Dallas, TX — February 23, 2003 — Solutions to one of the least liked parts of food shopping — long checkout lines — are proliferating worldwide, according to a new Food Marketing Institute (FMI) report released here today at the FMI MARKETECHNICS® convention.

Check It Out — Global Innovation for the Front End identifies seven technologies that food retailers are exploring to speed the checkout process and provide additional customer services:

Customer self-checkout — North American retailers are installing these at a rapid pace: 29 percent currently have them and 24 percent are planning to install them, according to another new FMI report, Technology Review Highlights, 2003.

Portable customer self-scanning — Shoppers scan groceries with a handheld device as they are placed in the cart, reducing the checkout to a payment transaction based on the scan data.

Queue busting — Store associates pull customers out of long lines, scan their purchases and send them to a checkout lane dedicated to making payments.

Wireless point-of-sale (POS) systems — Retailers use radio-frequency (RF) technology to create mobile checkout lanes inside or outside the store.

Shop and go — Customers can bypass payment lines by swiping a card across a reader, and the funds are charged against a credit card on file in the retailer’s database.

Digital receipt — Retailers e-mail customers an electronic receipt for each transaction, which can be used to update their business or home accounting software files.

Dynamic lane configuration — Retailers reconfigure checkout lane designations, such as full service and express, to most efficiently serve the customers waiting in the lines.

“This report shows that retailers are listening to their customers,” said FMI Senior Vice President Michael Sansolo. “And the industry is applying a broad array of technologies to speed up the checkout process.”

Retailers are not abandoning traditional checkout methods, according to the report, since many customers still prefer to have their orders processed in this manner. Rather, retailers are using new technologies to supplement traditional methods, and the choices vary in different parts of the world, based on cultural preferences and physical requirements.

In Japan, for example, customers prefer to interact with people during the checkout process. As a result, they use queue busters to expedite the checkout time.

Retailers in Asia and Europe, challenged by limited store space, are speeding the process with customer self-scanning and wireless POS payment technologies. Self checkout lanes are more widely used in North America, where retailers have the front-end space to accommodate such systems.

Case Studies Underscore Importance of Involving Consumers and Educating Employees

The report features case studies of retailers in North America and Europe, showing how they implemented alternative checkout technologies. In all cases, they were concerned how consumers would react to these changes, prompting retailers to involve consumers in the implementation process through focus groups, customer surveys and pilot tests to solicit their feedback.

Employee education was another major concern, both to train workers to supervise the self-checkout process and to assure them that these technologies would not eliminate jobs.

One retailer encountered shopper resistance when self-scanning systems were introduced. The company did not change its staffing for traditional and self-checkout lances, prompting employees to recruit shoppers to use the new systems.

Another overcame this resistance by initially overstaffing the self-checkout lanes and keeping all of them open. Employees could then help shoppers learn how to use the new technologies and ensure that their first experiences were positive ones.

Four-Step Process to Implement Alternative Checkout Technologies

For companies looking to implement new checkout systems, the report presents a four-step action plan based on the case studies and surveys of 14 retailers and wholesalers that have implemented the technologies:

1. Identify the technology solutions best suited for the company and its customer base. These decisions may be driven by strategic objectives such as offering new checkout options to address competitive concerns. Also important is identifying a technology supplier able to facilitate the smooth introduction of new checkout systems.

2. Screen the new technology to ensure that the solution works operationally, that customers will accept it and that the system selected will present a return on the investment.

3. Plan, build and pilot-test the system, all critical measures to ensure that the technology operates well in the store environment and can withstand the inevitable mistakes by employees and customers, along with the technical errors that the vendor must fix.

4. Start up the system, keenly aware of its visibility to customers. This is the time to overstaff the new technology with people fully aware of how it operates. Have vendor representatives on hand to help as needed.

Emerging Technologies

The report presents emerging technologies that will affect the front end and possibly bring dramatic changes.

One of the most promising is the radio frequency identification (RFID) technology, which tracks products bearing unique electronic product codes (EPCs) as they move through the supply chain. This system can virtually eliminate invoice errors, out-of-stocks, shrink and counterfeit products. It can facilitate recalls, automate the checkout and provide precise, real-time information on consumer purchases.

Another is the more widespread use of smart card encoded with microchips that can store funds and other information needed for transactions. In Japan’s “chip on a card” initiative, smart cards are being issued to 550,000 consumers, which can be used to purchase good in 1,600 stores, including food retailers. In the U.S., retailers and government agencies are testing smart cards to provide benefits under the food stamp and Women, Infants and Children (WIC) programs.

Retailers are also beginning to use biometric technologies to authenticate customer identification by scanning fingerprints and other features unique to each person. This technology promises to protect consumers from identity theft, and retailers using it report significant declines in fraudulent transactions.

This report, Check It Out — Global Innovation for the Front End, was made possible by the support of Symbol Technologies, Inc., and Optimal Robotics. To purchase copies ($40 for FMI members, $127 for associate members and $150 for nonmembers) or to obtain more information, please contact FMI Publications and Video Sales (202-220-0723) or visit the FMI Web site (www.fmi.org/pub/).