  removal  directly  should to  the  unlikelihood from  are  be  CIS.  that  item-price  consumers  not  expected  Belated  removal  to  as  information. then of  a  viable  why  contribute  this  i s the  w i l l pass a l l savings onto  to  to  consumers.  If  pay a p o r t i o n o f the CIS  c o s t s , then t h e CIS w i l l not be viewed advocates  i t appears  T h i s i s a reason  retailers  forced  pricing  w i l l reap the b e n e f i t s i n  the form o f p r i c e r e d u c t i o n s . consumers  i s made  alterative  I f consumers pay  on  by to  a  consumer item-price  usage  basis,  many w i l l be l e s s i n c l i n e d t o use the s e r v i c e s the CIS.  This  could  also  disenchantment with the scanning  cause  further  systems.  Grocery r e t a i l e r s : B e t a i l e r s a r e i n a p o s i t i o n t o b e n e f i t d i r e c t l y from the implementation o f  a CIS,  and  savings  to  decide how best t o manipulate these  (Section 5.3).  Savings.will  be  realized  even i f  they c o n t r i b u t e t o t h e o p e r a t i n g c o s t s of the CIS. - Government a g e n c i e s : agencies board  Use can be' made o f t h e CIS by  e.g. i n the (with  affairs).  regard It  role  to  would  i n f o r m a t i o n - i s important, always  been  of  a price  inflation appear  on  consumer  while  this  i t s c o l l e c t i o n costs  have  prohibitive  that  monitoring  (see S e c t i o n  5.2.3).  102  S t a t i s t i c s Canada's data c o l l e c t i o n i s r e s t r i c t e d c o s t s and the  the time f a c t o r .  opportunity  to  CIS  collect  r e l a t i v e l y lower c o s t and than  The  on  a  more  considerations  i n order  fall  are two  It  i s suggested t h a t the  and  o f the most important  This  group  situation  of  has  for  a  the  The  practical  vested  use.  updating  security.  be  considerations. under the c o n t r o l  interest  in  making  Consumers of the CAC,  and  local  described on-line  to the system and  who  will CRT).  g r o c e r y , r e t a i l e r s take  in  query  the.  and  requiring  r e a d i l y a v a i l a b l e ( v i a the  government agencies and  t e s t system, as  l i m i t i n g access data  will  r o l e of consumers i n o b t a i n i n g p r i c e i n f o r m a t i o n  the CIS. batch  the. system  does i n f a c t r e f l e c t the r e a l  consumer  then have the necessary data  on  expected  s e c u r i t y of the data i n the  s p e c i f i c p r i c e i n f o r m a t i o n can make use  In t h i s regard,  basis  system.  system be operated  c e r t a i n t h a t the i n f o r m a t i o n current  timely  a  within the scope of the t h e s i s .  the i n t e g r i t y  CIS  CAC.  at  to complete the a n a l y s i s , but the d e t a i l e d  d i s c u s s i o n does not Maintaining  them  Practical Application  practical  mentioned  of the  data  before, so government agencies can be  Suggestions For The  give  price  to c o n t r i b u t e to the c o s t s of the  6.3  will  by  Chapter  capability,  inherent  Problems to be considerede  V,  problems  i n future  from has thus of  research  103  are  mentioned  i n S e c t i o n 6.4.  The d a i l y p r i c e changes which occur w i l l via  diskette  to  are  because  office  (e.g.  data  centre  should  a l l systems suggested by vendors  type  raised  transmitted  the data c e n t r e f o r updating of the  The p h y s i c a l l o c a t i o n of the problem  be  machines  floor,  requiring  no  files.  not  special  facilities  a i r conditioning units, etc.).  Updating  the f i l e s  of  s u p e r v i s i o n and could be handled d u r i n g the evening.  