Grocers and retailers like Stop & Shop and Walmart have seen the future of the checkout, and it is mobile scanning.
The potential rewards for them are clear. Allowing people to scan and tally their totals as they shop promises reduced checkout times and staffing needs, more space for products and the chance to differentiate the shopping experience. It also generates lots of real-time data that can be used to target offers as customers wander the aisles.
But don't say good riddance to that bagboy anytime soon. The self-checkout, for example, has existed for years and it's still common to see those lines completely empty while cashiers are backed up.
Even if consumers were clamoring for it, retailers have a lot of kinks to work out before mobile self-scanning becomes the norm. Employee education, database integration and franchisee buy-in are big hurdles. Then there's the theft factor.
Still, as e-commerce grows and Amazon flirts with same-day delivery, the pressure is on to make trips to the store worth the hassle of bypassing a click. More and more companies are wagering that mobile is their best bet to make that happen.
Among those banking on mobile technologies are Stop & Shop and its parent company, Ahold, which have been testing hand-held self-scanning devices for eight years. Stop & Shop's Scan-It device resembles a less-threatening Star Trek phaser and is accessible at the front of stores with a loyalty-card swipe.
"The hand-held-scanning benefit for the consumer is convenience," said Paul Kramer, CEO of shopper-marketing agency Catapult Marketing, a firm that works with Ahold on the self-scan program. "You are packing your bags as you go."
Still, only 28% of Ahold store shoppers used the hand-held scanners in the previous year, according to August 2013 data from Catapult, and just 15% of Ahold shoppers regularly use the scanner devices.
Despite relatively lackluster adoption of the hand-held devices, Ahold remains committed. The cover sheet of its second quarter of 2013 earnings presentation even featured a photo of a young boy using a hand-held Scan-It device. (The firm made no mention of the technology during its earnings call, however.)
Self-scanning technologies "make it feel like you're not in your grandmother's or mother's supermarket anymore," said Bill Bishop, chief architect at Brick Meets Click, a retail consultancy.
If people aren't likely to pick up a Scan-It device, perhaps they'll be more likely to use their own devices. Ahold has introduced a Scan-It app that allows people to scan items with a barcode reader on their phones, keeping a tally of what they've put in their carts and displaying the amount of money they've saved through personalized discounts along the way.
A similar feature introduced by Apple in its Apple Store app two years ago allows people to buy some items by scanning the barcode and paying directly via the app. The Ahold system, and a similar one that's being tested by Walmart, however, require a visit to a self-checkout kiosk to pay.
At Stop and Shops, implementation of the hand-held devices -- which also entails setting up large displays for the scanners at the front of each store -- costs around $10,000, according to Seth Diamond, exec VP of Catapult's insights group. Just how much money these companies are investing in the mobile versions of the technology is unclear.
"The largest investment … is in all of the scanners, so now that's been offloaded to people's personal mobile," said Mr. Bishop.
Think of the Scan-It app as an extension of the Stop & Shop loyalty program. In addition to serving up offers based on previous purchases and same-day product scans, it promises to streamline the checkout experience by offering quick payment by credit card at a self-checkout kiosk.
Barbara Innes, a Southport, Conn., resident who was interviewed while shopping at a Westport Stop & Shop, said she'd been using the hand-held Scan-It device since the store launched the system eight years ago, but never used the mobile app. Convenience was her primary reason for using the tool, though she indicated reluctance to try the mobile app. "I'd be very upset if they took the scanners away," she said. "Sometimes the baggers can be nasty."
Catapult recently surveyed shoppers who use hand-held scanners, and 71% said they are very helpful, 47% said they are easy to use and 41% said they save time and make shopping fun.
At a Stop & Shop in Clifton, N.J., in August, all app users got the same initial set of eight offers as they entered the store, including 50¢ off Ritz crackers and 45¢ off Stop & Shop dinner napkins. As they continued shopping, the offers were meant to become more tailored to each shopper based on earlier purchases, and what each had scanned and placed into their baskets that day. When targeting is in full effect and an appropriate offer is ready in the database, a shopper might get a deal on salsa if she scans a bag of tortilla chips, or receive a discount on cake mix if she's near the baking aisle, based on location sensors in the store.
"If I am Kraft Wishbone salad dressing, I can target you immediately if you buy lettuce," said Mr. Kramer. Buying most fresh produce isn't the most seamless process, however. It requires shoppers to weigh items individually as a cashier would, then scan the sticker printed for each item.
More scanning, more data, more deals
The technology could potentially help companies understand how consumers move throughout stores. Opt-in self-scanning mobile apps can trace purchase pathways in a less invasive way than by tracking phones via Wi-Fi signals, which some retailers do today without notifying consumers.
"In a grocery store the best indication of where someone is is the product just scanned," said Patrick Moorhead, VP-mobile at Catalina Marketing, the grocery and CPG data powerhouse that supports the Scan-It system used in 360 Ahold-owned Stop & Shop and Giant Stores.
