'2000 has already begun at Fred Meyer, Nordstrom
by Steve Woodward
The Oregonian
The year 2000 is closer than you think.
For Kmart, 2000 began Thursday - fiscal year 2000, that is.
Within a week, Kmart will be joined in FY2000 by a crush of other large retailers, who tend to start their fiscal years on the weekend closest to Jan. 31. The timing allows companies to recover from the shopping frenzy of late December, selling any big inventories that remain in January, before embarking on a fresh financial year.
They now will be working within a fiscal year that has dates beyond Dec. 31, 1999.
Two software systems in particular - general-ledger accounts and merchandise planning - are vulnerable to the so-called Y2K computer bug, said Ted Grossman, a Babson College professor who specializes in retailing, information technology and year 2000 issues.
General ledgers in most industries record a company's financial position by calendar month. But retailers, which do more business on weekends than weekdays, redefine months so that they end uniformly and ensure consistent period-to-period comparisons.
That approach means retailers must tell their general-ledger systems on which day to end each month of the new fiscal year, depending on whether it's a four- or five-week month. For many, the final day of fiscal 2000 will be Jan. 29 or 30, 2000.
"If the general ledger is not year 2000-compliant, it's gonna go bonkers," Grossman says.
The other point of vulnerability is merchandise planning or "open-to-buy" systems, which help retailers create budgets for their buyers, who may have to buy millions of dollars in merchandise each day for sale months in the future.
As of Nov. 7, Portland-based Fred Meyer - one of the nation's five biggest food and drug retailers, with stores mainly in the West - was 55 percent complete in Y2K repair of its information-technology systems and 28 percent complete in testing and installing the repaired systems, according to its most recent filing with the federal Securities and Exchange Commission. The company, which declined to offer details beyond its filing, expects to spend $25 million to $30 million on its Y2K repair project.
Nordstrom, which anticipates spending $24 million, said it expects to repair its critical systems by March 31, with testing to be completed by June 30.
"We haven't seen anything yet that's apocalyptic," says Cathy Hotka of the National Retail Federation.
Credit-card companies have been working with merchants to prepare them to deal with expiration dates past 1999. Those cards may conflict with some older cash registers, but Hotka says Visa reported only about 150 problems a month worldwide.
Other retailers whose fiscal year 1999 ends this weekend include Target, The Bon Marche, Toys "R" Us, Wal-Mart Stores and Home Depot. |
