SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                               FORM 10-K/A

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                      Commission file
    December 31, 1996                          number 0-21456
-------------------------                      ----------------

            ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
            ------------------------------------------------
     (Exact name of registrant as specified in its charter)

         Delaware                                 06-1361276    
-------------------------                        -------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)                Identification No.)

           372 Danbury Road
           Wilton, Connecticut                              06897 

----------------------------------------          -----------
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: 203-761-7900
                                                    ------------

Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----
Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock, $.01 par value
                      ----------------------------
                            (Title of class)

          Indicate by a check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period as the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                            Yes    X           No       
                            -------           ------
           Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (Section 229.405 of
this chapter) is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [   ]

<PAGE>
<PAGE>
          State the aggregate market value of the voting stock
held by non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which the
stock was sold, as of a specified date within 60 days prior to
the date of filing.


Aggregate market value as of March 15, 1997.....$41,315,305 


           Indicate the number of shares outstanding of each of
the registrant's classes of common stock as of the latest
practicable date.


           Common Stock, $.01 par value,
           as of March 15, 1997 . . . . . . . . . . . .21,068,206
shares



                   DOCUMENTS INCORPORATED BY REFERENCE

      List hereunder the documents, all or portions of which are
incorporated by reference herein, and the part of the Form 10-K
into which the document is incorporated:  Proxy Statement to be
filed with respect to the 1997 Annual Meeting of Stockholders-
Part III.


<PAGE>
<PAGE>
                             AMENDMENT NO. 2

      The undersigned hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (the
"Annual Report"), as set forth in the pages attached hereto:

      Item 1.          Business-Marketing and Sales-SayGo
                       Agreements 

      Item 7.          Management's Discussion and Analysis of
                       Financial Condition and Results of
                       Operations -Overview 

      Item 7.          Management's Discussion and Analysis of
                       Financial Condition and Results of
                       Operations -Liquidity and Capital Resources 

      Item 14(a)(1).   Financial Statements-Report of Independent
                       Accountants

      Item 14(a)(1).   Financial Statements-Note 6 to Notes to
                       Consolidated Financial Statements

      Item 14(a)(1).   Financial Statements-Note 7 to Notes to
                       Consolidated Financial Statements

      Item 14(a)(1).   Financial Statements-Note 10 to Notes to
                       Consolidated Financial Statements


                            INDEX TO EXHIBITS
      
      Exhibit 23.1
<PAGE>
<PAGE>
Item 1.    BUSINESS-Marketing and Sales-SayGo Agreements

      The text contained under the caption "Marketing and Sales
SayGo Agreements" is hereby amended by adding the following new
paragraph after the third paragraph thereof:

      Under the SayGo Plan, the Company will recognize revenues as
monthly usage and other fees are billed to customers, and will
depreciate the cost of hardware components of its systems over
the shorter of their estimated useful lives or five years.  In
connection with introduction of the SayGo Plan, the Company will
have substantial cash requirements for manufacturing and carrying
costs which will not initially be covered by revenues.


Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS-Overview

      The last sentence of the third paragraph contained under the
caption "Overview" is hereby amended to read as follows:

Since inception and through December 31, 1996, the Company has
generated cumulative revenues of $12.6 million, and has incurred
a cumulative net loss of approximately $57.1 million, which
excludes non-cash charges in the amount of $8.6 million for stock
option compensation expense.

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS-Results of
           Operations-Year ended December 31, 1996 compared to
           year ended December 31, 1995 

      The first paragraph contained under the caption "Year ended
December 31, 1996 compared to year ended December 31, 1995" is
hereby amended to read as follows:

      Revenues.  The Company's revenues were $5,002,000 in 1996,
compared to $2,973,000 in 1995.  The increase of $2,029,000 in
1996 is primarily attributable to greater product sales in 1996,
including software license fees in the amount of $243,000 (6% of
product sales for 1996) recorded in the second quarter. The
increase in revenue also reflects a $586,000 increase in
maintenance revenue associated with a larger installed customer
base. All revenues are attributable to sales to customers in the
supermarket industry.  In 1996, a single customer was responsible
for 46% of revenues and 79% of revenues was attributable to three
customers. Approximately 30% of revenues in 1995 was attributable
to a single customer, with three customers accounting for 83% of
total revenues.  The Company anticipates that past patterns in
revenues may not be indicative of future results of operations as
the Company introduces its SayGo Plan, under which the Company
will recognize revenues as monthly usage and other fees are
billed to customers.

<PAGE>
<PAGE>
      The following paragraph is hereby added immediately
following the second paragraph contained under the caption
"Results of Operations - Year ended December 31, 1996 compared to
year ended December 31, 1995":

      In connection with introduction of the SayGo Plan, the
Company will depreciate the cost of hardware components of its
system over the shorter of their estimated useful lives or five
years.

