February 16, 2005

A Smarter Smart Cart?

By Evan Schuman, eWEEK

With a craving for broiled salmon, Jane quickly sifted through her spice cabinet only to find that her bottle of dill weed was nearly empty.

With a few clicks on her Bluetooth-enabled PDA, she updated her Web shopping list with the dill, and a window opened onscreen suggesting a new salmon recipe. It looked good, so she approved the recipe and her shopping list was instantly updated with all of the necessary items, omitting those that her kitchen already had in stock.

Jane drove the half-mile to her local supermarket where she grabbed a smart cart, scanned her loyalty card and saw her updated shopping list appear in front of her. It had been categorized by aisle, and the cart directed Jane to each item. While she was checking for brown spots on broccoli heads in the produce aisle, her cart signaled the pharmacy to prepare a prescription refill and sent an order for lunch meats to the deli.

Everything that Jane just did will be available to select American consumers over the next few months, as their grocers deploy a new line of smart carts announced this week by Fujitsu.

Are these carts state-of-the-art and cutting edge for retail technology? It's a matter of perspective. Compared with the best European and Asian retail chains, American retailers are electronic laggards, especially in the grocery segment.

Even compared with U.S. retail technology discussions, these carts are merely deploying and productizing capabilities that have been publicly discussed for more than a year. But compared with what is actually being used—and even offered—with today's American grocery retailers, these Fujitsu carts are positively Jetsons.

Equipping an ordinary shopping cart with Fujitsu's new U-Scan Shopper unit will cost about $1,200. That price also includes about 60 infrared triggers to be strategically placed along various store shelves—sort of like Hansel and Gretel's fictional breadcrumbs—to help the cart find its path around the store. Fujitsu is hoping to sell 100 carts at each typical grocery store, according to Vernon Slack, Fujitsu's director of mobile solutions.

Fujitsu said the unit is involved in two large-scale grocery chain betas this spring, with general release targeted for the end of this year. Slack said one of the retail betas is a national chain with more than 2,000 stores and the other is a "more than 100-store" regional chain. He would not name the chains.

"The U-Scan Shopper is the ultimate customer touch point. It will significantly change the future of the retail front-end," Slack said. "It puts service and checkout in the consumer's hands, reducing the reliance on the point-of-sale for customer service and freeing store personnel to help customers in the aisles."

The display unit's browser-based application runs on Microsoft Windows CE .Net and integrates with major POS (point-of-sale) applications, Fujitsu said.

Slack points to more practical advantages of Fujitsu's design, such as their claim that their cart-handle-mounted unit (it's literally bolted on) is small enough to allow for a child to sit in the traditional front-compartment, while some rival units are too large.

The "just less than two-pound" unit with the 6.5-inch display is surrounded with a quarter-inch of hardened Mylar plastic making it almost indestructible, even by a curious child, Slack said. The units are also sealed with a polycarbonate cover.

Slack sees the fact that the cart would already have the unit bolted to its bar when the customer arrives as an advantage over smart-cart approaches where the customer has to pick up a pad at customer service or at the entrance and place it in the cart.

Another differentiator is that the Fujitsu version makes the customer's use of a loyalty card optional. Without the loyalty card, the system's CRM capabilities—a big draw for retailers—are virtually nil. In an initial deployment, Slack said, requiring a loyalty card will turn off more privacy-suspicious, time-crunched customers than it will attract.

With the U-Scan Shopper's approach, if the shopper chooses to remain anonymous, the cart will still display offers based on the customer's location in the store. At best, then, the retailer's data-collection would be aggregate, which is less useful than customer-specific CRM info but better than nothing.

The part of the smart cart experience that causes greater difficulties for retailers is the checkout. Consumers can scan items as they select them with the smart cart scanner, which communicates their selections to the cash register at checkout. For fraud/security purposes, how does the store ensure that the customer is honestly scanning every item? Some stores use spot checks, subjecting randomly selected shoppers to time-consuming basket audits.

Customers scanning their purchases into the U-Scan Shopper would have the option of simply going through the checkout aisle, with cashiers helping to bag the groceries while checking the items against the system's generated list of scanned items.

But Fujitsu recommends an integration of the smart cart approach with a store's existing self-checkout system, leveraging the cashier typically assigned to oversee such areas, as well as the weight check systems. This method would be faster than simply using the self-checkout because the system would accept the smart cart's list of what is in the cart. But for verification, it would do a single collective weigh, as opposed to the traditional self-checkout single-item weigh.

Slack said that Fujitsu engineers have come up with a proprietary weighing algorithm that gets more accurate the larger the number of items in the bag being weighed. That's the opposite of the normal variance approach, which holds that a range of weight deviations will exist for every product and—in theory—such variations would grow as the number of items grew. Slack said he couldn't explain how Fujitsu has overcome that issue.

Fujitsu developed the U-Scan Shopper through a strategic alliance announced in 2004 with Salt Lake City-based Klever Marketing Inc., under which Fujitsu acquired Klever's non-U.S. patents, its software and certain rights in other related intellectual property for the U-Scan Shopper. The companies said that they will jointly market the product within the U.S., and Fujitsu will market the product outside the U.S. Klever will develop and manage the wireless, in-store advertising campaigns for retailers using the system.

"Each marketing message reaches an individual consumer at the exact product location where industry research indicates more than 70 percent of all purchase decisions are made," Klever Marketing President and COO Bill Dupre said in a statement. "Klever Marketing believes that the one-to-one electronic communication capabilities of the U-Scan Shopper, its point-of-selection delivery and its patent portfolio provide a formidable first-position in which to control the in-store marketing space."

The system's core functionality includes the context-sensitive ads, which tout products based on the part of the store the cart is in. It can also alert the customers to any relevant specials. If the customer has a particular soup brand on their shopping list, it can flash an alert—just as the customer is about to enter the soup aisle—that a competing brand is $2 off today-only and then run a short commercial about that brand.

The CRM component of the system takes advantages of the system's timestamps that coordinate with those 60 or so infrared devices. It understands—in theory—whether the cart is zipping through aisle nine on the way to aisle 12 or if the timestamps indicate that it is slowly looking at products or has fully stopped in front of dog food.

The U-Scan Shopper has a menu option that does nothing other than list store specials for that day, along with a menu listing tons of recipes, which all have the ability to automatically amend the shopping list.

The system's ability to know where items are located is based partly on the store-provided map, but it also "learns" when items have been moved by noting the collective behavior of customers. For example, if the system thinks that shampoo is in aisle 10, but suddenly notes that 28 customers this morning have scanned shampoo in the middle of aisle 8, it will update its internal map.

But what the Fujitsu system does next is based on the retailer's customization. Those product relocations are sometimes not what the store's general manager wanted. The system can send a message to store management when it detects an unexpected relocation. "Some retailers want to be alerted or they may want it to just dynamically change the map" and not message them, Slack said.

Fujitsu officials say the next upgrade of U-Scan Shopper will likely include integration with chain-wide store inventories, so that the cart and/or the Web site can alert a customer that their favorite store is out of two items on the customer's list but that those items are available at another store in the chain, five miles away.