and p r i n t i n g of r e p o r t s r e q u i r e s a minimum amount  The number o f d i f f e r e n t it  a  (Appendix I)  of  and  be  products  (15,000) i s very  large,  has been suggested that a subset be maintained on the  CIS, r a t h e r than the reference  to  the  entire  product  range.  However,  system s t a t i s t i c s i n E x h i b i t s 5.4,  with  5.5, i t  can be seen that t h i s wculd not make an a p p r e c i a b l e d i f f e r e n c e in  storage reguirements.  proposed  system  is  more  critical, on  considered.  change  the  (Appendix I) and i s c e r t a i n l y and  both from the p o i n t of view of the  Belated  q u e s t i o n of the supermarket's  consumers*  decision-making  to  data  security  access t o the database.  is  the  This i s  p a r t i c u l a r concern f o r the f u t u r e where o n - l i n e updating of  the CIS i s a d e f i n i t e p o s s i b i l i t y . of  hardly  T h i s i s where volume and v a r i e t y of products must be  carefully  of  also  The amount of i n f o r m a t i o n p r i n t e d  media chosen, and impact process.  would  configuration  not a l i m i t i n g f a c t o r . published  It  There are two  main  concern: a)  Data  belonging  t o a supermarket  -  supermarkets  should have unencumbered read-access, but  limited  areas  104  and c o n t r o l l e d update-access of t h e i r data. example,  supermarkets w i l l  consumer r a t i n g s , and  For  net be able to change  p r i c e changes too w i l l need  t c be c o n t r o l l e d .  • b)  Data belonging data and should  to competitors  should have  be  - This i s s e n s i t i v e  protected.  access  to  the  supermarket  competitor's  i n f o r m a t i o n enly i n the r o l e of of  A  a  price  consumer-user  system, i . e . j u s t as consumers w i l l have  access to the data v i a t e l e v i s i o n channels, i n a read-only  say,  mode, supermarkets w i l l be able t o  see the data but be unable to a l t e r i t . The  possible  impact  (Section 5.2);  to operate  forced  out  problem, of  'marginal' s t o r e s has  i . e . s t o r e s w i t h i n the system  unable  of  on  business.  A  related,  i s that of grocers excluded  competitor  given as to how  which  might  c o m p e t i t i v e l y on the b a s i s of p r i c e , and and  on a small s c a l e .  be be  practical due  The c h a i n may  to l a c k be  C o n s i d e r a t i o n must  p u b l i c a t i o n of competitors'  o p e r a t i o n s of such small c h a i n s .  very  from the CIS  automation of t h e i r checkout systems.  effective  been mentioned  prices will  an be  affect  105  6.4 F u t u r e  Besearch  T h e r e a r e many from  the  unanswered q u e s t i o n s  research  and  analysis  Most h a v e been d i s c u s s e d here i n order t o give  that  of the p r e c e d i n g  i n some d e t a i l .  They a r e  d i r e c t i o n to future  p r i c e s , competition,  importantly, How 'free'  i s price  publication  advertising  f o r the  sup-ermarkets?  the  experience  loss  in  advertising  of  the  reiterated  and,  more  use o f t h e i n f o r m a t i o n ?  effective  offset  chapters.  publication  market s t r u c t u r e ,  consumers'  resulted  research.  What i s t h e l o n g - t e r m e f f e c t o f p r i c e on  have  sales  as a form o f  that  short-run?  Does i t  supermarkets  What  effect  and r e v e n u e , d o e s t h e p r i c e  on  publication  have i n t h e l o n g - r u n ? -  Who  should  system,  take  and  how  the i n i t i a t i v e should  the  i n setting costs  be  up  the  allocated  amongst p a r t i c i p a t i n g g r o u p s ? -  What, i n f a c t , w i l l  chains,  and what o f  automation  is  be t h e r e a c t i o n the  smaller  some way o f f ?  