Retailers Tap Into Biometrics

Some executives say that payment technology, known as biometrics, will start to become more commonplace in the retail industry this year.


At a seminar held Wednesday at the National Retail Federation's annual convention, Green Hills Supermarket CEO Gary Hawkins and his son, Sterling Hawkins, vice president of retail industry consulting firm Hawkins Strategic, discussed how biometrics can help personalized marketing.

Do you clip coupons? If so, you're in the minority. Fewer than 1% of coupons ever get redeemed, according to coupon-processing firm CMS. With this unique new personaized marketing program, a supermarket customer logs online, browses special offers created specifically for them based on past purchases, creates a shopping list and then goes to the supermarket where he or she can print out the list. Once the consumer is finished shopping, they can pay via a machine that reads their fingerprint and accesses their stored information, eliminating the need for a credit card or cash.

"It's personalizing shopping," said Sterling Hawkins. "Think of it like a customized ad flier." Instead of sending out 100,000 "generic" fliers and getting less than 1% return, we provide the customer with targeted offers. It will save hundreds of thousands, if not millions, in marketing expenditures.

The system offers advantages over loyalty cards, which are often misused, says Gary Hawkins, including cashiers using their own loyalty cards for shoppers or people swapping cards.

Since the father-and-son team launched the program at Syracuse, N.Y.-based Green Hills in May 2006, 50 percent of sales and transactions are done biometrically, Gary Hawkins said. The program gets 100 new enrollees every week, and customers who enroll typically spend 6 percent more and shop 10 percent more.

While the program exists on a small scale at the supermarket, it can be applied to larger retailers, Gary Hawkins said. He predicts an explosion in using the technology in 2007.

"Personalized marketing is moving into retail," he said. Click Here To Read an Individualized Marketing Whitepaper. (PDF File)

Backgrounder

Green Hills was one of the first supermarkets to deploy loyalty cards, having done so in 1993. It was named "The Best Little Grocery Store in America" by Inc. Magazine.

Green Hills CEO Gary Hawkins achieved significant gains in margin and customer retention with the loyalty program by collecting and analyzing data and using it to personalize the store’s marketing. As a result, he began consulting and advising other retailers (and other industry executives) on how to accomplish this.

Accordingly, Hawkins started a consulting company called Hawkins Strategic, through which he consults for retailers and manufacturers, including global consumer goods manufacturers. Hawkins often uses the Green Hills supermarket as a laboratory, where he experiments with new marketing strategies.

“Two years ago, Pay By Touch contacted me to see if I was interested in pursuing using biometrics to enhance the loyalty program at Green Hills,” says Hawkins. “After significant research, we decided to deploy a payment and loyalty program, called SmartShop, powered by Pay By Touch, at our store. SmartShop is accessed by customers using their fingers, so the loyalty program is distinguishable by individual and by household, and discounts are provided that way as well.”

“Existing customers who choose to continue participation in Green Hills’ loyalty program enroll in the SmartShop program by creating a new identification code through Pay By Touch,” says Hawkins. “Customers can enroll in just the loyalty program or the loyalty program combined with an automated wallet of payment methods. The system accepts any payment method customers choose — any type and any number of credit cards or ACH [automatic clearing house] transactions.” Customers can enroll while visiting the store or the store Web site, in which case the customers’ finger images are linked to their account information during their next visit to the store.

Finger Provides Access To Coupons, Rewards, Payment Methods

When using SmartShop, customers receive store offers through a store kiosk (by placing fingers on a sensor to access their personalized accounts), e-mail, or a pre-established, personalized Web page. The account also provides access to an online grocery list, the weekly store advertisement, and personalized advertisements.

Household members can create grocery lists through the store’s Web site that can be accessed later and printed in the store by another member of the household to complete the necessary shopping. Upon checkout, the shopper places a finger over the sensor to redeem personal and public sales discounts.

Payment options also are accessed in this manner, as are store rewards, such as free merchandise, and other store promotions. Historical purchase information is made available to the Pay By Touch system.

A library of possible personalized offers (currently 150 offers per week) is available. These are compared to each shopper’s purchase history, and 20 personalized offers are presented to each customer each week. This number may increase; it was selected initially because it fit nicely on an 8½-by-11-inch piece of paper.