As staffing remains lean, grocers are using advanced self-service checkouts and kiosks to augment customer service.
By Deena m. Amato-McCoy
Successful supermarkets have learned to differentiate themselves by deploying technology that offers value to customers and advances loyalty. As a result, some forward-thinking supermarkets are taking the plunge and investing in next-generation self-service solutions that provide a customized shopping experience and offer a high level of customer service, even if there are fewer employees in the store.
Since labor remains one of retailers’ top three operating expenses, many chains are focused on reducing those costs, deploying self-checkout systems and other in-store technologies to fill the gap.
“You cannot reduce labor without having a way to educate shoppers in store,” says Frank Riso, senior director of retail solutions, Motorola’s Enterprise Mobility division, based in Holtsville, N.Y. “That just kills customer service, and as a result, a brand’s reputation,” “However, those who reduced labor and supplemented the reduction with a combination of technology and remaining associates familiar with the tool fared better than those chains that just let people go.”
What was the technology of choice for these successful retailers? Self-service kiosks. Chains have been dabbling in the technology for the better part of 15 years, but between thin operating margins, and consumers’ demand for even more store-level convenience, the units are becoming much more commonplace. So much so that retailer investments in kiosks could hit $5.8 billion by 2013, according to the study, Self-Service and Customer Interaction Management Solutions, released by Natick, Mass.-based technology research firm VDC Research.
Experts say that many shoppers are taking advantage of these systems, as $775 billion in transactions pass through these units, according to IHL Consulting Group, based in Franklin, Tenn. By 2013, that number is expected to jump to $2.3 trillion.
“As the economy strengthens, retailers will continue making investments in store-level technologies,” Riso says. “As long as they can find a balance of solutions that provide the best store-level operations, self-service will continue moving forward.”
While there have been plenty of arguments—from retailers and consumers alike —that self-service technology is replacing a slashed workforce, savvy retailers are learning to use the technology to positively augment the tasks of existing associates.
“When we look at implementations we don’t consider self-service as a catalyst for labor reduction, but as a way to free up associates normally tethered to cash registers or other devices,” says John Saccomanno, industry marketing director at Atlanta-based NCR Corp. “Retailers are able to use self-service as a way to introduce new service to customers without incurring additional labor costs. The units are not forcing retailers to get rid of labor, but instead they automate processes that previously needed more labor to manage.”
Checking our self-checkout
National and regional chains alike—from Pleasanton, Calif.-based Safeway to Bowling Green, Ky.-based Houchens—are investigating self-checkout technologies, experts note.
While the regional chains still prefer the “personal touch that manned checkout experiences provide,” Jo Natale, director of media relations at Rochester, N.Y.-based Wegmans Food Markets, said in a recent Washington Post article, it hasn’t stopped chains from deploying the technology, albeit on a case-by-case basis.
What is further spurring the adoption of self-service is the innovative solutions that promise to deliver what the shopper really wants: “the need for convenience; to get in and out of the store quickly, and the option to make decisions at their own pace, anywhere in the store,” says Wayne Stellmach, manager of marketing communications, Cummins-Allison Corp., based in Mt. Prospect, Ill.
This formula pushed Stop & Shop, a division of Ahold USA, based in Quincy, Mass., to develop a “mobile” self-scanning solution with the help of Motorola. The chain is using Motorola MC17 wireless handheld scanners, which run software provided by Quincy, Mass.-based Modiv Media. The units are prominently displayed near each store’s customer service counter, and shoppers retrieve a device simply by swiping their loyalty card over a dedicated scanner on the display fixture.
As shoppers pick merchandise from store shelves, they use the device to scan item barcodes, and then they place products into their shopping cart. The scanners also deliver electronic coupons and promotions to various customer segments. All orders are electronically totaled, and transactions can be tendered at a dedicated stationary self-checkout lane.
More than 260 stores feature the units and they process approximately 10% of stores’ sales. To add more customer service, the chain augmented the project with its “Order It!” program, an integrated kiosk- and LCD screen-based deli ordering system.
Shoppers scan their loyalty card at the kiosk, and the touch screen directs shoppers through the ordering process, which includes a history of recent orders and a price tally. Fresh food manufacturers can also deliver targeted discounts and promotions to users based on their order history.
Upon completion, shoppers receive an order number. They can also input their cell phone number to receive a text message once the order is complete.
Orders placed through the kiosk are electronically transmitted to a work management system that integrates all orders—those placed via kiosk or verbally with store associates. The system allows all orders to be viewed by the deli’s preparation line, and an LCD screen also displays order statuses.
Innovations beyond the front-end could spur even more self-service adoption. Minneapolis-based Target for example, steers clear of self-checkout, but is well-entrenched in the self-service game.
