While technology in the supermarket industry did not begin with the bar code in 1974, the bar code is surely the foundation on which many of today's retail systems have been built.
Thus, the 30th anniversary of the first live bar-code scan, which took place at a Marsh Supermarket in Troy, Ohio, on June 24, 1974, was an occasion to celebrate. Indeed it was. On hand at the Marsh store in Troy were representatives of: Indianapolis-based Marsh; the Uniform Code Council, the organization that oversees the Universal Product Code (UPC) bar-code technology; and Wm. Wrigley Jr., the company whose 10-pack of Juicy Fruit Gum was the first product to be scanned.
Another important guest was Sharon Buchanan, the cashier who made the first UPC scan. "When they started installing the new equipment, we knew it was important, but we had no idea just how far this bar code would go," said Buchanan, now retired.
In 2004, the food retailing industry continued to make strides with technology based on the bar code, and with technology that may one day supplement, and maybe succeed, the bar code. The latter refers to the industry's latest ubiquitous acronyms, RFID (radio frequency identification) and EPC (Electronic Product Code).
The industry also set the stage this year for a Global Data Synchronization Network that may finally put retailers and manufacturers in sync on product data.
The Big RFI(D)
Dallas, the Big D, and surrounding areas became the focal point of RFID testing in the U.S. in 2004. Most of that activity was generated by Wal-Mart Stores, which kicked off its program in late April at a distribution center in Sanger, Texas, where eight suppliers sent pallets and cases marked by RFID tags (sometimes called radio tags). Wal-Mart's RFID project is about to balloon in January when about 137 suppliers are expected to begin shipping tagged pallets and cases to three North Texas DCs serving around 130 stores.
With all of those suppliers sending RFID-tagged pallets and cases into the Dallas area, other chains decided to get into the game. In March, Albertsons announced it too would require its top 100 suppliers to affix RFID tags on pallets and cases headed for retail warehouses and stores. Then in September, the company met with those suppliers at its Boise, Idaho, headquarters to discuss plans for an RFID program that will be launched in April and will continue throughout 2005 in its Dallas/Fort Worth division.
Also following on Wal-Mart's heels, Minneapolis-based Target spoke to its top suppliers in August about conducting an RFID test at a distribution center and 10 stores in the Dallas market, sources told SN. As for other retailers, the level of interest and activity varies greatly, though few have made any prominent announcements.
Why all the fuss about RFID? The main reason is that RFID tags can do what bar codes do, namely identify products -- but without human assistance, without the tags visible, and in large numbers simultaneously rather than one at a time. Retailers like Wal-Mart, Albertsons and Target are focusing initially on the supply chain application of tags on pallets and cases to improve inventory tracking and control, and reduce out-of-stocks, but the industry's goal is to put the tags on every product.
But bar codes in 2004 retained their one big advantage over radio tags -- cost. Bar codes cost fractions of a penny each while tags' costs still range between 20 and 60 cents apiece, causing concerns over return on investment. Moreover, bar codes follow well-entrenched standards while standards for RFID tags are still evolving.
The organization responsible for RFID standards, EPCglobal, is close to releasing the latest generation of technology, Generation 2, which should usher in a new wave of cheaper and better tags and tag readers. EPCglobal, jointly run by UCC and EAN International, is responsible for the digital underpinning of RFID technology in retail and other industries -- the Electronic Product Code, or EPC.
RFID wasn't the only big technology news being made at the DC this year. Voice-based systems, especially for order selection, continued to make hay. Another noticeable trend in DCs was the growing interest in Automated Storage and Retrieval Systems.
Syncing Up
Data synchronization crossed a new milestone in August with the launch of the Global Data Synchronization Network (GDSN), a truly global network of data pools using a single Global Registry as a standard directory.
However, as Judy Sprieser, chief executive officer of Chicago-based Transora observed, "There's a lot of work needed to make the whole network seamless and operational." The Global Registry, for example, has a ways to go before it will be in production. "But the spirit of GDSN is live -- we all believe that a standard network is the best and lowest cost option for the industry," she said.
UCCnet, Lawrenceville, N.J., which had been the guiding force for data synchronization in the U.S. for the past few years, became a data pool-only service for those retailer and manufacturer members that wish to use it as such, such as Wal-Mart. Some retailers decided to select another company to be its data pool; for example, Kroger, Publix Super Markets and Schnuck Markets chose Transora, while Safeway and Ahold selected Worldwide Retail Exchange (WWRE).
Data synchronization is widely understood to be essential to ridding the industry of error-ridden invoices and purchase orders that costs billions to fix. It's also seen as a necessary precursor to RFID. Yet even at its peak last year, UCCnet had recruited only about 27 retailers or distributors to its ranks, though many were among the leading chains in the industry.
Thus like RFID, data synchronization remained in 2004 a very promising technology still in its early stages. And while pioneers like Wegmans Food Markets have gained a considerable return from item-level data synchronization, the real money will be reaped when other data, notably prices and promotional information, become synchronized.
Still, some retailers are already taking data sync seriously. In August, Kroger sent a letter to its nonperishables suppliers announcing a new-item and data synchronization program, and setting deadlines for compliance.
Gadgets Galore
In-store technology, typically focused on the consumer, made great strides in 2004. Retailers tested or deployed such gadgets as shopping cart screens, handhelds for shoppers, kiosks, digital signs and biometrics.
Probably the biggest splash with in-store technology was made by Food Lion at its five new Bloom stores in the Charlotte, N.C., area, the first opening on May 26. Emphasizing convenience, the technology features such tools as the Personal Scanner, a handheld device that shoppers can use to scan products as they shop, keeping a running tally of their purchases, thereby expediting checkout.
Also at Bloom, shoppers can locate a product using one of the customer touchscreen information stations. The stores also feature an information-packed touchscreen kiosk for wine shoppers, as well as a kiosk that generates recipes for meats. "No U.S. supermarket has this combination of technology all together," said Susie McIntosh-Hinson, Bloom's concept creator of information technology.
Another chain offering consumers a self-scanning tool to use while shopping is Albertsons. In April, the retailer announced that it has completed the rollout of a portable self-checkout system to its 103 stores in the Dallas market, the first major implementation of this application in the United States.
Stop & Shop, Quincy, Mass., attracted considerable interest with the first pilot of a shopping cart device, dubbed "The Shopping Buddy." The device, a touchscreen tablet that snaps into the front of a cart, provides store maps, targeted discounts, shopping lists and other information; it also includes a separate handheld scanner that allows shoppers to scan items as they shop. Stop & Shop's three-store pilot of Shopping Buddy resulted in an increase in revenue over 12 months, reported Bob Anderson, director of customer relationship marketing, Stop & Shop, at the Global Electronic Marketing Conference (GEMCON) in October. The chain plans to install the system in 20 additional stores in the first quarter of 2005.
Biometrics technology that scans a shopper's fingerprint for identification and automatic payment was deployed at four stores operated by Charleston, S.C.-based Piggly Wiggly Carolina. Two-and-a-half months into the pilot, the company found that 15% of customers had enrolled, Rich Farrell, Piggly Wiggly's director of information systems, said at Food Marketing Institute's Electronic Payment Conference in October.
Another growing trend in 2004 was the use of in-store technology to communicate with shoppers at the checkout and throughout the store. Several options have emerged, including in-store television, digital image projection, electronic displays and Web-based signs.
