Ahold USA’s Mobile Shopping System Takes Off

QUINCY, Mass. — For sheer determination alone, Ahold USA deserves a lot of credit.

While numerous other food retailers, from Food Lion to Giant Eagle, were testing and discarding handheld devices that let shoppers scan and bag their groceries throughout the store, Ahold USA’s Stop & Shop/Giant-Landover division kept plugging away with a similar technology.

Starting in 2003 with a touchscreen shopping-cart tablet (and detachable scanner) called the Shopping Buddy, which was tested in about two dozen stores, Stop & Shop switched to a handheld terminal called Easy Shop in 2007. Easy Shop,  renamed Scan It!, was rolled out to 145 Stop & Shop and Giant-Landover stores by the end of 2008, 250 stores by the end of 2009, and today is available in 351 stores,  including 270 Stop & Shop and 81 Giant-Landover outlets.

Unlike the other chains that have dabbled with handheld scanning technology for consumers, Ahold USA, in collaboration with software provider Modiv Media (acquired last week by Catalina Marketing), made the crucial decision from the very beginning to include targeted offers with the scanning functionality. Loyalty-card shoppers using the mobile device can not only scan items and track their spending in real time, saving time at the checkout, but also scroll through discounts tailored to their particular shopping history, their location in the store and their product selections. (At the checkout, they may be spot-audited for scanning accuracy.)

Ahold USA’s experience with in-store shopping devices put it in a good position to unleash its most audacious move — making the Scan It! handheld’s scanning and marketing functionality available on a smartphone app for iPhones and Android devices. Starting with three pilot stores last summer, Ahold USA has rolled out the Scan It! app to 110 Stop & Shop stores in its New England division (Massachusetts, Rhode Island and Connecticut) that already have the handheld version, with plans to extend it to all 351 handheld-enabled stores by the end of the summer.  The app rollout prompted Fast Company magazine to name Stop & Shop one of the most innovative companies in the food industry.

Ahold USA’s goal now is to expand the app rollout to the rest of its 756 stores (which lack the handhelds), not just the remaining 222 Stop & Shop and Giant-Landover outlets, but the 183 units operated by the Giant-Carlisle division, based in Carlisle, Pa., said Erik Keptner (pictured), senior vice president, marketing and consumer insight, for Ahold USA. The number of handheld scanners to be deployed in those stores is still under discussion.

Sunshine Foods, Affiliated Foods Midwest Merge IT Talents

In addition to the Scan It! app, Ahold USA has separately developed a mobile app that tracks gas points, offers downloadable-to-card coupons, among other features. But mobile is not the only digital play for Ahold USA; the company also has a robust ecommerce platform in the form of its Peapod division, and recently made its store magazine available on the iPad. “We have the desire to be the leading digital grocer in the U.S.,” said Keptner.        

For its steadfast and pioneering efforts in the digital arena, Ahold USA has been chosen to receive SN’s 2012 Technology Excellence Award.

'Changing the Consumer Landscape'

Ahold USA’s mobile venture comes from the belief that mobile technology is “changing the consumer landscape” and having a profound impact on “the way people shop and digest information,” said Keptner. “We think this is the way consumers will shop in the future so we’re giving them another choice in how they engage with us and shop with us.”

Retailers “need to provide the consumer with their preferred method of doing business,” said Thomas D. Murphy, a principal at Atlanta-based North Highland, and a former IT executive with Kroger, who facilitated a discussion on “the Checkout Continuum” at the Food Marketing Institute’s 2012 Show last week in Dallas. “Whether it is self-checkout, mobile checkout, social media, digital wallets, in-aisle marketing, or something else, it is about flexibility for the customer to design and manage their own experience.”

So far, about 7% of shoppers have used the Scan It! mobile handheld device for about one million transactions per month to generate about 10% of sales; the Scan It! app is adding to those numbers. While small, this shopper segment has proved to be more loyal to Stop & Shop and Giant-Landover stores, consolidating their food purchases there and therefore increasing their basket size, Keptner said. Ahold USA does not attribute significant cost savings to shifting the scanning function from cashiers to shoppers.

To increase usage of the app, Ahold USA plans to “drive awareness and trial,” Keptner said, noting the difficulty in getting shoppers to “change longstanding shopping habits.” Stores provide demonstrations on how to use the app and offer incentives such as extra gas points for trying it. Allowing shoppers to use their own phone — a tool they are intimately familiar with — should also increase usage, he said. Ahold USA is also working on ways to simplify the creation of bar codes at produce scales, one of the biggest challenges of the Scan It! system, according to customer feedback.

Targeted ads are a key driver of interest in Scan It!; with the app, shoppers can even check targeted offers on their phone at home. To improve the effectiveness of Scan It! ads as well as those delivered via email and regular mail, Ahold USA is employing NCR’s Advanced Marketing Solution, a system the company selected in January to manage its loyalty and promotion programs in the Stop & Shop/Giant-Landover division. (It was already used by Giant-Carlisle.)

Another advantage of Scan It! is that shoppers who place deli orders via the Order It! kiosk in about 500 Stop & Shop/Giant-Landover stores receive notices on their handheld or mobile device when those orders are ready.

Future Challenges

Ahold USA’s in-house technology prowess derives from its Information Management (IM) group, originally based in Greenville, S.C., but now spread across Greenville, Quincy, Mass., (home to Stop & Shop) and Carlisle, Pa. The IM group helped Ahold USA deal with perhaps the biggest internal challenge in implementing Scan It! — integrating it with the store POS systems.

More challenges lie ahead. For one thing, Ahold USA plans to merge the Scan It! app with its own store app and intends to add more features to the combined app. This summer, the company expects to incorporate a Modiv Media-developed feature that would allow shoppers to “like” designated coupons on Facebook and share them there with friends who also use the app. Ahold USA is looking at other new Modiv features, such as list building (under development) and a coupon wallet (now available) that can tap coupons from any digital source.

Ahold USA is also very interested in enabling shoppers to pay on their phone, possibly with a feature Modiv is developing. “We do see payment as a key component of the mobile experience,” said Keptner. “Being able to build a list, shop and pay [on the phone] — that’s nirvana for us.”

As for the cost of the technology, Modiv charges $3,000 to $7,000 per store for setting up the mobile app. The handheld system runs $60,000 to $80,000 per store, plus integration costs. Modiv declined to provide the ongoing license/maintenance costs. The system leverages the existing store Wi-Fi system to communicate with shoppers.

Meanwhile, Ahold USA is engaged in other digital projects. Within the last month, the company released the iPad app that supports its Healthy Ideas store magazine and features cooking videos. In February, its Peapod online shopping subsidiary launched a smartphone application in the Philadelphia market that allows shoppers to scan QR codes containing product information on train-station billboards, thereby populating an online order for Peapod by Giant; this can be supplemented with selections from thousands of additional products on the Peapod app.