KARSTADT’S POSITIVE POS TEST

Byline: Denise Power

ESSEN, Germany — Customer transaction times cut by more than 20 percent, cashier training time slashed by 75 percent and the promise of fewer checkout terminals and shorter lines systemwide are among the early results of new point-of-sale technology being tested by Karstadt Department Stores.
The results of the one-store beta test are preliminary, but the operator of 500 department and specialty stores will expand the testing to a second store this month to further document the system’s performance. Karstadt’s chief information officer said a decision to roll out the system to 200 stores could be made at the end of June.
Chief information officer Peter Niederhausen said testing of the new Internet-enabled POS system, which has not been installed at any other retailer, is part of a larger information technology initiative at the massive German chain, based in Essen.
“It started as a special project, but we see it in a more complex context today,” said Karl Lohmann, manager of store systems for Itellium Systems & Services GmbH, a subsidiary created by KarstadtQuelle Group, parent company of the store chain. Itellium was created five months ago as a centralized information technology services division, responsible for application development and maintenance of the retailer’s new POS system.
“We are starting to design a new technical and application infrastructure for future applications, and the POS project is one component of that,” added Lohmann, who together with Niederhausen discussed the initiative in a recent interview.
The new system promises to improve transaction processing, but in the longer term will likely serve a larger purpose, as a “point-of-service” terminal capable of accessing data and applications via the Internet and the retailer’s own intranet. Store associates’ ability to instantly provide customers with information about special products, delivery services and stock availability should enhance the shopping experience.
In the near term, Karstadt envisions the new system, from the SurePOS 700 Series developed by IBM of Armonk, N.Y., will deliver productivity gains and a better experience for customers. Among the components credited with a 20 percent faster throughput in the test store are a more powerful scanner that can read two bar codes at one pass, a speedier thermal printer and an intuitive touch screen graphic user interface that eases the process for the cashier, Niederhausen said.
“In the pilot, we compared a conventional printer against these [new] printers, and we found out, with one complete transaction, we could speed the time by more than 50 percent. The main reason was because of a quicker printer, better results in reading the ticket and very easy handling by the cashier,” he explained. The 50 percent improvement represents the shortened cashier labor time. The total transaction time, including customer activity, was reduced by more than 20 percent in the test location — a Karstadt department store in Hamburg.
The retailer also operates Hertie department stores, with selling space in both chains ranging from 36,000 square feet up to 540,000 square feet.
The transition from the old system to the new was easy at the test location, Lohmann said.
“For us,” said Niederhausen, “it could mean fewer POS terminals, fewer cashiers, and for the customer, shorter lines and a much more comfortable shopping experience.”
Although plans call for installing the point-of-sale system in the department store division initially, the company may explore its suitability for its 250 specialty stores, Lohmann said. Those units include sports apparel chain Runners World, women’s apparel chain Wehmeyer, multimedia chain World of Music and two smaller home appliance chains. Retail sales, together with revenue from its mail order company, Quelle, totaled about $16.4 billion in 1999.
Niederhausen said the graphic user interface of the system is so intuitive that new users need only two hours of training time. Cashiers typically spent an entire day learning how to operate the existing system.
Lohmann said down the line, the POS terminals may be used as “point-of-service” stations, capable of accessing data and applications from the Internet and the company’s intranet.
“Then it would be possible to drive our service applications, written in Java, on the POS terminal,” he said. The idea is to gather information from the Internet and intranet, “to bring customers [in stores] the same quality of information that they can get at home through an Internet application. In the store, we want to be able to give information about a special article, special delivery times and in-stock information.”