At the Kmart in Elmsford, N.Y., one Saturday afternoon, the handful of checkout lines open were all at least eight people deep, with the exception of the two self-checkout lines, which were considerably shorter.
Beep, beep, beeps from the self-scanners mixed in with the sound of the public address system and the general clamor of the store. Customers eyed the self-scanning lanes with what appeared to be a mixture of curiosity and trepidation, probably wondering whether the time they might save was worth the potential humiliation of trying to figure out the system.
In one line, a man and woman, with three children, read from the printed instructions beside the scanner. It took them two or three tries to swipe each bar code, with a pre-recorded voice demanding they try again after every failed attempt. Having finally scanned everything in their shopping cart, they then tried to pay by cash — but the machine kept spitting out their dollar bills. Again, the pre-recorded voice requested they try again.
Nothing seemed to work, and people behind the couple began to grumble with impatience. In the next self-checkout lane, customers were having similar problems — either figuring out how to scan an item or paying. No sales clerks were in the area to provide assistance, but after about a five-minute wait one finally arrived with a key. He inserted it into both troublesome machines, and the customers were able to pay and leave.
A middle-aged man stepped up to the scanner with two cans of Martha Stewart paint, four paintbrushes and a roller. The paintbrushes scanned easily, as did the plastic sheet. But the gallon-sized can of paint wouldn’t fit properly under the scanner, and the bar code couldn’t be read. Finally, by folding his arms into a yoga-like stance, the man was able to get the scanner to read the bar code on the can. He paid cash — no hiccups this time — and left.
“The self-scanners are fine when they work — or when customers know how to use them,” he said after leaving the store. “You wonder what these people have been doing all these years at supermarkets. Don’t they know what a scanner is? The experience can be frustrating, but the self-checkout is still probably faster than waiting in the regular checkout line.”
Self-scanning is just one of several new technologies retailers are trying out on the selling floor to improve customer service without adding salespeople. Kiosks for bridal registries, price-lookup scanners, biometric payment systems, and “smart” shopping carts that keep a running total of your selections and do suggestive selling are already in advanced testing stages or, in certain cases, permanent fixtures.
Spending on technology by retailers is on the upswing. In a departure from past practices, more of the retail dollar is going toward technology that the customer actually sees, rather than being spent on back-room systems such as enterprise resource planning or data mining.
The National Retail Federation, the trade association for retailers, recently surveyed 30 merchants with a combined $200 billion in sales. The group said it plans to spend an average of 9 percent more this year compared with 2003 on information technology.
“A lot of it is on the store side, such as with POS and workforce-management solutions, as well as supply-chain issues such as transportation management,” said David Hogan, senior vice president and chief information officer for the NRF.
Much of the technology is still in its infancy, and there are issues of functionality, cost and customer acceptance that still have to be worked out. How much of the technology will be embraced by retailers and consumers remains to be seen. A broader question is whether retailers will be able to find the right balance of manpower and machinery.
“Self-scanning eliminates workers and gets traffic through,” said Arnold Aronson, director of retail marketing strategies for consulting firm Kurt Salmon Associates. “But some customers are afraid of it. People have to get used to it. It will become more important.”
“Customers have very little patience with any kind of technology. It usually collapses when it involves a learning curve on the part of customers,” said Isaac Lagnado, president of Tactical.org, a consulting and market research firm. Nonetheless, he said, self-checkout is fairly simple and has been used sporadically by grocery stores with some success. However, the scanners aren’t always 100 percent accurate, particularly when the stores are running price promotions. Lagnado estimated that sometimes stores can experience days when about 20 percent of the time, there are mis-scans. “It’s still got a long way to go,” he said.
He believes self-checkout could be used in mass-market stores — as Kmart is doing in some lines in New York and New Jersey — but not in specialty and department stores. “They’re already freaked about shrinkage,” he added.
Another technology with the potential to improve customer service is biometrics, which enables shoppers to pay by finger. First they register with the retailer. Then they can pay by just touching a scanner that matches their fingerprint with their personal information stored by the retailer, instead of paying with cash or credit card. A handful of stores, including groceries, gas stations and drycleaners, are currently using the systems, which have the potential to speed checkout lines at mass merchants without adding more sales clerks.
“This is actually pretty slick technology,” said Hogan. “It’s all about getting in and out of the store efficiently, without fumbling through your wallet searching for cash or your credit card. In three to five years, this will be much more prevalent. This is a customer service add-on, but there are still customers that aren’t comfortable with it and, faced with the option, pay with cash or credit.”
Microsoft and a few retailers, such as Metro in Germany, have more fanciful visions of the store of the future. For Microsoft, it’s a retail environment revolutionizing service. Instead of a simple greeting at the door by a sales clerk, a customer walks in, triggers an alert via a wireless infrared or radio frequency identification device and it’s all hands on deck. The sales clerks in the shoe department know their best customer has just arrived, so they scramble to pull out the latest styles for her to try.
