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[15 comments]

SCDigest: New Kroger Bar Code Scan Tunnel Could Revolutionize Retail Checkout

By SCDigest Editorial Staff
January 13, 2011

Through a special arrangement, presented here for discussion is a summary of a current article from Supply Chain Digest.

Since May of 2010, Kroger has been testing a revolutionary new approach to point of sale and retail checkout that involves high-speed imaging of bar codes or other identifiers to reduce its own labor costs and speed shoppers through the checkout process. The technology, Advantage Checkout, developed with Fujitsu, was on display at the NRF conference.

The heart of the system is a "scan tunnel" similar in a sense to tunnels some airlines have tried to deploy to manage the tricky job of scanning baggage bar codes that are oriented in every possible angle. A battery of imaging scanners on all sides not only read bar codes, but use optical character recognition (OCR) technology to read letters and numbers and potentially to capture a picture of the product as it goes through the tunnel.

As an example of how the system can work, if there is a bad bar code on an item, the imager using its OCR capability may still be able to identify the product based on the printed UPC number below the actual bar code. A display at the end of tunnel tells a store operator when a product was "seen" but not identified, where quick manual handling of the item would take place.  After a shopper's items have all been placed on the cart, a red bar similar to the separators commonly used today to indicate when one order ends and the next begins is placed on the belt. When the scan tunnel sees that, it notes the order is complete and the POS systems produces a total bill ready for payment.

Current read rates in the pilot program are 98.5 percent or more.

Kroger said the system can reduce store labor by further empowering customer self-checkout. Current self-checkout systems in grocery stores are generally used by shoppers with a relatively small number of items but Advantage Checkout is designed to be used for large or small volumes of items in a shopping cart.

The high speed of the system -- the belt inside the tunnel is moving at rapid pace -- means the system can dramatically improve the processing time for a given customer through checkout. Customers or a store associate can rapidly place products on the belt and off they go through the tunnel as the cart continues to be unloaded. It is clearly capable of processing many dozen of items in a short period of time.

"The key is reducing the number of product touches," Kroger CIO Chris Hjelm told SCDigest. "How can we eliminate billions of touches a year by both our customers and our associates? That was a key design goal."

Now, Kroger has to decide if, how and when it will actually roll the Advantage Checkout system out to its own stores -- and potentially make the technology available to other retailers. Kroger holds a number of patents related to the system. The design also assumes that item-level RFID won't be coming to the the grocery industry any time soon.

Discussion Questions: What's your take on this Kroger Advantage Checkout system? Do you think it can be successful in mass deployment? Should or will Kroger make it available to others any time soon?

FINANCIALS:     [NYSE:KR]

Discussion Questions:

What's your take on this Kroger Advantage Checkout system? Do you think it can be successful in mass deployment? Should or will Kroger make it available to others any time soon?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that checkouts in the near future will somewhat resemble Kroger's Advantage Checkout system?

Comments:

Let's start by assuming it works--if it doesn't work nearly perfectly, it will end up being a customer service disaster. The question would be whether the system pays for itself; do the reduced touches save sufficient labor costs to pay for the machines?

The upside is faster checkout. The downside is reduced customer contact.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

Other than the fact that it looks like a tanning bed for rodents and won't handle large items, the idea seems sound. I would love to hear the feedback of the operators/cashiers who have actually used the device on the ground.

Fabien Tiburce, CEO, Compliantia, Retail Audit & Task Management Software

Yup, that's what everyone wants in life these days, fewer "touches."

Let me ask my RW colleagues who know SO much more about retail than I do a question. When you read of these technological developments, and never mind that it might save a customer 3 seconds, what is your visceral energetic response when you look at these pictures? Do those pictures energize you and make you tingly? Or do you feel like someone kicked you in the stomach? Personally I feel the latter.

My hope is still that some retail organization somewhere will realize that their highest possibilities will not be found in extreme mechanistic developments but rather on an energetic plane. It's not machines that make the world go round, it's energy. And "touches" are nothing more than the transfer of energy.

And no I'm not smoking funny stuff.

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Ian Percy, President, The Ian Percy Corporation

Anything that actually improves self-checkout would be welcome by consumers. With the high speed of the system, I wonder if items can actually be bagged quickly enough by consumers as there are often not staffers to assist with this process. Will items just bunch up at the end of the register if consumers actually use it for large orders? In that case, it might not be a win.

Odonna Mathews, President, Odonna Mathews Consulting

Do customers checking out really want "touches" or do they just want faster checkouts? The local Home Depot has self checkout. The self checkouts are always being used, even when the clerks at the traditional checkouts are standing around with no lines. I have even seen people wait for a self checkout when they could have gone to a manned checkout.

When it comes to checkout...it is all about speed. Customer service at checkout is "how fast can you get me through?" not "isn't it a nice day today?" Even my 87-year old mother ops for the self checkout because, "Oh! It's just faster."

If I am Kroger, I roll this out as fast as possible and I certainly do not make it available to competition. They will find their own soon enough.

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Gene Detroyer, Professor, Independent

It looks a little too much like an MRI machine for me. That aside, I think the issue is whether customers would rather zip through an automated checkout, or have a pleasant, efficient checkout with a courteous associate.

In stores that are really mainly competing on price and not service, this system should work IF it gets up to a read rate of 99.9% or so. At a 98.5% read rate, someone with 30 items in their basket is going to have an issue more often than every third trip.

Would you rather use this thing or check out in a Publix, where there are typically no lines and no self check outs? Oh, and the associates are friendly and fast.

