Retailers Wage War Against Long Lines; Infrared Vision Helps Kroger Reduce Wait Times to 26 Seconds; Wal-Mart Experiments With Bar-Code Apps

May 1, 2013, 9:33 p.m. ET

Retailers Wage War Against Long Lines

Infrared Vision Helps Kroger Reduce Wait Times to 26 Seconds; Wal-Mart Experiments With Bar-Code Apps

By JULIE JARGON

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At this Cincinnati Kroger, supervisors monitor a system that says how many lanes need to be open and how many will be needed in 30 minutes.

Supermarket giant Kroger Co. KR -0.52% is winning the war against lengthy checkout lines with a powerful weapon: infrared cameras long used by the military and law-enforcement to track people. These cameras, which detect body heat, sit at the entrances and above cash registers at most of Kroger’s roughly 2,400 stores. Paired with in-house software that determines the number of lanes that need to be open, the technology has reduced the customer’s average wait time to 26 seconds. That compares with an average of four minutes before Kroger began installing the cameras in 2010. “The technology enabled us to execute at the front of the store without that additional (labor) expense,” said Marnette Perry, senior vice president of retail operations for Kroger.”It’s remarkable that we’ve been able to improve execution as much as we have without a big price tag.” Reducing wait times is becoming a top priority for retailers, from high-end department stores to hardware chains to fast-food outlets. Battling both online rivals that offer at-home convenience and intensifying competition among fellow brick-and-mortar outlets, many companies see enhancing the shopping experience as a way to build loyalty. “Since the checkout is the last experience in a store, if it’s a bad experience, you’ll probably see that financially,” says Kurt Kendall, retail strategist with Kurt Salmon, a management consulting firm. “Retailers could speed up their service if they fully staffed their lanes, but they are trying not to staff all their checkout locations. This is the dirty little secret of this.”Other retailers and restaurant chains are experimenting with technologies to speed up service, including mobile ordering and payment systems that use customers’ mobile devices or hand-held gadgets by sales people.

McDonald’s Corp., MCD -0.74% seeking to improve customer service amid mounting complaints, is implementing a new “dual point” ordering system in which customers place their order at one end of the counter and pick it up at another once their number appears on a screen.

The order-taker is supposed to focus on the customer while a “runner” performs other tasks such as dispensing drinks and condiments. The new system is in place at just under 10% of the company’s 14,000 U.S. restaurants and is expanding.

“While dual point was in test, we saw better attention paid to hospitality—specifically eye contact and full attention being paid to the customer—which results in a better customer experience and order accuracy,” a McDonald’s spokeswoman said.

Wal-Mart Stores Inc. WMT +0.44% is testing a new “Scan & Go” system in which customers use the Wal-Mart iPhone app to scan the bar code of the items they want to buy and bag them as they shop. When they get to a self-checkout lane, customers hold their iPhone up to the self-checkout screen, which wirelessly receives the scanned items and prompts them to pay. The company began testing the system in December 2012 in about 70 stores and has since expanded it to more than 200 stores in 14 markets.

A Wal-Mart spokeswoman said the company is experimenting with innovative technologies like mobile self-checkout because its “customers are shopping differently than they ever have before—they’re using their mobile devices to search for coupons, compare prices and navigate aisles.”

Some experiments with new checkout technologies haven’t gone well. Many companies are expanding use of self-checkout systems, where customers scan in their own items and place them on weight-sensitive platforms designed to make sure all goods are paid for.

But IKEA, the Swedish furniture giant, and Albertsons LLC, the Boise, Idaho, supermarket chain, are doing away with self-checkout because they believe the systems make shoplifting easier.

The military has used infrared vision extensively for navigation and surveillance purposes, as have law-enforcement officials, including those in Watertown, Mass., who used the technology to determine that one of the suspected Boston Marathon bombers was hiding in a boat. Since the late 1960s, when the first commercial infrared cameras were developed, the technology has been used for a number of civilian ventures, including art restoration and building inspections.

Kroger’s system, dubbed QueVision, is now in about 95% of its stores, which operate under the Kroger, King Soopers and Dillons names, among others.

The system includes software developed by Kroger’s IT department that predicts for each store how long those customers spend shopping based on the day and time. The system determines the number of lanes that need to be open in 30-minute increments, and displays the information on monitors above the lanes so supervisors can deploy cashiers accordingly.

Kroger declined to specify the cost for installing QueVision, but says the cost of running it is minimal. While it is hard to break out the exact impact faster lines have had on sales, the company says surveys show customer perception of its checkout speed has improved markedly since 2010.

And Kroger executives said they learned something surprising from QueVision data that helped them boost certain orders. The system showed that there were more customers than Kroger realized buying a small number of items in the morning and during lunchtime, and that the express lanes were backing up. So Kroger added 2,000 new express lanes to its stores nationwide, which it credits with growing the number of those small orders over the last two years.

Kroger in March reported fourth-quarter profit of $461.5 million, exceeding analysts’ expectations, compared with a year-ago loss of $306.9 million that included a big pension charge. Sales increased 13% to $24.15 billion.

Kroger executives say they are continuously improving the QueVision software to better predict shopping behavior and fine-tune the staffing of the checkout lanes. And they are testing other ways to get shoppers out more quickly, including a tunnel-like device resembling an MRI machine that scans items as they go through, then automatically bags them.

“The bottom line is we want our checkout experience to be the best and it’s our goal that our customers will enjoy the experience so much that they’ll want to return,” Ms. Perry said.

Technology can help businesses speed up checkout lines:

Kroger—Infrared cameras detect the number of people in the store, while software predicts how many lanes should be open.

Nordstrom—Hand-held devices let customers pay from anywhere in the store and help associates follow inventory.

Wal-Mart—Shoppers can use an app to scan bar codes and track their spending before paying at a self-checkout lane.

Chili’s—Diners can pay for their orders at the table, using a small, flat-screen device.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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