HY-VEE SHOPPING CARTS GOING WIRELESS

DAN ALAIMO

WEST DES MOINES, Iowa -- Hy-Vee here said it will install a wireless in-store network this summer that will allow customers to view information and promotional offers on specially equipped shopping carts.

The move could line the 213-store retailer up for advanced wireless applications in the future.

The agreement with Klever Marketing, Salt Lake City, calls for the installation of the Klever-Kart system in 20 stores in the Kansas City area, to be followed by a chainwide rollout.

"I think that we have just touched the tip of the iceberg with things like wireless registers that can be moved and used any place, any time," said Mike Tetmeyer, vice president of marketing for Hy-Vee.

"Communications such as what Klever-Kart is trying will be a standard part of our business within the next three to five years. This whole product class is just expanding and exploding, and I'm not sure that any of us know what all the final uses will be," Tetmeyer added.

Initially, the information conveyed by the device is expected to include store-specific product location assistance, promotions, news, weather and meal planning complete with nutritional information.

Future plans are for paperless electronic coupons and personalized specials. Longer term, the technology could lend itself to carts with on-board scanners that might enable customers to bypass the checkstands, Tetmeyer said.

"That is going to impact the stores tremendously and give us a lot more communication where we will actually get real-time movement of items that people are picking up," he said. "I'm not sure where everything is going to go, but I feel comfortable that wireless technology is going to blossom within the next five years."

For now, Hy-Vee is looking at the Klever-Kart technology as an enhancement to its customers' experience.

For example, the store directory will enable people to find items quickly, not only by aisle, but by the location within the aisle, said Nancy Pagel, marketing coordinator for Hy-Vee in the Kansas City area.

"As they go down the aisle, promotional items will trigger a little chime to alert customers to the sale," she said. The sound can be heard only within about four feet. The device also will convey information, for example, comparisons between private-label and national brands.

"It gives the customers a lot of information to help them make their choices and it will save them a lot of time. We try to make shopping as easy and as streamlined as possible, especially for people who are on very tight schedules," Pagel said.

Revenues from advertising will be shared between Klever Marketing and the retailer, according to the company's Web site. The devices and installation are provided by Klever, which also is responsible for maintenance.

The Klever-Kart LCD screen is small enough so as not to obstruct the child seat in the cart, and sturdy enough to withstand temperatures of 212 degrees or minus 30 degrees, said Corey Hamilton, president and chief executive officer, Klever Marketing.

They are also waterproof. About half of the carts for a given store are installed with the device, which is enough to reach about 75% of the customers, he said.

"Our device influences what people purchase in the store where they make their purchase decisions. It's a much more micro-targeted advertising medium than anything ever developed before," Hamilton said, citing a Food Marketing Institute statistic that 70% of purchase decisions are made in the store.

In a 60-day test conducted last fall with Ralphs Grocery Co., Compton, Calif., the average brand promoted with the system without a price offer discount caused a 35% sales increase, he noted. Hamilton hopes to place the system in 10,000 supermarkets worldwide within five years -- 5,900 in the United States.

The primary component of the system is the LCD display unit, which have radios in them that exchange signals with trigger units mounted on the shelving, Hamilton said. An analog or DSL phone line connects a back-room host computer to the system at Klever's headquarters in Salt Lake City.

Moreover, there is a cable link from the back-room computer to radio frequency transceivers in the ceiling, which also sends signals to the LCD units.

In the early '90s, there was a well-known attempt at the same type of advertising medium called VideOcart, started by Information Resources, Chicago, and later spun off.

However, by 1994, VideOcart was out of business and Klever now owns its remaining assets and intellectual property, Hamilton said.

The two biggest problems of VideOcart have been addressed by Klever-Kart, he said.

One is the size and life of the batteries. VideOcart's batteries were very large and held a charge for only about 10 hours.

Klever-Kart's are much smaller and last 33 days, although they are scheduled for recharging when the advertising is changed every 28 days.

Another issue was the size of the display unit, which made it difficult, if not impossible, to fit a child in the cart.

The VideOcart equipment was much more expensive. "We are paying one-fifth of what they did. Our system works 100 times faster and it has many more capabilities," Hamilton said.

"They (VideOcart) spent a lot of time making the 'show' really great, but they didn't spend any time getting consumers really involved in it," said Carlene Thissen, president, Retail Systems Consulting, Naples, Fla. "They just figured that the thing was so good that everybody was going to love it."

VideOcart was effective, she noted. "They averaged 79% sales gain for a test brand when they did an electronic coupon." But the display was somewhat annoying, "more in-your-face. There was the audio and the video and it was more of a distraction. But people don't want to be distracted when they shop, they want to be helped," Thissen said.

Thissen thinks Klever-Kart has corrected enough of its predecessor's problems to stand a good chance of succeeding.

"The main difference with Klever-Kart is it is a lower-tech version of VideOcart that has to make cost effective to implement," she added.

Meanwhile, store systems are more advanced than they were in the day of VideOcart, which was somewhat ahead of its time.

"The point-of-sale systems are becoming a lot more open and they are starting to tie fairly neatly into technology at the shelves, including wireless technology," she said.

"The big picture on the concept is you can reach people in the aisle exactly when they are making their decisions, and I don't think it gets any better than that," Thissen said.

Not everyone shares Thissen's opinion about Klever-Kart's prospects.

A source at Information Resources, who was close to the VideOcart project and asked to not be identified, said there remain many questions about the concept's viability.

"There are a couple of technological issues with the shopping cart that are seemingly impossible to overcome," the source said.

One is recharging the battery, which no matter how long between charges still requires time on the part of a service person, paid by Klever.

Also, the source questioned whether the display would hold up to the hostile environment presented by most supermarket parking lots and the cleaning of the carts by "fire hoses."

Customer demand for the benefits provided by the system is another question.

"When we first put the prototype devices in the stores, there was an immediate upsurge in sales of products that were advertised on it. But over time, the shopper usage of the VideOcart declined, as did the impact of the advertising," the source said.

The product locator was nothing more than a novelty feature, according to the source. "It was something that people used the first time or two that they came into the store, but the vast majority of the people doing active shopping -- and certainly your power shoppers -- know where things are in the store," the source said.

"The big problem with technology like this is it is competing with a piece of cardboard on the front of the cart and you really can't beat that price model. When you deconstruct the entire experience, I don't think it was a good idea," the source said.