MARKETING ONE-ON-ONE

MAUREEN TONN

In-store technology capable of accessing information from customer-loyalty databases and inventory systems, and using that information for multiple marketing applications, has the potential to significantly raise a retailer's customer-service quotient.

Emerging technology could be used to flash personalized greetings, remind customers it's time to restock on a certain item, or to modify item pricing based on the time of day or the amount of product in stock.

Electronic shelf labels and kiosks are the technology best suited to deliver the type of instantaneous, one-to-one marketing that can generate excitement at retail, industry experts told SN.

Indeed, wider acceptance of kiosks by retailers may depend on the technology's ability to perform numerous functions for shoppers, such as providing frequent-shopper program point totals, recipes and store maps, and distributing coupons.

"Kiosks are starting to be used a little bit more, but you're not going to get full value until you can run different applications off one box, till they're integrated, and till they can be interactive with the point of sale," said consultant Ken Fobes, chairman of Strategy Partners Group, Ponte Vedra Beach, Fla.

Electronic kiosks' ability to, for example, access frequent-shopper databases in order to provide customer-specific discounts may provide motivation for more consumers to use them. This, in turn, would motivate more retailers to give them scarce floor space.

"When somebody goes to the supermarket, the only thought on his or her mind is getting out," said Tom Agan, principal in Kurt Salmon Associates, Atlanta. "A kiosk has to provide a lot of value for a consumer to stop, more so than would another medium in another environment. People's time is so precious."

Shoppers receive just such value at coin-counting kiosks that also dispense coupons, at stores in the Columbus, Ohio, Kroger Marketing Area of Kroger Co., Cincinnati. Customers who bring in $10 or more in coins to the self-service kiosks are eligible to receive coupons for a wide variety of products.

"That's a real, practical benefit," Agan said.

Retailers have also used ESLs solely for their most basic function -- to guarantee pricing integrity between the shelf and the front end. The tags are typically fed from the same price file used to populate the store's point-of-sale system.

Additional ESL applications include better order management, out-of-stock alerts and planograms, but the technology's untapped strength lies in the tags' ability to display rapidly updated pricing information at the touch of a button.

Retailers could use this ability to run "blue light specials" during certain times of the day, drawing shoppers' attention to lower prices available for a short amount of time, said consultant Don Vehlhaber, president of LogisTech Associates, Atlanta.

In addition, ESLs can even out retail traffic flow by lowering prices at off-peak times to draw in customers. They can also react to the inventory on the shelf and in the system. If, for example, it's 10 a.m. on a Saturday morning and the store is out of a certain item that cannot quickly be replenished, the system can raise the price on that item and lower the price on another to keep the customer satisfied.

"This technology is available but is not being used yet," said Milton Merl, president of the consulting firm Milton Merl & Associates, New York, adding that "ESLs are arguably a huge opportunity."

Harvey's Supermarkets, Nashville, Ga., is having preliminary discussions to explore more of ESLs' promotional powers. The 44-store retailer installed between 16,000 and 18,000 labels in one store over the summer.

"Obviously, pricing integrity for our customers is the biggest benefit," of ESLs, said Benny Ensley, director of accounting and data operations at Harvey's. "But we know that the system can display messages, and we're exploring plans to expand on our use of the system."

ESLs can also display promotional information above and beyond the current price. Stores that use comparative-pricing strategies can display multiple prices along with the message "You save 20 cents," for example. Tiered pricing can also be highlighted in this way, said Terry Morgan, senior practitioner at Deloitte & Touche, New York. Flashing lights on or next to the tags can draw extra attention to sale items.

Through the use of radio frequency chips in frequent-shopper cards, stores one day may be able to craft very individualized promotions. As a shopper passes through the aisles, the card will activate different messages on different ESLs, bringing discount information down to the shelf level, Merl said.

Currently, however, supermarkets' implementation of ESLs has been limited by their cost. At approximately $6 to $7 a tag, retailers have mostly reserved their use for health and beauty care items and products from which consumers establish their perception of a store's value.

The Internet's growth could help kiosks' cause, consultants told SN. The in-store devices are another avenue to dispense Web-based coupons to customers who don't have access to the Net, Deloitte's Morgan said.

"Now there are more electronic ways to make yourself feel good about saving money," said Ellen Evans, director of consumer marketing services for A&P, Montvale, N.J. "Just stop at the kiosk and collect the offers."

Even with these new benefits, consumers will make the most use of kiosks that are placed in high-traffic areas. "We need to look at how they are positioned within a store," Morgan said. "Consumers' paths through the store are not as predictable as they once were."