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Al McClain, CEO, Founder, RetailWire.com

I have become pretty accepting of the self checkout lanes in my store. The whole reason for the "tunnel" format is to make it clear that items have been properly presented to the POS system. If a customer walks past the tunnel with a product in their hand it is pretty obvious and new video technology is becoming able to detect these maneuvers. It seems the barcode read accuracies I recall reading are approaching the 99% level without additional input. The time consuming part of self checkout is still bagging and tendering. I don't see anything here that addresses either of those. There is no mention of cost, so I don't know how it compares to plain scanners.

Sure looks like a solution looking for a problem to me.

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Bill Bittner, Principal, BWH Consulting

In answer to Ian's question, the picture totally creeps me out.

Just what we need - another device that scans our bodies while it scans our groceries.

I'm so old-fashioned, I would cheer for a system that allowed the checkout clerks to put product on a belt, self-scanned it inside a smaller tunnel (for product only), and then had someone bagging it up for me on the way out. Of course I have some friends that wouldn't even want their food subjected to whatever the tunnel would do, but I'm not that extreme.

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Paula Rosenblum, Managing Partner, RSR Research

And what happens after the scanning? It seems to me that the limiting factor in checkout (be it clerked or self-serve) is and always will be the bagging time after the goods have been checked...the actual scanning is the easy part.

'notcom'

This looks like trying to solve an old problem without changing the paradigm. Fact is, not all consumers are using or accepting self scanning. Ahold is expanding the use of the wand. The real change is coming from the cell phone. If anyone has not visited an Apple store, this is the future to look at. This new checkout is too little too late and likely costs too much.

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W. Frank Dell II, CMC, President, Dellmart & Company

My question is: what of the bulk produce items? Every time I check out, the CSR has to weigh or key-in a product code to facilitate the charge. Will this technology bring about "laser etching" on the perishables we buy? I do agree with the delay in bagging and transaction though. The best tech would be RFID, where the consumer could bag their purchases while waiting for the person in front of them, then run the whole load through a "tunnel/scanner". If that were coupled with smart-phone touch to pay then the whole system would shave copious amounts of time.

'DisplayDetective'

In looking at these comments, I will just say that the negative ones seem to assume Kroger hasn't thought about any of the issues.

I think there are a few, but it is telling that Kroger decided to release this, if you will, after a seven month live store test of two units. Something tells me that test is looking pretty good, or else we would not have seen the NRF display, accompanied by two very senior execs.

Self-checkout right now seems largely a success, for a few items. Lines at Kroger at peak times are long and slow. Low value-added labor is on its way out of everything. RFID is way to expensive, maybe for decades.

Put this all together, and I would not be so quick to be a naysayer - even if it is personally an unappealing approach to some. It's just a faster self-checkout, without the ridiculous and often erroneous battle with the system as to whether you actually put the scanned item in the bag.

Dan Gilmore, President and Editor in Chief, SupplyChainDigest

This solution needs to be simpler than having the consumer's scan the product themselves. I am skeptical that it is. For that reason, and no other, Kroger should be very cautious. This solution needs to be so easy that it invites consumers to want to come to the store, rather than pushing them away. This is another issue that Kroger needs to be very sensitive with.

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Kai Clarke, CEO, American Retail Consultants

The device is interesting, but several variables should be considered here.

The capital investment per store and the average store FTE savings would need to be weighed against net change in customer satisfaction and store preference in terms of exclusive users, shared users, and non-loyals with no defining preference.

I also would want the value of the new scanner determined in the context of potential savings and opportunity costs. The grocery experience and increasingly big-box shopping experience is self-service to the virtual (no pun intended) exclusion of store associates to guide and clarify.

Still, a warm body will not be enough. Product knowledge, cues to the needs/interests of customer segments and means to identify them, communication skills and a support team to ensure fulfillment are required for routine success in service delivery. Even so, I would like to know the difference at the bottom line over time. Technology, patents notwithstanding, is NOT a defense against competitors. It will be copied.

Decisions like these deserve a deeper look not just to what could be saved, but what could be earned that is now left on the table. Put another way, here's what I think in the words of the customer:

Dear Ms. Kroger;

Saw your new check out tunnel today. Interesting.

Since I do some of the cooking and most of the grocery shopping for our little family of five, I do have a few thoughts on what you are testing.

What will happen to the check out person? Will the tunnel greet me by name and try to guess what I am making that night?

What happens if I want to pay cash or have coupons, food stamps etc.?

I guess the main idea is speed of check out. For some reason, people hate to stand in line at the grocery store. I use the time to read all the tabloids. Great factual stuff. We have lots of senior citizens in my neighborhood. I hope the thing isn't so fast that they develop check out stress syndrome; you know, not being able to keep up with the conveyor belt.

Speed is great but what about accuracy? How sure are we that prices will be read accurately, items will not be missed, and most importantly, that bar codes will all be accurate and sale items will be priced correctly? Right now, I can watch the computer when Becky runs an item through to make sure the sale price is there.

What about produce and anything that needs to be weighed? Does the tunnel do that? By the way, with all the airport hoo-hah, is any radiation in that thing? I don't want my grapes glowing in the dark.

Who bags the groceries? I don't have the faintest idea where to put the melon and the potato chips.

Finally, if there are fewer service people at the store, do I get lower prices on groceries? If have to do all the work, I should get something.

Just my thoughts.

Sincerely,

Mr. Grocery Shopper

Roy Bergold, Managing Director, Dorsey & Company

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