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SPEED & EASE DRIVE STORE OF THE FUTURE PACKAGE GOODS TO COME FROM ON-LINE SERVICE AS GROCERY TO FOCUS ON FRESH FOOD

By Published on .

The year is 1998. A busy executive returns from a harried day at the office to a house full of hungry kids and a kitchen full of dinner opportunities, the latter thanks to a high-tech grocery system that lets consumers shop in a variety of quick and easy ways.

To keep her kitchen stocked and shopping time minimal, she orders package goods from an on-line service at her office.

She buys fresh foods and prepared meals at a local supermarket that is organized to get her in and out as quickly as possible, with complete dinner items grouped together in aisles and self-service, credit-card friendly check-out. No money exchanges hands. No time is wasted wondering what to serve with Rice-A-Roni. No long lines at checkout.

It's the supermarket of the future, where shopping is an adventure in electronic consumption (and, actually, already available in bits and pieces today).

Stores will be more specialized. Regional distribution facilities will arise to pick-and-pack orders placed by interactive TV or computer and deliver them to home or office.

A new breed of stores, like H.E. Butt Grocery Co.'s new Central Market in Austin, Texas, which carries mostly fresh prepared meals and is stocked with imported and hard-to-find items, will dot the neighborhood (see story on Page S-15).

Central to the experience will be efficient and expedient shopping.

"The currency of the '90s has become time," says Mike Gorshe, executive director with Andersen Consulting's food industry division in Chicago. "Our focus has turned to taking advantage of whatever free time we have."

Industry consultants believe much of these applications will be regular fixtures in shoppers lives before the end of the decade.

ShopperVision, a home-shopping system for groceries and drugs, is scheduled to become available to cable TV viewers in Orlando as part of Time Warner's planned Full Service Network this fall.

On the two-way interactive digital system, consumers will see a three-dimensional "electronic replication" of a supermarket, with products in the exact location on TV as they are in the store, says Sandy Goldman, ShopperVision president-ceo. A fulfillment company will handle delivery, at a cost of $5 to $10 per order.

Facilitating the change is a trend toward grocers' acceptance of credit and debit cards, says Mr. Gorshe. Where as recently as a year ago many supermarkets were not equipped for credit cards, today most have realized consumers using cards are buying twice the dollar value in goods than those paying by cash or check, he says.

According to a Food Marketing Institute survey of members, while 70% of respondents said their stores used credit cards in 1993, only 35% of their companies' stores were equipped for credit card usage. By the end of this year, 82% of companies will use credit cards, with 49% of those companies' stores equipped.

Couple that with the average home-delivery purchase of $111-compared with average in-store purchase of $23-and the incentive to participate is obvious.

Companies such as Shopper Express, which runs on the America Online computer network, and Peapod Delivery Systems are tapping into the what Andersen Consulting says is a $130 billion-a-year retail home delivery market.

The target audience is the upscale consumer market hoping to whittle the shopping chore down to a few minutes a week on the computer, says Peapod President Andrew Parkinson, whose company began offering its service in San Francisco-area Safeway stores in 1993 and Chicago-area Jewel Food Stores stores three years earlier.

Since Jewel began working with Peapod, Mr. Gorshe says, the supermarket chain has experienced an 8% sales increase.

Today, a total of more than 7,000 consumers use the system in both markets-with 30% of those customers shopping from the workplace, he says.

The hope is to speed up and shorten the shopping outing.

"The key thing to realize is the store wants those shoppers in and out as quickly as possible, and the consumer wants to do that, too," says Steve Elson, director of marketing at Catalina Marketing, an on-site electronic couponing company. "Anything that slows down that process is not going to be productive or realistic in the future."

Among other technology and advancements, some 30 stores nationwide, including Dominick's Finer Foods in the Chicago area, are testing self-service customer check-out.

A new system of imprinting bar codes with infrared data will provide greater shoplifting security and complement a product under development in South Africa by a Pretoria-based company called CFIR, a research and development company.

The system will use an X-ray device to scan a shopping cart filled with groceries-without unloading, Mr. Gorshe says.

Another 50 U.S. stores are experimenting with LCD (liquid crystal diode) shelf tags, which enable grocers to immediately match a competitor's price, and post specials and promotional tie-ins, he adds. Supermarket companies that are using this technology in select stores include Vons, H.E. Butt, Giant Food Stores and Jewel.

As is the case with much of the new technology, what's holding up shelf tags is the cost; running at $15 each at their introduction in 1989, they're now down to around $6 per tag.

Many of the companies involved opt to tag those 30 or 40 items that account for the greatest volume of sales, he says.

In the future, companies will be able to display specials-complete with audio and full-motion video-on TV monitors with the signals beamed via satellite to all the stores in a chain.

Also emerging is the use of on-line services, such as America Online and CompuServe, which now offer grocery shopping. Customers pick their items, pay by credit card and a regional distribution center fills the order and sends it direct to the customers.

Optimally, this trend-along with the move to deliver package goods from an off-site order fulfillment facility-would free space in the store that otherwise would be taken up by bulky package goods.

"There's no reason [for] the retailer to have stock of items like that," says Matthew Brandabur, managing editor of In-Store, a newsletter on in-store marketing and technology published by Chicago-based Retail Systems Consulting. "You won't be looking at a wall of Cap'n Crunch. You'll be looking at one little panel that says `Cap'n Crunch.'*"

The interactive grocery experience isn't without its pitfalls.

Some people believe the technology will not handle constantly changing retail prices, and that interactivity will leave all but the computer literate "early adapter-adopter" community walking the aisles.

"You're talking about an incredible infrastructure to reprogram the system every day," says Roger Selbert, a Los Angeles-based trend watcher and publisher of FutureScan, an every-other weekly retailing newsletter. "I think that it's a long way in the future, and I don't think it will ever be the way most people shop."

Indeed, shopping on an on-line system may be convenient, but it won't eliminate the grocery store.

"I don't think anything is going to take the place of the smell of fresh-cooked bread," says Mr. Brandabur.

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