DALLAS, TX — February 23, 2003 — Food retailers across the country continue to install self-checkout lanes, enhance electronic commerce communications and explore emerging technologies such as biometric and radio frequency identification, according to a new report from the Food Marketing Institute (FMI). The study, Technology Review Highlights 2003, was released at the FMI MARKETECHNICS® convention being held here.

The report also reveals that an increasing number of retailers are aware of the standards associated with Sunrise 2005, a mandate by the Uniform Code Council (UCC) that all North American retailers be capable of handling the 13-digit European Article Number (EAN) at point-of-sale (POS) and in their databases.

Self-Checkout Systems

Nearly 30 percent of food retailers are now experimenting with self-checkout systems, which provide a solution to cashier shortages and improves customer service by allowing more checkouts to remain open during busy times. There are two main types of systems in use: self-scanning checkout lanes and hand-held (portable) scanners. In stores with self-checkout, customers scan their purchases at the end of their shopping trip. With hand-held scanners, customers scan products as they are taken from the shelves. Although self-checkout is growing rapidly in the U.S., hand-held units are much more common in Europe.

Store Communications

Data communication between stores and company headquarters has become a daily activity for food retailers. Currently, 90 percent of survey respondents use e-mail systems at store level and 85 percent provide stores with Internet access.

Retailers are also using the Internet to communicate with vendors and customers. Nearly one-third use it to communicate regularly with vendors, particularly for product ordering.

Electronic Commerce

Just over six in 10 companies surveyed use electronic data interchange (EDI) for transactions with suppliers. A smaller number, 29 percent, have participated in B2B exchanges, which allow companies to perform efficient transactions via a network of companies worldwide. Approximately 23 percent use scan-based trading (SBT), which allows retailers to synchronize supply and demand at the POS and to reduce inefficiencies that increase overhead in the direct-store-delivery (DSD) supply chain.

Retailers have also been using electronic commerce to promote online shopping and other services. Just over one-quarter of companies offer home shopping and other store services through the Internet.

Emerging Technologies

Food retailers are increasingly embracing innovations in equipment, business methods and technology applications that enhance performance and efficiency. Biometrics and wireless communications systems are generating particular interest.

Biometrics, a method of scanning thumbprints, eyes or other unique physical qualities, are primarily being used in the retail arena as a method of customer and employee identification. Currently, 8 percent of respondents are using this technology, but nearly three times that number plan to implement biometrics at store level. Fingerprint recognition systems are the most widely used.

Two out of three food retailers employing biometrics have used the systems for managing employee attendance. Half have used them to authorize checks and 17 percent to process POS payments.

Wireless systems have become much more common at the store level, with close to 90 percent of the surveyed companies using some form of wireless communication. The majority, 66 percent, are using them for in-store communications. Nearly 40 percent use wireless networks at the POS, 16 percent use wireless scales and 6 percent use wireless hand-held payment terminals.

To improve customer service, just over half of the retailers surveyed use customer kiosks in their stores to deliver information and coupons, while two in 10 have personal data assistants (PDAs) available for customer and store purposes, such as conducting mobile transactions at the POS. Food retailers have also enhanced payment systems through the implementation of electronic check conversion and smart card readers, with 13 percent and 3 percent, respectively, using these at the POS.

Finally, companies in the survey expressed an increasing interest in the electronic product code (EPC), a system of microchips embedded in product packaging and radio frequency technology to communicate with readers throughout the supply chain. The chips provide individual item identification and enable retailers and manufacturers track products as they are produced, distributed and sold at checkout. Although commercial use of the EPC may be years away, several major manufacturers and retailers are participating in trial uses of the system. The technology is currently being studied and demonstrated at the Massachusetts Institute of Technology (MIT) Auto-ID Center.

Data Privacy and Security

With the development of loyalty card programs and Internet shopping services, food retailers have been proactive in protecting customer information. Six in 10 have a policy statement on consumer privacy, and an additional 15 percent plan to establish policies. In addition, 90 percent of companies are using firewalls to keep shopper data private and an another 8 percent plan to install firewalls.

Sunrise 2005

Just over half of the companies participating in the survey have stores capable of scanning the EAN-13 code at the POS. This multi-industry standard was established by the UCC to facilitate trade on a global scale. The UCC set January 1, 2005, as the deadline for North American retailers to be capable of handling the standard. Of those companies not yet compliant with EAN-13, 97 percent plan to be so by 2004.

Nearly three in 10 are currently capable of scanning the EAN-14, an even more important standard that the food industry worldwide is expected to move to in the next few years. Ninety-five percent of remaining companies plan to be capable of scanning EAN-14 by 2004.

At the database level, 67 percent of respondents are capable of storing EAN-13 transactions and just over one-third can handle EAN-14 ones.

Technology Review Highlights 2003 can be downloaded (free to FMI retail and wholesale members) at www.fmi.org/pub. Printed copies are for sale to retailer/wholesaler members ($10), associate members ($29.75) and nonmembers ($35).