FRESH ENCOUNTER TAKES BEELINE FOR HOME SCANNING

DAN ALAIMO

FINDLAY, Ohio -- Fresh Encounter here this month rolled out the BeeLine Shopper home-scanning program to seven of its Fulmer Supermarkets in the Dayton-Springfield, Ohio, area.

The program enables customers to scan empty product containers and coupons at home, and generate shopping lists sorted by store aisle. It also makes health-related recommendations on food purchases, and electronically generates coupon savings. While Fresh Encounter's program will be focused on building loyalty and is based on paper lists printed at home, the BeeLine system has the potential to interact with on-line shopping programs. BeeLIne is based in Troy, Ohio.

"BeeLine gives our customers another way to find out what is going on in their stores," said Eric Anderson, vice president of merchandising and marketing at Fresh Encounter, which operates 28 stores under eight banners throughout Ohio.

"It tells customers how they can shop smarter, faster and healthier. For us, it is just a natural tie-in to our strategy as being the local community market in the towns we serve," he said.

The retailer decided to roll out the program to the Fulmer stores after a test with employees earlier this year, said Jason Bock, Fresh Encounter director of advertising. The Fulmer stores were chosen for their proximity to headquarters, and because of the number of customers with computers and Internet access, he said.

The retailer will consider extending the program to other stores, but probably not its more rural, low-income locations, Bock said. "We have a lot of stores where the mix is right and BeeLine will work," he said.

"As a smaller company, we are still trying to determine what our Internet involvement should be," he said. "This is an excellent opportunity for us to look at it from a different angle than some other retailers. In the long run, home scanning or some technology derivative of it will become more commonplace and people will become used to it." On-line shopping is something the retailer may consider in the future, he added.

"We are getting in on the very early stages of what may be the next phase of people buying food. I like the system personally because it adds a lot of value, and because it works in partnership with our stores," he said.

The program is being promoted heavily in the retailer's circular, with local and cable television advertising, with bag stuffers and employee contests to get people signed up. A public-relations campaign resulted in interest from local newspapers and other media, he said. Demonstration tables are set up in stores to show customers how the new concept works.

Customers are charged a $29 deposit and a $25 annual subscription fee, which can be offset with special coupons offered through the program. "If someone really uses the system, it won't cost them anything at all," Bock said. A source close to the project expects these fees to decline as economies of scale take hold.

Customers are given communications software to connect to the scanner and, in the future, those disks will include Internet service software for those not yet connected, said the source. That software gathers the information from the scanner when it is put in a connected cradle, and then pushes it to a Web site, which responds with the customer's shopping list.

"We are probably going to tinker with the program and determine what kind of offers have the most appeal to people. We are going to experiment with some significant coupon offers to see if we can entice people to shop in certain departments, or for certain products, and build sales," Bock said.

BeeLine and the retailer have modest sign-up goals at the outset of the program. "It's a new concept, so we are looking for 50 customers a store by the end of the first month, and we are on target to do that. As we grow and word of mouth spreads, we expect to have several hundred customers per store," the source said.

Customer response has been good, but quizzical, Bock said. "People are not sure what this is going to do for them. We have to convince some to be early adopters so we can get some good positive customer feedback off the system in our stores. It has generated a lot of interest and excitement, and we are getting a lot of very positive media coverage."

A major focus of the BeeLine system is contributing to consumers' desire to eat healthier foods. According to a study by the American Dietetic Association, 68% of Americans look at labels because they are trying to eat healthier, 41% understand why eating better is important and look for healthier foods, but 92% said it is time-consuming and difficult to find those products. A Food Marketing Institute study found 66% of shoppers wanted their grocer to help them find healthier choices, but only 40% felt their grocer succeeded.

The BeeLine program attempts to raise that success rate. For example, if consumers tell the program that they have a special diet concern, such as eating less salt, BeeLine will make alternate recommendations based on data from old product containers that are scanned into the system. The program also converts private-label product information to those items sold by the host retailer, said the source. "The core marketplace for this system is families with kids and families with nutritional concerns," he said.

"People are very confused about where to turn for health information," Bock noted. "So we are giving them a very easy, very realistic way of receiving that information. When they are actually making their food-buying decisions, we are going to give them some health information and help them in making decisions that are important to them."

A side benefit to the retailer of this increase in nutritional consciousness is that healthier foods frequently command higher margins, he noted. "We hope that it will broaden shoppers' concepts about what they buy. Some people are very squeamish about trying new products and this is another way that we can give them an incentive to try one," he said.

BeeLine also interacts with the Catalina Internet coupon site, ValuPage, as well as a list of the retailer's specials, and suggests discounts to consumers. As a result, they do not have to search out special deals.

The BeeLine system also sets Fresh Encounter apart from the competition. "We like to think that once people get used to the system and they see its value, that it is going to be a selling point for us," Bock said. "Undoubtedly, we need to teach some people about how neat it is. But in the long run, this is an idea that has some real merit because it is going to save some time for people and possibly save them a lot of hassle. It also is going to help them with health while saving them money, which everybody is interested in," he said.

"It's unique to our store," Anderson noted. "The grocery list that is printed out, the products that are included in the program, they are all ours. They were purchased at our store, and it drives people only to our store."