How will technology influence the way consumers shop for groceries over the next five to 10 years?
One way to find out would be to visit Green Hills, a one-store independent based in Syracuse, N.Y. The store's owner, Gary Hawkins, has already earned a reputation as an expert in loyalty marketing who has written two books on the subject while operating an international consulting business. Beginning this week, Hawkins is taking the store to a new and unprecedented level with a biometric-based loyalty-marketing program called "Smart Shop" that leverages the Internet.
The new loyalty program, which will supplant Green Hills' card-based program, will communicate personalized weekly discounts to shoppers via e-mail, Green Hills' Web site, kiosks, the checkout and, in 2006, cell phones. Instead of presenting a card, shoppers will use biometric finger-scan identification (from Pay By Touch, San Francisco) at the checkout to receive offers as well as make payments. Biometric technology will also gain shoppers access to personalized offers and shopping lists at the store's kiosks. This kind of technology, Hawkins contends, "will help the industry market to shoppers intelligently and cut out the waste."
Green Hills is not the only supermarket embracing new technology to improve the customer experience. Indeed, over the past few years food retailers have been showing a growing propensity to try new systems and applications that promise to remake the way supermarkets operate and the way consumers shop. Other examples include intelligent scales, contactless payment, shopping cart screens, and radio frequency identification. Perhaps the biggest trend in retail technology -- which promises to continue into the near future -- is the self-checkout lane. "Self-checkout will grow over the next five to 10 years at the expense of traditional [employee-based points of sale]," said Austen Mulinder, president and chief operating officer, Fujitsu Transaction Systems, Frisco, Texas, which markets both self-checkout and traditional POS.
Lee Holman, vice president, product development, IHL Consulting Group, Franklin, Tenn., also expects self-checkout "to be hot in the near term." However, he feels that eventually it will "cool down somewhat simply because there will be a saturation/balance point reached where retailers have the appropriate number of cashiered lanes and self-checkout."
Self-checkout has enjoyed so much success at the front end of stores that a few retailers are trying to extend the idea to the rest of the store with portable scanning devices. These devices allow shoppers to scan and bag their purchases as they shop. Food Lion's five Bloom stores in the Charlotte, N.C., area are testing portable scanning devices provided by Symbol Technologies, Holtsville, N.Y.
In addition to speeding up the checkout process, portable scanners also offer consumers a running tally of their purchases, which reassures shoppers on a fixed budget. Indeed, those shoppers may be empowered to spend more than they would without knowing their total, Bloom executives said. Portable self-scanners "will only increase in use as consumers become more aware and more comfortable with them," Holman said.
Another new device, which incorporates a self-scanner but offers a host of other applications, is generally known as the "Shopping Buddy" -- the name given to it by Stop & Shop, its pioneer. The device, a touchscreen tablet, rides on the front of a shopping cart, providing a wide range of information, some of it targeted to the loyalty-card shopper pushing the cart.
During a year-long pilot, Stop & Shop, Quincy, Mass., a division of Ahold USA, tested 40 Shopping Buddy devices in each of three Massachusetts stores, and has espoused plans to roll them out to 20 additional stores.
The Shopping Buddy allows shoppers to place a deli order, and then alerts them when the order is ready to be picked up. The screen informs shoppers of favorite or targeted items on sale as they approach the items in the aisle. Other functions include a product locator and price checker. "The store will play a more active role in a shopper's trip than a more passive 'I hope you find everything you need' role," said Ralph Jacobson, the Santa Clarita, Calif.-based executive marketing manager, retail industry, IBM, Armonk, N.Y.
The future prospects of the Shopping Buddy have been buttressed by the release of several similar devices from several manufacturers this year. Fujitsu, for example, this year introduced the "U-scan Shopper," which differs from the Shopping Buddy in being permanently lodged on the shopping cart rather than snapped in by the shopper. According to Fujitsu's Mulinder, the company will release a new prototype of this device over the next six to 12 months that will be "funded by CPG companies to drive promotions at the point of purchase."
Some of the functionality of the Shopping Buddy can also be found in stationary in-store kiosks. For the example, deli ordering is a kiosk function "that makes so much sense that we're surprised more supermarkets haven't already done so," IHL's Holman said.
