Article
Supermarkets using kiosks to keep customers in love
With competition among retail stores growing stronger every day, loyalty programs enabled by kiosks and other technology may be more a matter of survival for some companies than a mere way of life.
March 20, 2004
Leading-edge supermarkets at home and abroad are giving the retail sector food for thought on how to attract and maintain customer loyalty.
Grocery chains Giant Eagle and Marsh in the U.S. and Metro Group in Europe are testing new kiosk technology that helps managers learn and respond to the buying habits and preferences of individual shoppers.
Store officials hope the interactive self-service technology can gain them a competitive edge and keep customers coming back.
Giant Eagle, piloting NCR's Copient kiosk and tying it to their Advantage Card loyalty program, provides "real-time targeted offers based on the unique buying history and interests of our shoppers," said Rebecca Kane, the grocer's marketing director of customer relationships and target marketing.
The NCR Copient solution allows retailers to use a Web-based tool to create highly customized and product-specific promotions suited to the unique preferences of each customer. The device includes card-reading hardware and software and a touchscreen interface.
The program goes well beyond discounts and rewards. Customers may join clubs, provide instant feedback and track savings with a swipe of their cards.
The bottom line is to "strengthen the personalized relationships we have built with our customers while improving our overall value proposition," Kane said.
Your own personal shopper
"Personal Shopping System" terminals are located at the checkout lanes as well as near
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"It started out meant for grocery chains, but now it's starting to appeal to all kinds of retailers," said Rock Wight, Copient product marketing director. "There's potential for general merchandise stores and liquor stores to use it."
The Copient recently received an award from the Global Electronic Marketing Conference, held to recognize excellence in electronic marketing.
That award program is staged by Retail Systems Consulting, a Naples, Fla., independent consultancy. Barry Kotek, RSC's managing partner, said Copient and similar retail-oriented kiosk systems are aimed at tapping into that all-importance loyalty factor.
"In retail, 20 to 30 percent of your customer base makes up 70 percent of your profit," Kotek said. "Loyalty programs are all about driving customer count."
He said developers of the newer retail kiosk systems are becoming much more loyalty-conscious. These systems will keep track of a customer's buying patterns and tie them in with special promotions. "If you've always bought Pepsi, why would a store give you a coupon to buy Coke?"
These systems have become extremely sophisticated, building individual affinity offers to fit a customer's taste.
"Studies have shown that people who buy beer also buy baby diapers," Kotek said. "The idea is to analyze how you can keep customers and, secondly, what else you can sell them."
He said supermarket chains competing with Wal-Mart have every reason to adopt new technology designed to build loyalty programs.
"Every time a Wal-Mart supercenter opens, two supermarkets close," he said. "Wal-Mart is the country's biggest grocery retailer. For some it's simply a question of survival."
Marsh Supermarkets is marketing its loyalty program under the name "My Marsh." It features a wide-ranging kiosk and electronic target-marketing program developed as part of the Copient solution. Kiosks are located throughout the pilot stores including the entrance, deli/bakery, wine, meat and pharmacy areas.
Metro Group's program
Meantime, overseas, the grocery store giant Metro Group is building customer loyalty programs in its own unique way.
At Metro's Extra Future Store in Rheinberg, Germany, shopping carts are equipped with "personal shopping assistants." The carts, and kiosks located throughout the store, were developed by Wincor Nixdorf and its software partner Pironet.
Via a menu screen, shoppers learn about the day's specials and scan their items as they push the cart through the store. These electronic assistants also direct the way to aisles shelving specific items. Price checks are available at the flick of a finger.
A Boston Consulting Group study revealed that Extra Future Store customers were "highly receptive" to the PSAs and self-checkout service.
"Customers are really enthusiastic about some of the innovations," said Dr. Gerd Wolfram, project manager of the Metro Group Future Store project. "The study also bears
"Every time a Wal-Mart supercenter opens, two grocery stores close. ... For some, it's a matter of survival." Barry Kotek, Retail Systems Consulting |
"The Future Store initiative is really revolutionary," said James Pemberton, managing director of MCRL Ltd., the British software developer and Pironet subsidiary that is working with Wincor Nixdorf on the project. "We'll see a flurry of trial projects among retailers."
Besides grocers, retailers such as home improvement stores and wholesale buying clubs will be naturals for this type of self-service, Pemberton said.
He said the way to achieving "long-term customer loyalty" is by offering personalized service through such vehicles as the PSAs and personalized kiosks.
Disloyal to loyalty programs?
Advancing technology is the capstone of loyalty programs for retailers, but not all of it is taking hold so easily.
Smart-chip technology used by Target stores as part of its customer loyalty program is being phased out by the department store chain.
The technology was developed in July 2003 as a feature of the Target Visa card. It gave customers the opportunity to access exclusive retail offers and savings via "Smart Coupons" redeemable via an in-home smart reader or in-store kiosk. The retailer will keep its Visa program but is phasing out the smart chip starting this summer because it has"experienced limited use," according to the Washington Post.
Forrester Research, an independent technology research company, said smart cards have not reached their "critical mass" in the United States due to the costs of upgrading the infrastructure for the chip cards.
Michael Howe, president and chief executive officer of Catuity-the company that provided the loyalty software to Target-expressed optimism that Catuity will resume its work with Target in the future.
"Catuity is fortunate that our loyalty software supports a variety of consumer identification devices," Howe said. "While in this instance it was smart-chip technology, the system works equally well for mag stripe, contactless RFID or bar codes."
