Store of the Future is here today
January 19, 2004,
Out-of-stocks. Misplaced items on the shelves. Warehouse management challenges. The problems retailers wrestle with today may be headed into extinction if a 41,451-square-foot supermarket in Rheinberg, Germany, is any indication.
METRO Group, a $61 billion international retailer of grocery stores, wholesale units, consumer electronics centers, home improvement locations and department stores, introduced its Future Store to NRF attendees last week, even providing a personal tour thanks to a live video feed.
Opened in April, the store includes shopping carts equipped with Personal Shopping Assistants (PSAs), shelves that know which products should be on them and shelf labels that state prices. Informational terminals can give out recipes as well as check prices.
The wireless transmission of data through RFID (Radio Frequency Identification) commands a large behind-the-scenes presence also, from tracking merchandise from the DC to the store shelf, to the Intelligent Scale and De-Activator.
The project is not without hurdles, including cost and implementation, but Metro executives don't believe there is another way.
"You must follow the paths of innovation. The ones that do not shape the future may not have one," said Zygmunt Mierdorf, METRO chief information officer. "Today's innovation is tomorrow's sales."
That said, the store of the future is now open for business.
Several elements, such as the self check-outs, are already familiar to some American consumers. Others are less so, including the PSA, located on the shopping carts and activated with a swipe of a card. The PSA can then tell customers what they bought the last time they were in the market, or, if the customer transmitted her shopping list earlier from home, where the items are located in the store.
The PSA also has a barcode scanner, so that the customer can scan each item and have a running total of the purchase. When the customer is finished shopping, she can take her cart to the front and pay using the total of the PSA. The average basket of someone paying this way is 30 euro. A "normal" checkout average is 18 euro, and even less for the self checkout.
And then there is RFID. The implementation of RFID along the entire process of the supply chain is the most sweeping project so far, METRO said, from tracking goods in the warehouse and then to the store itself.
RFID continues inside the store as well. Smart Shelves, equipped with integrated readers below, can detect how many items are on them, as well as if they are the correct items. Electronic shelf labels — the store has 30,000 of them — assure that the price given on the label is the same as the checkout, and the labels are updated instantly as prices change. The Intelligent Scale identifies and weighs the product, such as fruit, and prints out an RFID sticker for the item. After the customer checks out of the store, she has the option of deactivating the RFID tags on her items by placing them on the De-Activator if she has concerns about privacy.
"We're going from science fiction to science action," said Christian Nivoix, general manager, IBM Global Distribution Sector. "RFID technology is the logical successor to the barcode ... RFID makes it easier than ever before to track and trace specific items throughout the supply chain. Stock levels can be checked at any time, anywhere in the chain, with the end result for the consumer of improved product availability on the retail shelf."
METRO plans to roll out this technology domestically first, and, by November, 100 of its suppliers will be involved. By January 2006, it hopes that 300 suppliers will be equipped as well as its DCs in Germany.
Self-checkouts and Intelligent Scales will be the first and easiest concepts to roll out, and will go into the retailer's German hypermarkets and supermarkets first.
It will take 10 to 15 years for acceptance of RFID, Korber said, "but I don't care, you have to start."
He also felt the advantages of the technology negate the concerns with the cost of implementation. If one concentrates on the money issue first, "Then you don't get innovation." How customers react is what's paramount, he said, and prices will come down eventually, as they did for mobile phones or computers.