Like so much else about the Internet, questions about its value in reaching consumers provoke sharply divergent reactions. Some IS executives see it as an incredible opportunity for supermarkets to establish a personal relationship with shoppers. Others see the Internet's low cost of entry and wide reach as a serious threat to traditional supermarket retailing.
invading shoppers' privacy.
SN: In terms of using the Internet to reach consumers, this seems to be a period of experimentation. What are some of the more successful ways supermarkets are using this technology?
DRURY: To really get the most out of the Internet, you can't look at it as a grocery store on wheels. You have to look at it as a customer service that permits you to provide people with an ability to have a lifestyle that they want. The Internet provides an opportunity for us to meet up with that -- people who don't have the time to go to the store but they do want the service, selection, freshness.
SMITH: The ideal use, as I see it now, is for education and general information for such topics as meal planning, getting recipes and ingredients, store locations, store layouts if desired, that sort of thing.
NICHOLSON: There are two ways the Internet is used between businesses and their customers. One is the actual selling of products, for instance, books from Amazon.com. There are many very successful people selling products over the Internet.
The second way is as an information tool. In the near future, I think that's the usage for the supermarkets in their interaction with customers. It's a vehicle to get large amounts of information into the hands of the Internet-active customer base we have out there.
SN: You mentioned that many companies have been successful selling products over the Internet. Do they present a competitive challenge for supermarkets, or is it an opportunity for supermarkets themselves?
HOMA: I don't think retailers should view the Internet as competition. It may be another avenue for sales of their own products, and another way to get to understand who their customers are. And I don't know if anybody is doing that well today -- selling over the Internet.
SMITH: I think the Web does pose a threat to supermarket retailers. The cost of entry is low, which allows nontraditional retailers to enter the market for high-margin products. That's the threat I see.
NICHOLSON: I do not see very many supermarket companies selling products. There are a few. For example, Dorothy Lane Market sells Killer Brownies over the Internet. That's great, but that's not their supermarket, it's a secondary thing they've gotten into. It's a whole different business, though a business that's very adaptable to the Internet.
SN: So what opportunities do you feel the Internet does present in communicating with shoppers?
DRURY: The Internet gives us a chance to be more informative to the consumer. I think we can do more interactively with menu planning than we ever could in the store. That interaction with the consumer will be the big thing we'll exploit going forward. For example, wouldn't it be great to say we're going to have dinner for five tomorrow night, and be able to look at a number of menus sorted by nutrition or fat content, then have the thing blow up a shopping list for you that, if you chose, could be delivered to your house? That's really solution selling, in my opinion.
SN: And it's the Internet's interactivity that makes that possible?
DRURY: It's a very personalized shopping experience. If you go into a supermarket or any retail outlet, it's a very sterile environment. The Internet is a very personal environment, and I think that's the real advantage. And for solution selling, this is the best thing since sliced bread. The solution is that person's solution, not just a general solution.
SN: That raises some issues about the Internet as a data-gathering tool. How effective do you think it can be in that role?
SMITH: You can learn about the demographics of your users. The only thing that requires caution is that the application of the findings is somewhat limited, to people who have access to the Internet and are willing to share that information with you. So that in itself, that demographic, describes a certain kind of person.
NICHOLSON: It also depends on what you're doing. If you're selling Killer Brownies and you collect data about customers buying them, and then use that data to market a chunky cookie via mail-order, then obviously that's a great use of that information. Overall, though, I think it's fairly limited. You can certainly do a survey, but who fills it out is going to be a biased group of people; it's not indicative of your customer base at all. It's not a tool in marketing so much as it helps you understand how your site is being used. I don't know that it's very useful in running your business.
SN: What about gathering information passively, with "cookie" technology that records information about Internet usage directly from the user's machine?
DRURY: We don't do that on our Internet site. We consider it very private. And I think if we don't honor that as an industry, we'll kill it.
HOMA: Cookies technology is controversial; it's so much in its infancy. We don't use it. You have to ask if you should use it at all.