      The eighth paragraph contained under the caption "Results of
Operations - Year ended December 31, 1996 compared to year ended
December 31, 1995" is hereby amended to read as follows:

      Interest Expense.  Interest expense increased to $382,000 in
1996 compared to $291,000 in 1995.  Interest expense represents
interest on amounts borrowed from the CDA and, through July 24,
1995, a revolving credit facility with the principal stockholders
of the Company and members of the Board of Directors and their
affiliates.  Commencing with the consummation of the Private
Placement in January 1997, the Company will record interest on an
amount equal to the gross proceeds from the Private Placement
plus prior recorded and unpaid interest at the annual rate of
13.25%.  Additional expense will be recorded as a result of the
amortization of the discount recorded on the Senior Discount
Notes (for value attributed to the Warrants) and the amortization
of costs of issuance.


Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS-Liquidity and
           Capital Resources

      The fourth paragraph contained under the caption "Liquidity
and Capital Resources" is hereby amended to read as follows:

      In addition to selling the ERS ShelfNet System to customers
at a price generally in excess of $100,000 per store, under the
Company's proposed SayGo Plan the Company will offer the system
on a fee-based arrangement whereby the Company retains ownership
of the system.  See "Item 1. Business-Marketing and Sales-SayGo
Agreements" above, for a description of fixed and variable
charges proposed by the Company under the SayGo Plan.  As a
result, the Company will have substantial cash requirements for
manufacturing and carrying costs attendant to introduction of the
SayGo Plan, which will not initially be covered by revenues
calculated on the basis of usage fees paid by customers. 
Accordingly, the Company will require substantial funds in order
to support the introduction of the SayGo Plan.

      The following sentence is hereby inserted immediately prior
to the first sentence in the sixth paragraph under the caption
"Liquidity and Capital Resources":

<PAGE>
<PAGE>
      Cash from financing activities provided $13,526,000 in 1996
compared to $13,139,000 in 1995.
<PAGE>
<PAGE>
                    REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Electronic Retailing Systems International, Inc.

      In our opinion, the consolidated financial statements listed
in the index on page F-1 present fairly, in all material
respects, the financial position of Electronic Retailing Systems
International, Inc. and its subsidiaries at December 31, 1995 and
1996, and the results of their operations and their cash flows
for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting
principles.  These financial statements are the responsibility of
the Company's management; our responsibility is to express an
opinion on these financial statements based upon our audits.  We
conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Stamford, Connecticut
March 20, 1997


<PAGE>
<PAGE>
Item 14(a)(1). FINANCIAL STATEMENTS-Note 6 to Notes to
Consolidated
               Financial Statements-Long Term Liabilities

      Note 6 to the Notes to Consolidated Financial Statements is
hereby amended by adding to the end of the first paragraph
thereof, the following two sentences:

At issuance, the initial conversion price of the debt and
exercise price of the warrants was $13.00 per share which was in
excess of the then market price of the Company's Common Stock of
$7.00. Due to the excess, nominal value was assigned to the
warrants.

Item 14(a)(1). FINANCIAL STATEMENTS-Note 7 to Notes to
               Consolidated Financial Statements-Customer
               Information

      Note 7 to the Notes to Consolidated Financial Statements is
hereby amended by adding at the end thereof the following
paragraph:

Accounts receivable at December 31, 1996 and 1995 are unsecured
and concentrated among major supermarket chains in the United
States.  If the customers within this concentration failed to pay
according to the terms of their agreements these receivables
would be reduced to nominal value.

Item 14(a)(1). FINANCIAL STATEMENTS-Note 10 to Notes to
               Consolidated Financial Statements-Stock Option 
               and Defined Contribution Plans

      Note 10 to the Notes to Consolidated Financial Statements is
hereby amended to read as follows:
      
Note 10-Stock Option and Defined Contribution Plan:

The Company has an employee stock option plan whereby options to
purchase shares of Common Stock may be granted to key employees
of the Company.  In June 1994 and December 1996, the stockholders
approved an increase in the number of authorized shares of Common
Stock available for issuance under the plan from 850,005 to
1,225,000 and from 1,225,000 to 1,775,000, respectively.  Options
granted under the plan typically become exercisable over a period
of four years.