That real-time location data can be combined with purchase history and cart contents to generate offers that are more customized than if they were solely based on proximity to other products. For instance, if a shopper who typically buys soy milk scans a box of breakfast cereal, he might be targeted with a discount on soy milk, rather than dairy milk, when he reaches the refrigerated section.
Catalina collects data from 30,000 drugstore and grocery chains across the U.S. each day via point-of-sales systems and is combining that with the data it gleans through its mobile scanning app. (It says its retail clients ultimately own the data.)
"We're developing [capabilities] to allow us to see the interval between scans, as well as intervals between aisles. We also capture [via the app] overall trip time, products and categories interacted with during the trip, total basket size and composition, as well as offer types and triggers," said Mr. Moorhead.
Catalina works with brands to develop triggers for offers in the app. For example, it might use its massive database of shopper-purchase behavior to build an audience segment comprising people who have bought a product in the last year but stopped buying it in the last 20 weeks, and to give them a discount as an incentive to revisit it.
Trial and error
Another major obstacle: database integration. If a product isn't recognized by the self-scanner app, it can't be added to an order, thus disrupting the self-scan-buy flow. To get its Scan-It system up and running, Ahold needed to integrate the app with its headquarters' database, loyalty-card data, pricing data and store-sales data, said Mr. Diamond. That integration "was a slow, methodical process," he said, noting it that took a year and a half of testing to work out the bugs.
During Ad Age's September visit to a Walmart in Lacey, Wash., several attempts to self-scan a variety of items using the store's Scan and Go mobile app, including a non-brand name women's blouse and greeting cards, were fruitless. When scanning fails, the app lets users enter the barcode number manually. That didn't work to locate the items in the database either.
Meanwhile, lots of brand-name items or products that are most likely stocked regularly were easily scanned and found in the system, including Hanes L'eggs Sheer Energy hose and Kashi GoLean cereal.
The end result can be a less-than-ideal shopping experience. When items are not found in the database, they must be purchased via a cashier. Or shoppers might just decide not to buy them at all.
Despite these obstacles, John Caron, VP-marketing at Catalina, says its clients have seen a 6% to 8% sales or basket lift as a result of implementing its app.
Walmart began testing the Scan and Go app in December 2012 in and around Atlanta, Dallas, Denver, Oklahoma City, Omaha, Phoenix and Seattle. Catalina provides technology for Walmart's Scan and Go program, but neither company would elaborate on their relationship or the technology involved.
"Walmart's entry into the market has prompted others to take [mobile-scanning technology] seriously," said Mr. Caron.
Data-hungry companies like Walmart clearly stand to learn a lot about their customers if the mobile self-scanning trials take off, but Walmart denied that Scan and Go is a data-collection play. "The primary goal of Scan and Go is to provide another convenient option to our customers," a Walmart spokeswoman said.
Kroger is also in the early testing phase of its Scan-Bag-Go hand-held devices in five Cincinnati-area stores. "Kroger operates 2,419, so this is very much a pilot still in its infancy," said Keith Dailey, Kroger's director of media relations.
Other big grocers are in wait-and-see mode. Safeway, for one, is eyeing mobile-scanning technologies but isn't ready to move forward with one, said Michael Minasi, president-marketing at Safeway. "We aren't, at this point, testing an app-driven scan-and-pay technology," he said, noting that the retailer offers a loyalty card and a home-shopping app that lets customers select items for delivery.
U.K. grocery giant Tesco introduced its Scan-as-you-Shop devices in 2010, and the firm says 20% of sales are derived through the program. The scanners are "now used by over 300,000 of our customers each week, which allows us to reinvest hours into service elsewhere in-store," said a spokeswoman. But Tesco is holding off on a mobile version.
The other kind of swiping
The potential for theft is an obvious pitfall. Proponents of self-checkout and scanning programs downplay the problem, but it's enough of a concern that there are auditing systems in place. Dave Kraemer, customer-service rep and front-end manager at the Stop & Shop in Clifton, conducts around 20 audits each day, he told Ad Age during the August visit.
Does he encounter Scan-It shoppers attempting to leave the store with items in their bags that haven't been scanned? "Oh, plenty," he said.
"The operators of the stores are very suspicious there's going to be a lot of theft associated with self-checkout and the truth is that they're correct," said Mr. Bishop. He added that stores should only reward loyal shoppers with the opportunity to self-scan.
Catalina's "asset protection" process detects "odd behavior," according to Mr. Caron. If a Scan-It shopper hasn't checked out but hasn't scanned an item in several minutes, for instance, it might trigger an audit. The audit involves comparing what a customer has scanned and bought with what's in his shopping bags. While the practice of checking a receipt against items in a shopping bag is common at the exits of retailers like Home Depot and Walmart, it is unusual for a grocery store. Sometimes consumers have simply scanned a lower-priced product and put a higher-priced version in their bags. For instance, items like yogurt or cat food that come in multiple varieties with different prices might be scanned improperly. Catalina is also trying to work out how to deal with loose items like baked goods. What if someone wants to buy just two muffins but they're priced per half dozen?
"I've actually had to go through troubleshooting with people," said Mr. Kraemer, adding, "The hardest thing, I guess, is training."