“For us, it is about good customer engagement,” said Chris Borek, Target’s senior manager, multi-channel interactive experience, during “Bull’s-Eye! Keeping Your Eye on the Target—Successful Strategies of Customer Engagement Technologies,” a keynote session during the recent Customer Engagement Technology World convention, held in New York City.
“We want to help our guests find, learn about and buy merchandise,” he said. “Leveraging digital technologies are they key to addressing these goals, especially in complex categories.”
One of these categories is grocery. Calling 2010 the “year of the remodel,” Target spent a “considerable amount of capital,” he said, changing the floor plans away from a cookie-cutter format, and modifying its focus on the categories that help engage guests, including a revamped, blown-out fresh grocery section.
“We don’t have self-checkout, but we are exploring new ways to make our shopper’s life simpler, especially in the key categories of grocery and pet,” he told Grocery Headquarters following the session. While he declined to share specific self-service applications that will be added, he did say “self-directed applications are priorities for us as our goal is to make shopping simple.”
In the meantime, Target is showing the potential for this simplicity in its photo processing department with a kiosk that enables shoppers to process prints from their Facebook accounts. Shoppers can access their Facebook profile right at a web-enabled kiosk, and download files to make prints and gifts.
“We are learning the importance of merging social and the cross-channel experiences,” he said. “You can also become a ‘fan’ of Target Photo on Facebook, upload photo files to be printed, them pick them up at a local store. It is a program we are learning from and hope to do more with.”
Making change count
To take some of the burden off of customer service desks, some grocers are refocusing efforts on coin redemption options. The market, which is driven by consumers’ desire for convenience and retailers’ need to drive more operational efficiencies, has exploded. The automated units gained popularity as they turned shoppers’ loose coins into receipts for cash, even gift cards that can be used at the grocer’s store, or other non-competing retail specialty chains.
These systems are gaining attention from national chains to independent retailers, such as Waukegan, Ill.-based Lewis Fresh Market, a one-store operator that has a Cummins-Allison JetCoin unit. Shoppers pour their coins into the kiosk’s hopper, and receive a printed receipt that can be exchanged for cash at the service desk or checkout register.
Besides being a revenue generator for the grocer, the unit also automatically sorts all coins by denomination into separate bags, enabling the retailer to recycle the coins they need right back into their cash drawers, if needed. Within its first month online, the unit took in $10,000 in coins.
The system also provides incentives for shoppers, according to officials at Cummins-Allison. “Through our Fast Pay program, shoppers have the option of converting their coins into cash,” Stellmach explains. “Offering cash on the spot is even more convenient than interacting with an associate, and it makes the transaction that much more valuable for the shopper.”
The supermarket pharmacy continues to be one of the most pivotal departments within the grocery store. With more information available online, and not all of it relevant, it is not surprising that more consumers are considering its grocers’ pharmacists as trusted “health care partners” of sorts, and leveraging them to learn more about medication, illness symptoms, and other details they can use to spur well-being.
St. Louis-based Schnuck Markets is using this as a springboard to offer in-store health-related tools to further empower consumers to maintain their health. In addition to blood pressure machines that are used at many pharmacies, the grocer also features The EyeSight Kiosk, from Duluth, Ga.-based SoloHealth, a free self-service vision test kiosk focused on shoppers’ eye health.
The unit conducts screenings and then an analytical engine evaluates these results, as well as the consumer’s age, ethnicity and potential risk factors. The unit delivers individualized reports on vision status, information on eye health, product information and promotions. Shoppers can also set up appointments with local eye care professionals directly through the unit.
Based on a variety of data, including age, gender, ethnicity and symptoms, Schnuck officials can learn more about the demographics of the shoppers using the kiosk and create promotions and programs to educate shoppers on eye disease and prevention.
The chain features 30 units, and the chain has approximately 10,000 users each month, according to Mike Juergensmeyer, the chain’s vice president of fuel and pharmacy.
Beyond the shelves
With selling square footage at a premium, kiosks could be the catalyst needed to expand assortments and categories, especially those that may not have a category champion in-house. “Some units in France dispense glasses of wine; others feature high-end health and beauty merchandise, and still others may feature personal consumer electronics and accessories,” explains NCR’s Saccomanno. “The units provide a sense of security, a better merchandising environment and unique branding opportunities as well.”
They can also be the final piece in the SKU rationalization conundrum. As chains continually need to weed out SKUs that may be underperforming, or slow turners, Web-based kiosks can act as an “endless aisle.” Shoppers can use the kiosk to research a product not found on shelves and using a GUI integrated with the grocer’s e-commerce application, they can order the merchandise to be picked at store-level or delivered to their home within a couple of days.