Microsoft has said its retail platform, the Smarter Retailing Initiative, or SRI, will help retailers improve customer service without spending vast sums. But ironically, Microsoft’s RFID vision could actually require additional sales personnel.
“There’s no question that if you could figure out all of the time which customers are in your store, you would have a leg up,” said Jack Mitchell, president of Mitchells of Westport and Richard’s, two high-end designer specialty stores in Connecticut. “But then you need people that can execute” the proper meet and greet and sales assistance.
Metro’s “store of the future” in Rheinberg, Germany, utilizes self-checkouts, “intelligent” scales with digital cameras and information terminals where, for example, shoppers can learn about what wines to pair with what foods. There are also plasma screens playing commercials and handheld personal shopping assistants for storing shopping lists. “Smart” shopping carts provide information on products and suggest additional items that, for example, would round out an outfit, while “smart” shelves signal the storage area for more stock when the assortments get low.
Suggestive selling can increase the average transaction by 25 to 30 percent, said Lagnado. “What technology can do and has done for add-on selling, particularly on the Internet, has been tremendous,” he said. “No question about it.”
Grocery stores and mass merchants are looking for new ways to do suggestive selling on store shelves and at self-service price-lookup stations. For instance, grocery stores could offer coupons and rebates on sku’s that have stable performances season after season, customized to the category, right on the shelf, he said. It would mean less work for stock people and checkout clerks.
In the cosmetics department, there could one day be mannequins with screens on their faces that could show customers what they might look like wearing different-colored lipsticks and eye shadows, he said. The displays might be used to suggest products that go together.
Price-lookup stations offer another selling opportunity.
“Basically, it’s about letting very simple computer applications that do price lookup provide suggestive selling, so if there is a junior denim customer, it might suggest three other pieces from the denim collection found in other aisles,” he said. “It could do what a good sales person — the kind that used to be more prevalent 30 year ago — would have been able to do, essentially providing some personal shopping.”
Mitchells of Westport pioneered a similar idea in the late 1980s, which has now come to be known as “clienteling.” The practice is just starting to catch on at other high-end specialty retailers, such as Nordstrom and Barneys. Mitchells collects customer data at point of sale, including purchase history, sizes, and birthdays, then uses it to facilitate more personal contact between the salesperson and the customer by automatically reminding the salesperson of selling opportunities. Essentially, clienteling computerizes the pen-and-paper “black book,” which high-end salespeople have long used to track customer preferences and wish lists, as well as personal shopping and high-end selling.
Mitchells wrote its own software, but now off-the-shelf programs with similar functionality are available from Blue Martini Software and Symbol Technologies Inc. In 2002, Nordstrom said it planned to use Blue Martini to help its 20,000 salespeople remember to tell customers about new shipments, alterations and in-store promotions relevant to them. At Barneys, salespeople still use their traditional black books, but the store automatically generates customer-call lists for events, and salespeople can e-mail customers from the selling floor and look up their purchase histories at the register.
By making it easier for associates to remember to contact a larger number of customers more often, the programs have the potential to increase sales and bring high-touch customer service to a slightly broader group of customers.
Workforce management is another technology with big potential to improve customer service and increase sales. “It’s been underhyped versus overhyped,” said NRF’s Hogan.
For example, by using scheduling software and traffic counters at several key stores, Victoria’s Secret was able to increase sales by reallocating clerks so its stores were more fully staffed at peak times, such as weekends and holidays. With shorter lines, fewer customers left the store without buying anything and the merchant was able to process more sales at peak hours. Store executives said the software and counters helped them recognize and solve a problem they didn’t know they had.
At Sears, Roebuck and Co., department managers have been able to spend three hours more per week on the sales floor helping customers and training associates, thanks to software from StorePerform Technologies Inc. In essence a giant to-do list for the whole organization, StorePerform Workbench helps executives at headquarters better prioritize the task load for individuals at each store. Sears opted to use the software to free managers from administrative tasks.
Hogan acknowledged some of the emerging customer-service technologies are going to “wither on a vine and die.” Kiosks, for example, are getting mixed results, he said. “Those for bridal registries and obtaining movie tickets are working okay, but from the feedback, we really don’t think customers are gravitating to them,” he said.
With the “smart shelf” technology, Hogan noted, “There is some potential.” Some grocers are testing this, as well as Metro, he added, though he doesn’t see it being utilized on a broad basis for another several years, possibly not until 2010. “Customers have begun to embrace this, at least at Metro,” he said.
To date, most of the benefits of technology for retailers have been behind the scenes, said Aronson. For example, the Internet and CAD have both played a significant role in speeding up the design cycle.
However, technology has its limits, particularly in the fashion world, he said.
“There still has to be a critical balance of art and science,” Hogan said. “Technology is not yet a substitute for originality and creativity in fashion and design.”