The store was the scene of many technological innovations this year. More supermarkets either tested or rolled out a number of new systems, ranging from biometric payment, color coupon printers, shopping cart tablets and self-scanners to deli ordering systems, kiosks, digital media and even cell phones as loyalty vehicles.
Biometric payment continued to make headway in food retailing in 2006. As of November, slightly less than 1,000 U.S. food retail and convenience store locations were using the biometric fingerscan readers marketed by Pay By Touch, San Francisco, the major biometrics provider to retailers.
Another alternative payment vehicle, contactless credit and debit cards, are accepted by a number of convenience store and drug store chains but Meijer remains the only major supermarket chain that accepts them.
Another in-store trend in 2006 was digital media. Retailers such as Supervalu, Kroger, Price Chopper and Pathmark adopted digital screens at the POS, in perishable departments, or in Center Store. In-store media represents a major ad vehicle for manufacturers, usually facilitated by a third party such as SignStorey or PRN.
Self-checkout lanes have become a mainstream presence in the supermarket industry. But the self-checkout concept has expanded to include portable self-scanning devices used throughout the shopping trip. Food Lion's Bloom stores continue to offer those devices.
Perhaps the most notable example of self-scanning is that offered by the Shopping Buddy, the shopping cart tablet system that Stop & Shop, Quincy, Mass., installed in 19 stores in Massachusetts and Connecticut this year. The Shopping Buddy includes a small scanner with which shoppers can scan and bag as they shop, with the total tallied on the tablet screen along with a list of purchases. Checkout at the front end is reduced to payment.
But the Shopping Buddy offers numerous other features: deli ordering, with notification when orders are ready for pickup; generating bar codes for produce purchases; a list of previously purchased items for each aisle, as well as items on special; and a product locator. “We've seen sales growth and trip growth [in Shopping Buddy stores],” said Robert Keane, a Stop & Shop spokesman. The chain plans to install the system in an undisclosed number of additional stores next year.
Another store innovation tested this year by Ukrop's Super Markets and Stop & Shop is DeliVision, a deli ordering system designed to let associates better manage orders coming from kiosks and customers who order at the counter. Stop & Shop deployed the system in 50 stores with plans for a broader rollout.
At the POS, one of the more sweeping changes was the rollout of color-coupon checkout printers by Catalina Marketing, St. Petersburg, Fla. (See story, Page 47.)
The high cost of credit transactions continued to rankle retailers in 2006. At industry meetings, discussions centered on what to do about it. One solution is to try to process as many transactions as possible through the automated clearinghouse system. This can be done via a personal identification number-based ACH debit card program, such as that provided by Debitman, which recently changed its name to Tempo Payments. Some companies, such as Supervalu, are starting to employ biometric systems at the POS in order to steer transactions to the ACH network.
LOYALTY EMERGES
Loyalty programs, a mainstay of many supermarkets, emerged as significant factors for some retailers in 2006. Kroger, for example, pointed to the company's customer loyalty data, developed with U.K marketing firm Dunnhumby, as an important driver of its same-store sales growth.
One of the more novel loyalty programs was created this year by Green Hills, a one-store independent in Syracuse, N.Y. Called SmartShop, the loyalty program replaces cards with biometric identification: shoppers identify themselves at the checkout and at in-store kiosks by placing the tip of their index finger in a scanning device. The program provides customized savings based on individual buying habits.
MobileLime, Watertown, Mass., equipped three more independent retailers this year with its cell phone-based loyalty system. Shoppers receive discounts at the POS by supplying their cell phone number, which the store also uses to text message information on promotions and events. (See story, Page 1.)
Another notable loyalty program, on a much larger scale, was the avenu program launched this year by Supervalu, which inherited it from Albertsons. The program ties together kiosks that issue targeted coupons, in-store screens at the checkout and in perimeter departments, audio programming and Catalina checkout coupons.
Hannaford Bros. began using Internet Protocol phones in 15 stores, with plans to have them in 25 stores by the end of the year. And in what may be a first for the retail industry, the chain installed a time-and-attendance application on the IP phones at one of those stores, in Westbrook, Maine, replacing conventional time clocks used by hourly employees.
Business intelligence systems such as price optimization continued to grow in importance in food retailing. H.E. Butt Grocery Co., San Antonio, reported making gains via the DemandTec price optimization, and Brookshire Bros., Lufkin, Texas, is rolling out a system from KSS. In addition, operators such Archie's IGA in St. Maries, Idaho and Van's Markets in Helena, Mont., selected an optimization program from Revionics, Sacramento, Calif., targeted to small retailers.
Retailers are increasingly relying on forecasting tools to help them predict consumer demand. Price optimization systems help do this, as well as applications from companies such as Logility, which Associated Grocers of Florida uses to prepare stores for the next big hurricane. Hannaford Bros. began using a forecasting engine to generate store orders in 50 of its stores this year.
In-store energy concerns represented a major theme for food retailers in 2006. Many retailers explored energy-saving technology, such as the fiber-optic lighting tested by Albertsons/Supervalu in refrigerated display cases.
DATA SYNC STRIDES
The food industry made great strides this year in adopting data synchronization processes and technology that enable manufacturers and retailers to exchange accurate product data. As of Sept. 30, 10,594 companies participated in the Global Data Synchronization Network, compared with 200 in January 2005; and 1,022,000 items were registered in the Global Registry, compared with 180,000 in January 2005.
Industry leaders achieved milestones: for example, Supervalu now has about 525 suppliers in production-level synchronization of item data, representing 60% of its nonperishables volume.
Another pioneer, Wegmans Food Markets, was the focus of a new study, “Synchronization — The Next Generation of Business Partnering,” which revealed that the chain's biggest savings related to data synchronization were in improvements to logistics and supply chain processes.
For example, the study reported that Wegmans derived a $3.5 million annual savings in transportation costs ($2.5 million for inbound freight and $1 million for outbound freight) as a result of synchronizing product data with suppliers.
Data accuracy became a mantra for companies pursuing data synchronization. After all, it hardly pays for manufacturers and retailers to be in synch on data that is inaccurate in some way. To help with data quality, several trade groups assembled the GS1 Data Quality Framework.
Other strides included the completion of the first data synchronization pilot aimed at variable-weight meat and poultry products at the item level. The next major data sync pilot will take place in January when long-awaited standards for price synchronization will be tested.
RFID ADVANCES
RFID continued its development in food retailing in 2006. Wal-Mart, which has done more than anyone to demonstrate the potential of RFID as a way to track the movement of pallets and cases through the supply chain, expanded its program to about 500 stores and 300 suppliers — numbers it plans to double next year.
For Wal-Mart, the principal goal of RFID has been to reduce out-of-stocks. While one study sponsored by the company reported a net 16% reduction in out-of-stocks resulting from its RFID program, “we have only just begun to attack” the issue, said Ron Moser, Wal-Mart's RFID strategy analyst, in a presentation at the U Connect conference in June.
Wal-Mart has fully embraced the Gen 2 standard for RFID tags and readers. In June, the company began to “sunset” Gen 1 RFID technology, with a termination date in January.
But apart from Wal-Mart and a handful of other large retailers, the adoption rate of RFID and its accompanying electronic product code technology “continues to move at a modest pace,” according to a report released in May by Retail Systems Alert Group, Newton Upper Falls, Mass., and Atlanta-based NCR.
Still, some medium-sized chains have begun taking a serious look at RFID. RFID tests were conducted by Publix (with produce suppliers) and Hannaford Bros. Piggly Wiggly Carolina plans to test RFID next year.