A summary of all option activity pursuant to the employee stock
option plan is as follows:






<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                            Price Range    Options
<S>                                         <C>            <C>
Options outstanding December 31, 1993.......$ .01-$6.00    697,978
  Option grants.............................$ .01-$8.50    239,823
  Options exercised.........................$ .01         (193,500)
  Options canceled..........................$ .01-$6.00    (13,931)

Options outstanding December 31, 1994.......$ .01-$8.50    730,370
  Option grants.............................$ .01-$5.63    480,205
  Options exercised.........................$ .01          (27,766)
  Options canceled..........................$ .01-$8.50   (265,080)

Options outstanding December 31, 1995.......$ .01-$6.00    917,729
  Option grants.............................$1.88-$2.25    380,784
  Options exercised.........................$ .01          (65,860)
  Options canceled..........................$2.25-$6.00   (354,161)

Options outstanding December 31, 1996.......$ .01-$5.875   878,492
</TABLE>

The following table summarizes information about employee stock
options outstanding and exercisable at December 31, 1996:
<TABLE>
<CAPTION>
                          Weighted  Weighted              Weighted
Range of                  Average   Average               Average
Exercise        Number    Remaining Exercise   Number     Exercise
 Prices       Outstanding   Life     Price    Exercisable  Price  
<S>           <C>         <C>       <C>       <C>         <C>
$ .01          389,676    5 years   $ .01       70,125    $ .01
$1.88-$3.63    371,784    9         $2.25       10,000    $1.88
$5.00-$5.875   117,032    8         $5.05       64,917    $5.09
               878,492                         145,042
</TABLE>


Additionally, the Company has a director stock option plan under
which options covering shares of Common Stock may be granted to
directors of the Company.  During 1996, 122,500 options were
granted to directors of the Company to purchase an equal number
of common shares pursuant to this plan at option prices ranging
from $1.875 to $3.38.  In January 1997, the stockholders approved
an increase in the number of authorized shares of Common Stock
available under the plan from 50,000 to 150,000.  All such
options remain outstanding as of December 31, 1996.

The Company applies APB Opinion 25 and related interpretations in
accounting for its employee and director stock option plans. The
consolidated statement of operations for the years ended December
31, 1996, 1995 and 1994 includes noncash stock option
compensation expense of $44,000, $27,000, and $1,119,000,
respectively, representing compensation earned for service
through the periods then ended related to option grants.  Had
compensation expense for the Company's employee and director

<PAGE>
stock option plans been determined based on the fair value at the
grant dates of awards under the plans, consistent with FAS 123,
the Company's net loss and net loss per common share would have
been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                      1996           1995  
<S>                                   <C>            <C>
Net loss:
  As reported.....................    $(9,412,000)    $(10,868,000)
  Pro forma.......................    $(9,412,000)    $(11,221,000)
Net loss per common share:
  As reported.....................    $(0.60)         $(0.95)
  Pro forma.......................    $(0.60)         $(0.98)
</TABLE>

The fair value of each option grant was estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for employee and
director stock option grants in 1996 and 1995: dividend yield of
0%; expected volatility of 53%; risk-free interest rate of 7%;
and expected life of 5 years.  The weighted average fair value of
employee and director options granted during the years ended
December 31, 1996 and 1995 was $1.31 and $2.98, respectively.

The Company has a defined contribution profit sharing and savings
plan which qualifies under Section 401(k) of the Internal Revenue
Code for employees meeting certain service requirements. 
Participants may contribute up to 30% of their gross wages, not
to exceed in any given year a limitation set by Internal Revenue
Service regulations (such limitation was $9,500 in 1996).  The
plan provides for discretionary matching contributions, as
determined by the Board of Directors, to be made by the Company. 
There have been no discretionary amounts contributed to the plan
as of December 31, 1996.

<PAGE>
<PAGE>
                               SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: June 23, 1997                 ELECTRONIC RETAILING SYSTEMS
                                       INTERNATIONAL, INC.


                                         
                                     By s/William B. Fischer
                                       ----------------------------
                                        William B. Fischer
                                        Vice President, Finance


           Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated:

Signature                       Title                      Date
---------                  -----------------         ----------


                             Vice Chairman of the    June 23, 1997
BRUCE F. FAILING, JR.*        Board and Principal 
----------------------        Executive Officer 
Bruce F. Failing, Jr.                 


                             Vice President,         June 23, 1997
WILLIAM B. FISCHER            Finance and 
----------------------        Principal
William B. Fischer            Financial and
                              Accounting 
                              Officer

                             Director                June 23, 1997
PAUL A. BIDDELMAN*
----------------------
Paul A. Biddelman


DAVID DIAMOND*               Director                June 23, 1997
----------------------
David Diamond


NORTON GARFINKLE*            Director                June 23, 1997
----------------------

<PAGE>
<PAGE>

Norton Garfinkle


GEORGE WEATHERSBY*           Director                June 23, 1997
----------------------
George Weathersby


DONALD E. ZILKHA*            Director                June 23, 1997
----------------------
Donald E. Zilkha


*WILLIAM B. FISCHER
------------------------
William B. Fischer
Attorney-in-Fact



<PAGE>
<PAGE>
                            INDEX TO EXHIBITS                     
 

Exhibit                                                        
Number                    Document Description                 
--------                  --------------------

23.1          -  Consent of Price Waterhouse LLP