of supermarket  chains  f o r whom  S h o u l d t h e government  pursue a p o l i c y of n o n - i n t e r f e r e n c e ? Data a c c e s s (Gray  1377,  eventually by It  v i a some f o r m o f home 'computer'  private  laws  1978)  be o f f e r e d  i n part  organizations,  appears t h a t  many  and  of  this  i s  far off  type of i n f o r m a t i o n  o r whole, f r e e  or f o r  o r by t h e s u p e r m a r k e t s the  not  potential  a  will price,  themselves.  pitfalls  could  be  106  avoided A  i f some expedient purpose  of  planning i s done i n advance.  this  thesis  has. been  d e s i r a b i l i t y of c o o p e r a t i o n so t h a t advantage  of  (specifically  the  electronic  grocer) i n d u s t r y .  we,  t o point out  as a s o c i e t y , may  revolution  in  the  the take  retail  I t i s time f o r a l l p a r t i e s to  begin planning i f we are to b e n e f i t from these i n n o v a t i o n s and avoid an i n t e r i m "dark age"  period.  107  REFERENCES  Armstrong;  J . The  Montreal Star.  December  Armstrong,  J . The  Montreal Star.  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M y a s h i t a , "An E f f e c t i v e D i s p l a y of Unit Price Information", J o u r n a l of Marketing, A p r i l 1975 pp. 11-19 ( c i t e d i n Howson and D e x t e r , 1 9 7 7 ) . S o b r i a n , A., " S t e i n b e r g ' s P o i n t o f S a l e E x p e r i e n c e " , The Canadian I n f o r m a t i o n P r o c e s s i n g S o c i e t y - Canadian Computer Show, T o r o n t o , O c t o b e r 1975,. S t e i n b e r g , A., q u o t e d i n " E l e c t r o n i c C h e c k o u t s : A R e p o r t as o f December, 197 2", a b u l l e t i n o f t h e G r o c e r y P r o d u c t s M a n u f a c t u r e r s of Canada, p . 9. S t i g l e r , G., "The e c o n o m i c s o f i n f o r m a t i o n " , J o u r n a l o f P o l i t i c a l Economy, 69, 3, 1961, pp. 213-225. S u p e r m a r k e t News, " P h i l a . Item P r i c e B i l l D e b a t e d by Food I n d u s t r y , C i t y C o u n c i l " O c t o b e r 1, 1077, p. 22.  110  S u p e r m a r k e t News, " E e p o r t by E. Z w i e b a c h , August ~ p . 2. T e a s d a l e , P., ''Here Come t h e P r i c e 3, 1978.  1, 1977,  M o n i t o r s " , The P o s t , . O c t .  Wise, P.,- "Penny Wise", The V a n c o u v e r  Sun, J a n u a r y  30, 1976.  Y a u n a t t a , E., c i t e d i n Study o f Computerized Checkout Systems i n F o o d s t o r e s ; s t a t e m e n t on b e h a l f o f F i g h t I n f l a t i o n Together b e f o r e a h e a r i n g o f t h e C a l i f o r n i a Assembly Committee on F i n a n c e , I n s u r a n c e and Commerce, S a c r e m e n t o , F e b r u a r y 24, 1975.  APPENDIX  SYSTEMS AND  I  CONFIGURATIONS  VENDOR  QUOTATIONS  112  BURROUGHS B U S I N E S S M A C H I N E S  LTD.  April SYSTEM  10, 1979  CONFIGURATION  HARDWARE  Burroughs B811  B810 M i n i  - 1 MHz  Computer  Processor  -  96 KB MOS  -  160 L . P . M . L i n e  - DDE -  Memory  Console  1 MB  - Data  Printer  SPO  B.I.M.D.  - 3 7 . 6 MB  (C.P.U.)  (Inbuilt)  Fixed  Disk  C O M P r o c e s s o r DCPP  10  MHz  - 2 TD831 T e r m i n a l 1920 C h a r a c t e r  Purchase  Price  Burroughs  . . .  One Y e a r  Lease  Maintenance  above  system  includes  includes  system  installation  delivery  period  4 - 6  months  delivery  price  $500.00  s o f t w a r e CM800-MCP CM800-UTL  $ 8 0 , 9 6 5 . 00  $  2,116.00/  $  480/mo.  113  BURROUGHS B U S I N E S S  B810  Configuration  B810  1 MHZ  B810  3 7 . 6 MB  field  upgrade  Fixed  Purchase  Disk  Price  Data  Comm P r o c e s s o r  37.6  MB  Fixed  t o 2 MHZ  Package'to  $ 8 0 , 9 6 5 . 