Kiosks are also being increasingly seen as knowledge centers in the store, providing everything from recipes and wine pairings to a product's location in the store and its country of origin.
For example, a recipe kiosk for meat and seafood items, based on software from Shop to Cook, Buffalo, N.Y., is starting to get attention. At Bloom stores, the kiosk has been well-received by shoppers, according to Susie McIntosh-Hinson, Bloom's concept creator, technology. It enables shoppers, by simply scanning a meat or seafood package, to generate recipes that include cooking instructions and complimentary sides. Shoppers can search for recipes as well. Bloom has the ability to use the kiosk to tell which meats are the most commonly scanned and which recipes most frequently selected.
Another new kiosk is being piloted out at one of the world's major test sites for new in-store technologies, the Future Store, an Extra supermarket opened by Metro Group in 2003 in Rheinberg, Germany. The kiosk allows shoppers to determine the origin, components and production method for meat products and eggs, in accordance with European Union regulations on the traceability of food. Such a device could prove invaluable in helping U.S. retailers comply with future country-
Pete Abell, senior partner, ePC Group, Boston, foresees stores communicating information such as food-drug interactions for consumers who request it. "The graying of America will provide lots of people trying to avoid harmful or semi-harmful foods, drugs and [over-the-counter] drugs," he said.
Kiosks are sometimes criticized for taking up valuable floor space in a store. To get around that issue, IBM, at its Raleigh, N.C., development center, is developing an "Everywhere Display" with decidedly futuristic overtones. A ceiling-mounted device, the Everywhere Display places images onto any surface in the store. Shoppers touch the projected surface to find information, as if they were interacting with a touchscreen kiosk.
Produce scales are also evolving. Bloom offers a scale that allows shoppers to weigh their own produce and generate bar codes by entering price look-up numbers. A more advanced scale is being tried at the Future Store. This intelligent scale, or "Veggie Vision," uses sophisticated cameras in concert with a database to "recognize" produce and print out price labels so that shoppers don't need to enter any codes. "It's easy to use, makes shopping more convenient, and there's a 'fun factor' to it," said Gerd Wolfram, managing director, information technology, Metro Group.
So far, the Veggie Vision scale is the most popular device in the Future Store. According to a survey conducted by The Boston Consulting Group in April 2005, 68% of shoppers said they have tried the scale at least once, up from 62% in 2003. By contrast, 34% said they have tried the Personal Shopping Assistant, Future Store's version of the Shopping Buddy, at least once.
The technology with the greatest potential to transform the supermarket may be RFID. RFID tags, which report the identity of products via wireless radio transmissions to a nearby reader, can help retailers track inventory with great accuracy. This can impact many other applications.
For example, to ensure that its shoppers can find the products they want in its stores, Wal-Mart Stores has embarked on an ambitious RFID program. Working with suppliers, the program uses RFID tags to track pallets and cases throughout the delivery process. Some retailers are testing RFID in the store as well. The Future Store's "smart-shelf" application uses RFID readers to recognize when tagged products are removed from the shelf, alerting store staff that a shelf needs to be replenished.
In the future, if all products are tagged with RFID tags, checkout could take place automatically as shoppers walk past RFID readers on their way out of the store. "If and when RFID reaches the item level, everything will change," Holman said, though he doesn't expect this to happen in the next decade.
Perhaps the biggest question for food retailers over the next five to 10 years will be the role that online shopping plays. Jupiter Research forecasts that online grocery sales in the United States will total $3.3 billion this year, about 0.6% of total grocery sales. By 2009, Jupiter said, online sales are expected to generate revenues of $7.5 billion, just 1.1% of total grocery sales but enough to make the Web-based grocery the third-largest online category behind apparel and computers.
Food retailers themselves expect even more growth. According to SN's 2005 Technology Survey, 40% of respondents said that online grocery sales will account for 6% to 10% of total sales within five years. "Retailers will have to learn how to access customers through multi-channels," said Ken Fobes, Business Strategy Group, Ponte Vedra Beach, Fla. "They will have to learn how to enable home shopping."