Wireless technology may soon reach well beyond the in-store supermarket operations directly into consumers' pockets, dashboards, personal digital assistants, offices and households with the newest platform, 802.11a megahertz, about to be introduced possibly later this year.
Applications have already extended far beyond portable point-of-sale and handheld devices for price verification and scanning within supermarkets. Besides supporting in-store operations like electronic shelf labels, electronic marketing on shopping carts and hands-free communication between associates, retailers are evaluating how to take the next step and incorporate consumer devices like cellular telephones, PDAs and two-way pagers as vehicles for new applications.
Part of the attraction to wireless could be the low cost compared to less flexible, wired electronic platforms that require investments to overhaul and wires to connect to ceilings, floors and shelf sets. Wireless infrastructures are comprised of antennas, switches and routers that move data between devices and mainframe computers at sub-second speeds, and all components are hidden within ceilings and gondolas, keeping stores wire-free, convections free-flowing and hardware on store floors portable.
Excitement remains high, yet many food retailers are putting expansion plans on hold due to their high expectations of the anticipated versatility of the newest wireless standard, 802.11a megahertz.
By waiting, retailers will avoid an additional investment in the current 802.11b megahertz standard to brace their current, and often weaker, wireless platforms.
Hannaford Bros.' First Step With Wireless
Waiting for a new platform has not stymied grocers' current commitment to wireless projects within the current protocol, however. For example, Hannaford Bros., Scarborough, Maine, is improving its direct-store delivery and in-store ordering with a standardized, high-speed wireless infrastructure that connects stores to its home office.
Hannaford took its first step toward high-speed data transmission in 1997 when it replaced its satellite network with a synchronous transfer-mode technology that supported high bandwidth transmissions consisting of data, voice and video files between stores and headquarters. Once the system topped out at 1 megabyte spread across multiple vendors' wireless infrastructures and jeopardized accuracy and delivery of data, Hannaford began installing a standardized, 11-megabyte radio-frequency-based, wireless, local-area-network backbone from Cisco Systems, San Jose, Calif, in each of its 114 stores in July 2000.
"There were things we couldn't do, or did poorly," said Bill Homa, chief information officer, Hannaford. "Using so many wireless infrastructures limited functionality within the stores, and none of the applications interacted with each other or up to the corporate office."
Upon completing the installation in August 2001, Hannaford used the platform to improve the accuracy of its order-entry process. By linking handheld units from Symbol Technologies, Holtsville, N.Y., to the backbone, clerks and department managers could access stock information with sub-second response time from anywhere within the store simply by pulling data from a shelf tag's bar code. The signal pulls data related to the scanned stockkeeping unit and pushes information such as out-of-stock status, warehouse discounts and recent orders back to the unit within a second.
Homa would not quantify specific results, but did say the chain is eliminating out-of-stocks on store shelves; creating better, more accurate orders; and storing less inventory in stores' back rooms. To date, 20 stores each use six handheld units. Hannaford planned to expand the new order-entry system chainwide by the first quarter of 2002.
Rather than relying on an inaccurate, cumbersome manual DSD process, Hannaford's DSD operation also went wireless. The grocer uses handheld units to check in DSD vendors and get instant access to price changes and product promotions. "We used to have a delay in analyzing this data, which caused receiving problems," Homa explained. "Now we have no delays." The project, which was piloted in five stores in summer 2001, will be live chainwide by second-quarter 2002.
Hannaford also linked a planogram application so it can instantly view schematics and product locations through the handhelds. Further, Web-based wireless kiosks for deli ordering are in three stores, and mobile wireless POS systems are used in various stores.
"Wireless technology has afforded us the opportunity to increase sales, reduce inventory and improve our bottom line," said Ron Hodge, chief executive officer, Hannaford. "It has also allowed us to meet our quality, variety, value and service goals. The wireless network yielded a return on investment in less than a year."
Independents Go Wireless
Binghamton Giant Markets is using wireless, electronic shelf labels to cut labor associated with generating paper labels and to gain ordering efficiencies by connecting the units to back-office operations.
"The push was the good chunk of savings we could achieve by eliminating manual generation of our shelf tags and signs," said Jim Whittaker, director of management support services, Binghamton Giant, a 12-store independent retailer headquartered in Binghamton, N.Y. "This boiled down to a savings of 15 to 16 hours a week per store."
Binghamton Giant installed its first store with Atlanta-based NCR's wireless DecisioNet ESLs in late 1999. Positive results pushed the retailer to commit to a chainwide rollout of 12,400 units per store, covering all departments except its direct-store delivery-supplied general merchandise and health and beauty sections. The rollout was expected to be complete this month.
From headquarters, a price file electronically spans the chain's 2.4-gigahertz wireless infrastructure. The file is transmitted to the store's point-of-sale units and electronic shelf tags. A small radio transmitter housed in the tag relays a message back to headquarters, and the prices are confirmed. The units can receive up to 30,000 updates an hour.
The 70-year-old retailer's next step is to connect the tags to its back-office operations and improve planogram and reorder processes. "The tag's microchip displays a symbol alerting us to product availability," Whittaker said. "If it is not visible, we can reorder the item." He declined to define a time frame for the expansion.
Binghamton Giant invested between $6 and $7 per tag, including installation, communications technology and shelf labels. This is a significant decrease from DecisioNet's last release that retailed for $8.50 and $9.50 per tag. Binghamton expects a return on its investment in less than five years.
Stop & Shop's
Wireless technology is supporting electronic marketing efforts at Stop & Shop, a division of Ahold USA, Chantilly, Va., on, of all things, shopping carts. The 312-store chain's "personal shopping assistant" is a wireless, Web-based, battery-powered tablet developed by Unipower, Quincy, Mass. The tablet is linked to the retailer's loyalty program database.
A display provides customers with personalized information, including promotional offers and shopping lists based on their past shopping history. Customers also can use the tablet to place orders with the deli or with outside merchants linked to the program, and self-scan their order within the aisles. About 20 units are live in a Stop & Shop store in Hingham, Mass.
Based on a survey of 380 users asked to rank their usage between one and 10, with one meaning they would never use it and 10 meaning they would use it on every shopping trip, "about 379 respondents ranked scores of seven to nine. That was huge, positive feedback," said Jack Mark, founder and chief technology officer, Unipower.
The survey also found that respondents increased their shopping trips to the store by 40%, and 50% of the shoppers predicted they would buy more as result of using the device. These customers also reported a $51 increase in their monthly purchases.
Schnuck Awaits Next Platform
Even Schnuck Markets, St. Louis, is dabbling in wireless -- from DSD receiving and price verification to POS units and scales in perishables departments. Bob Drury, senior vice president of logistics, manufacturing and information technology, Schnuck, anticipates further expansion when the new 802.11a standard is released between November and January 2003. The original 802.11 megahertz standard, which moves data at the slow rate of 1.5 megabits per second, is not compatible with the current 802.11b megahertz, which moves data at 11 megabits per second. "This hindered many retailers' plans to expand [wireless] projects because we all had to decide whether to invest in this second network," he explained.
Then came the announcement that the next version, 802.11a megahertz, was on the way -- a platform that will support new wireless technologies at a rate of 54 megabits per second, and will sustain older applications as well. "When this standard emerges, all types of new projects will break loose," Drury said.
Those applications are already waiting in the wings in the form of consumer devices like cell phones and PDAs loaded with laser scanners, wireless card dashboards that support global positioning systems, notebook computers, watch-like devices like MP3 digital watches, and two-way pagers. By coupling these devices with broadband and wireless Internet access, supermarket retailers will carve out a new niche of customers.