Meijer’s Smart Carts

This project makes all the sense in the world. It is a realistic use of the technology from both the economic and technical maturity perspectives. The closed loop nature of the project makes the economics work and the low penalty for a missed read acknowledges the continuing work on the technology. It also introduces the consumer to that “scary RFID technology that is going to expose them to all kinds of intrusive observation.” I think as they realize the benefits of the technology they will be better accepting of it on the products themselves.

Finally, I can always remember working on Wednesday evenings when the store was never crowded and imagining that the customers must all gather in the back of the store to charge the front end all at once. Whether it was a conspiracy or customers were just willing to continue shopping as long as the felt there was no one in front of them, it seemed to always happen. The statisticians call it exponential arrival rates. To me it just seemed to be a fact of Wednesday evenings. Maybe with RFID on the carts we’ll get the real answer.

And actually there is another question which has never been answerable in the past: when was I under-scheduled at the front end? You can only go as fast as the number of lanes you have open and various attempts to capture cue lengths have met with challenges. RFID should also be able to answer that question….

Retailers are in a battle for shoppers’ time. By placing RFID on the shopping carts, Meijer stands to gain extremely useful information to facilitate faster checkout lanes and more consumer-friendly store layouts. The best news is they will gain valuable experience in harnessing RFID for future applications.

Cashier staffing decisions should be influenced by the number of carts in the store, build up in the lanes, and the count of carts closing in on the cashiers. Miejer managers must then become more adept at shifting floaters into cashiering when the alerts are sounded.

To gain more optimized store layouts, every retailer develops prototypes and planograms based on vendor pressure and sales data. But now, store analysts can leverage the RFID data streams to measure the time carts spend lingering at individual places within the store. Does the time spent at a certain aisle location relate to dollar purchases? Ideally, you’d want the shopper’s time to be apportioned well to the dollars spent. If not, you can address the planograms in areas where shoppers linger. Meijer can now also study the time delays at service departments. What is the average time to process a prepared foods order? This will be an extremely important metric.

If Meijer can translate this information into actionable information, they promise to build competitive advantage. But then business intelligence always builds competitive advantage.

Ryan asks some very good questions. And the cost implications are huge. We continue to do RFID shopping cart studies across the country, but these are tests that are providing the biggest brands and most cutting edge retailers information never before available: millions of shopping trips viewed on a second by second basis, married to detailed SKU locations and purchases at the checkout.

The scope of learning is well worthwhile for our repeat customers, but the cost is not for the poorly funded. :>) One significant part of that cost is shrinkage on the equipment. The cost of lost carts is always significant for retailers, but now you must add in the cost of the on-board active RFID, as well as deliberate pilferage and vandalism of this nifty electronic object. (The active tags are nearly indestructible other than by deliberate vandalism.)

The larger issue, again as Ryan notes, is the movement of research into store operations. The reality is that there are a few supermarkets in the country that already have full-trip tracking. But those managements are focused on using the location of the cart to target sales communication to the shopper. This falls in the category of IRI’s long defunct VideoCart project.

Probably 99% of work presently being done with tracked carts is NOT for the purpose of studying and understanding shoppers, but for trying to get commercial messages in front of them. There are at least five major efforts around the country focused on this issue right now. (And probably plenty of others I’m not aware of.) Our own work is focused nearly exclusively on understanding the shopping experience, on a statistical basis. But knowledge and information has to be embedded into the minds of tens of thousands of operational decision makers before it will make major impacts.

We are driven by an obsessive interest in the shopping experience, while the technology companies are driven by an obsessive interest in selling more equipment. Neither of those are perfectly aligned with retailers’ obsessive interests.

(BTW, part of the understanding of the shopping experience extends to the conceptual ability to predict checkout queues before they happen. :>))

All this is going to do is confirm what everyone already knows – the stores are shopped on the perimeter. I find the shoppers reactions humorous – where is the “big brother” element? RFID is tracking the cart, not the shopper, and there is no way to tie the shopper to a cart. What is this really going to tell the retailer or CPG that is useful?

Has ANYONE been paying attention to what is going on at Walgreens with respect to RFID? Walgreens will have a chain-wide deployment of RFID to track in-store displays by mid-2007. With this utilization of RFID the retailer gets actionable information to correct problems during promotion periods, the CPG gets actionable information with respect to product mix, adjacency, best type of display, best location, and on and on. Why is no one talking about this outstanding use of RFID?

Real numbers, in real-time, providing actionable information.

As well as testing RFID based smart carts, Meijer is also evolving their in-store media network. It would be interesting if the traffic pattern data would be aligned and/or overlaid with the in-store media network viewing patterns.

The latest generation of ‘smart carts’ integrate RFID and media into a single solution whereby relevant merchandising, advertising and/or promotion material is triggered and played based upon the location of the cart. Additionally, product way-finding and self-checkout are also integrated into the experience. The key here is to understand and respond to the customer. As Lonnie Cannon, the Meijer shopper, said, “Speed is something I’m looking for. I’m not very patient. If it makes shopping faster, I’m for it.”

The challenge is to integrate these capabilities across multiple channels while making the experience completely seamless and rewarding to Meijer’s customers.

As noted, it will be interesting to follow what Meijer will do with the resulting data and analysis to further their brand and their customer’s shopping experience. The value of this data goes beyond Meijer. Meijer could use this data in collaboration with their vendors and CPG brand partners to create more relevant and successful promotional and merchandising campaigns.

Some of the students in my Food/CPG Marketing Strategies and Issues class at Western Michigan University have experienced the Meijer shopping cart test. For the most part they find it very interesting but like some of the consumers interviewed, they think it is much like the “Big Brother” analogy.

I think there are a couple of very interesting learning opportunities for Meijer. First in my mind are the long-term merchandising learnings based on customer traffic patterns in the store. Is there an outcome that solves the food versus general merchandise dilemma found in supercenters. Can they find a way to make food shopping easier while increasing their GM volume and profits?

Second is the location of perimeter departments in the store. Will they find the bakery-deli-meat-produce-dairy-pharmacy solution that saves consumers time while increasing overall revenues? Can they also find ways to lower labor/energy/capital costs? Even though this sounds rather idealistic it could be a big breakthrough relative to the food /GM revenue and profit mix discussed in point one.

I am certain Meijer will learn and benefit from this technology..the question is how long will it take?

Meijer made several mistakes with their RFID implementation.

All carts are tagged, so consumers could not avoid participation (unless they took a shopping basket). Some shoppers may shop elsewhere to protest the tracking technology. Greeters did not know what the tags were or what the RFID project was about. They could not explain it to customers who were curious. Finally, there was no sign posted alerting shoppers that some of their cart movements were being electronically tracked. Hopefully these mistakes will not be repeated by other chains.

Meijer doesn’t need RFID shopping carts to know about long checkout lines. It’s odd to see such a high-potential technology used for a purpose like this. Why not use RFID to solve problems that can’t be solved any other way?