Monday, May 7, 2007

Self-Service is Good Service

TECHNOLOGY: Groundbreakers
These grocers are among the ones that just get it -- and they're helping pull the industry into retail technology's new age.

The past 12 months saw early adopters bringing entire new classes of technology to bear on food retailing, by making real headway with initiatives such as tying loyalty programs to a consumer's fingerprint, effective marketing to mobile phones, and offering contactless card payment to shoppers on the run.

These pioneering grocers have moved the industry a step closer to the ideal of a fully tech-enabled market, equipped with accurate knowledge of what consumers want, and the ability to efficiently deliver it to them.

Here they are:

Loyalty with a finger

One of grocers' biggest gripes about loyalty programs is that the data most programs generate isn't very reliable or actionable. Shoppers forget to bring their cards for every trip, and/or borrow someone else's, and the integrity of the data is then compromised

Pretty soon all the intelligence that an expensive loyalty program has gathered is useless. This leads grocers to misapply the programs.

"Quite frankly, we've been hard-pressed to find retailers that are doing the customer loyalty program with specific customer successes," says Greg Buzek, president of Franklin, Tenn.-based retail technology consulting firm IHL Consulting. "Most retailers use the loyalty card as a discount card only to identify certain brands, rather than to target specific individuals. Instead of targeting specific offers to specific customers, the system is set up to target certain products to the masses, at a discount."

But now some retailers can take technology that has been relied on for years to identify crooks, and tie that to their loyalty systems so that they can reliably link a transaction to one person -- and one person alone.

In January Green Hills, an independent one-store operator based near Syracuse, N.Y., launched its Pay By Touch SmartShop service, in which biometric technologies teamed with Green Hills' marketing services to provide a loyalty program that's directly linked to individual customers. SmartShop gives shoppers customized offers on the products they buy most when they enter the store -- before they shop.

"The SmartShop service has been extremely popular, and shopper participation is already impacting 50 percent of store revenue," says Gary Hawkins, c.e.o., Hawkins Strategic and proprietor of Green Hills. "We have seen offer redemption rates exceeding 20 percent, and SmartShop is driving a significant increase in revenue."

A new self-awareness

Wegmans' decision last month to close its 20-year-old in-store video rental departments to make way for Redbox video kiosks shows just how far self-service technology has come. Letting shoppers serve themselves is now being recognized by some operators as a new form of valuable service. They've come to realize that self-service systems, including self-checkout units, kiosks for dispensing information and taking orders, and DVD vending machines, can complement even the most service-oriented operation.

The technology may not be new, but the way some retailers view it today certainly is.

Newport Avenue Market, an upscale supermarket in Bend, Ore., is well known for delivering excellent customer service. As such, owner Rudy Dory only reluctantly considered installing a self-checkout system. He ultimately decided it was a competitive necessity, since most of the retailers in his trade area already had such systems.

Still, Dory feared he might be going against his store's roots, and that shoppers might agree. "I thought my shoppers would view it as a reduction in service levels," he recalls.

Sometimes, guessing wrong isn't a bad thing. After Dory installed the Fujitsu U-Scan self-checkout system, he saw customer acceptance and usage take off immediately. Most shoppers were happy to choose self-checkout for a five- to 10-item basket.

"We saw about 20 percent of our total transactions through self-checkout during the first month, and it quickly escalated to 35 percent by the second month," says Dory. "And we've continued to average right around 35 percent since then."

"Self-service is good customer service," agrees Ray Carlin, c.e.o. of StoreNext, which markets the self-checkout system Dory installed, as part of a suite of solutions aimed at independent grocers.

According to IHL, stores with self-checkout systems see from 25 percent to 40 percent of transactions, and 15 percent to 25 percent of the total dollar volume gravitates to those systems. In a recent IHL Consulting Group/RIS News survey of retailers, The Consumer-driven Store, 60 percent of respondents said they were planning to purchase self-checkout systems by this June.

Self-checkout is sharing the DIY revolution with information kiosks, as consumers seek to learn more about their purchases. Originally designed to deliver health and drug information -- as with the now widespread Healthnotes kiosks often tied to in-store pharmacies -- these freestanding units are popping up elsewhere in the store, serving as founts of information about products in almost every department.

Supervalu's Farm Fresh Stores division, for example, employs information kiosks in the produce departments to make nutritional data and recipe suggestions for fruits and vegetables easily available.