0 0 now  $ 4,940.00  6 5 . MB would  Disk be  $  3,100.00  $25,975.00  160 L P M  Line  Printer  Line  Printer  Super  Mini  Control  Memory  831 D i s p l a y  Pack $88,000.00  Disk  Burroughs  TD  LTD  ( D C P P ) 10 MHZ  Inbuilt  8 KB MOS  MACHINES  ( 1 MB)  ,  $  4,100.00  $  9,110.00  $ 2,195.00 $  Terminal  1,000.00  $ 5,460.00  114  COMPUTE WELL  SERVICES  LTD.  December SYSTEM  1978  CONFIGURATION  Description Dec  1,  D a t a s y s t e m 538  Price with:  $115,000.00  PDP 1 1 / 3 4 CPU 2 5 6 K B MOS Memory DECwriter Console Terminal 2 28MB r e m o v a b l e C a r t r i d g e D i s k Drives 4 VT100 V i s u a l D i s p l a y U n i t s 300 LPM L i n e P r i n t e r CTS500 O p e r a t i n g System, i n c l u d i n g R S T S / E , RMS-11K ( R e c o r d M a n a g e m e n t System w i t h M u l t i - k e y Access), D A T A T R I E V E (Date R e t r i e v a l ) , BASIC-PLUS-2. I n s t a l l a t i o n a n d 90 d a y s o n - s i t e warranty 5% P r o v i n c i a l S a l e s T a x  Total  5,750.00  $120,750.00  Note: (1)  P r i c e s q u o t e d a r e FOB f r e i g h t and i n s u r a n c e  Kanata, extra.  Ottawa,  FST  & Duty  included,  115  COMPUTE WELL  SERVICES  LTD.  December  1, 1 9 7 8  Description  Price  (1)  Compute-Well D i s t r i b u t i o n Packages i n c l u d i n g A/R, A / P , G/L, O r d e r E n t r y and I n v e n t o r y C o n t r o l . A l l file, s c r e e n , r e p o r t a n d o t h e r 1-0 a r e d r i v e n by p a r a m e t e r s f o r e a s y modification. Packages c a r r i e s one y e a r w a r r a n t y .  $21,000.00  (2)  M o d i f i c a t i o n o f p a c k a g e s a n d new s o f t w a r e a r e c h a r g e a b l e a t $200 per man-day.  116  CYBERNETICS  COMPUTER  SYSTEMS  November  SYSTEM  8, 1978  CONFIGURATION:  (1)  T e x a s I n s t r u m e n t s DS990 M o d e l 6 990/10 M i n i c o m p u t e r (13 s l o t c h a s s i s ) 128 KB E r r o r c o r r e c t i n g memory 2 model DS25 D i s k D r i v e s (50 MB t o t a l ) 2 model 911 V i d e o D i s p l a y T e r m i n a l s S i n g l e Bay C a b i n e t DX10 M u l t i p r o g r a m m i n g Time S h a r e s o p e r a t i n g system M o d e l FD800 D u a l D i s k e t t e D r i v e  70,785  (2)  C e n t r o n i c s Model minute p r i n t e r  11,000  (3)  Sort/merge  (4)  Data  base  6000, 600 l i n e  per  3,385 management  system  2,705 87,875  Monthly @ 2.3%  cost  Maintenance  on 5 y e a r  lease 2,021  ( p e r month)  584 2 , 605  117  CYBERNETICS List  COMPUTER  SYSTEMS  of O p t i o n a l or S u b s t i t u t e  Items  T e x a s I n s t r u m e n t s M o d e l 810 P r i n t e r (150 CPS) T e x a s I n s t r u m e n t s M o d e l 2 2 3 0 P r i n t e r ( 3 0 0 LPM) T e x a s I n s t r u m e n t s M o d e l 2 2 6 0 P r i n t e r ( 6 0 0 LPM) T e x a s I n s t r u m e n t s M o d e l DS25 A d d - o n D i s k D r i v e G e n e r a l E l e c t r i c T e r m i n e t 3 4 0 P r i n t e r ( 3 4 0 LPM) T e x a s I n s t r u m e n t s M o d e l 9 1 1 VDT A d d - o n T e x a s I n s t r u m e n t s M o d e l 743 H a r d Copy T e r m i n a l T e x a s I n s t r u m e n t s M o d e l 9 7 9 A T a p e D r i v e ( 8 0 0 B.PI) T e x a s I n s t r u m e n t s M o d e l 979A Tape D r i v e (1600 B P I ) T e x a s I n s t r u m e n t s M o d e l 771 D i s k e t t e D a t a E n t r y Terminal Add' o n M e m o r y I n c r e m e n t s - 16 KB 32 KB 48 KB  3,715 18,265 24,695 13,935 7,500 2,300 1,795 14,850 17,075 10,000 1,485 2,970 4,455  118  SPERRY  UNIVAC  COMPUTER  SYSTEMS  November  SYSTEM  CONFIGURATION:  Varian  System:  128  K Bytes  67 MB  165  CPU  Disk  char/sec  2 CRT  printer  diskette unit  Total Lease  (90  line/min)  terminals  Includes operating capability.  1  20, 1978  purchase costs  system,  compilers,  data  ($6,000)  price  $73,700 $ 1,695/month  communication  

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