Thinking by Peter Davidson

I have to go to the grocery store. In the daylight, no less. I usually like to go to the grocery store late at night. There are fewer people there then and so I am able to move through the store more quickly. There is a downside. There are fewer cashiers at that hour so the last 20 feet can be very slow. I wish that the stores close to me had self checkouts. One of my favorite stores some distance away has both self checkout and customer hand held scanners to scan purchases as groceries are selected. This system which I have written about before makes for very fast easy shopping outings.

A PeterThink Classic post:

Have you been to the grocery store lately? What a great place to see evolving technology. WIWAK(When I was a kid) cashiers did just that they handled cash. They read the price tag stickers on each item and manually punched the price into the cash register. Then came the widespread adoption of bar codes(UPC) and bar code scanners. Bits were associated with atoms. The codes don’t really have the price embedded in them like the ink on the little adhesive price tag, instead they merely tell the register (now a computer) what the item is. The computer runs a database that associates item codes (UPCs) with prices. WIWAK stock clerks had to manually re-price items when they were on sale. Now the price can simply be changed in the database and the shelf label. Labor savings. Then along come loyalty cards. These cards allow stores to reward loyal shoppers by reducing prices on select items when people use their loyalty cards. We all know that the system is tracking every purchase for marketing purposes. The store knows how many times a month or a year you buy milk. What you have for breakfast. Probably, the store knows a lot about your lifestyle. You recently started to buy diapers and baby formula = new baby in the house. You started buying larger diapers and baby food vs. formula = junior is growing up. Generally, people accept this info fog being emitted when they visit the store for the return they receive in the form of cost savings.

Now another tradeoff is being offered. A local store is testing a new system from Symbol Technologies. The Portable Shopping System offers users a basic trade. For the ability to send users targeted marketing messages while they shop suggesting companion products, competing products, special sale items, etc. the user realizes some time savings in the form of streamlined checkouts. Notice it’s a checkout not a cashier. The way it works is that users scan their loyalty card upon entering the store to release a handheld scanner from a rack. The game begins. Shoppers select, scan and bag their groceries as they move through the store. The device keeps track of scanned items and provides a running total of purchases. Periodically, messages appear on the screen. Scan cereal and the device reads "Need Milk?" When shopping is complete shoppers proceed to a self checkout machine and scan a final end of trip barcode. The central server records your order and associates it with your loyalty card. The "robotic checker" scans the loyalty card and the computer pulls up the order. Payment is made and the shopper exits the store with their self-bagged groceries.

Probably, the store now knows how long you spent in the store and possibly your route through the store and how long you spent in front of each shelf area. Yes, it is possible for the wireless technology that powers this system to triangulate the location of the handheld scanners. It’s not clear that the system includes these features at this time, however, future versions may include these features.

The Bottom Line.

This is a continuation of the development of sentient environments where information is attached, gathered and broadcast by physical items in our environment. In the next few years the technology will only become stronger and disappear into the walls, floors and ceilings around us. Manufacturers are close to being able to literally print RFID (radio frequency identity tags) tags on the packaging of their products. When this happens the "scanner" will be built into the handle of the shopping cart. Items will be added to your bill when they are placed in the cart. "Check out" that is totally invisible and transparent to the shopper. The cart gets your payment card info from the chip in your watch. The larger point is that the cloud of information surrounding the individual of the near future will be ever present and ever expanding. Your environment will know and tell your secrets. Oh, and your kitchen computer will know what you brought home from the grocery store. It will hear it from your car that red all those RFID tags on the drive home. But it’s OK because the computer knows that you bought everything you need to make your favorite recipe for dinner tonight.

It’s gonna be a great future!

More on Grocery Store Technology

The clueless Kmart announced today some new ads featuring among others Martha Stewart.

Kmart short on any innovative thinking is looking to minority communities trying to carve out a niche they feel they can compete in. Hence the "diversity" in their new ads. They are even introducing the new ads during the World Series. While that makes for good media attention I doubt it has much play with their target customer for those Martha Stewart sheets.

Time to revisit some previous thoughts on Kmart. From 5/07/2003.

I don't know any of the details of their situation. I do know that I don't know a single person who shops at any of the remaining Kmarts. If they don't come back with a radical new format and offering they simply won't make it. Half their market seems headed for Target and the other half is headed for Wal-Mart.

What Kmart should do:
Name Change - The Kmart name has failed. In the customers mind Kmart=bankruptcy. The must change their name as soon as possible. They must, however, develop their new persona before doing so.
Become the Merchandising Mechanism for Personality Brands - The new company should craft a new retailing concept that is tied to personalities. Building on their relationship with Martha Stewart, the company should develop marketing and merchandising strategies that are based upon successful personality brands. Martha Stewart, Oprah, Dr. Phil, Dr. Atkins, B. Smith, Suzy Orman, Ralph Loren and a host of others are building personality brands that all speak to some aspect of the American lifestyle. These brands use traditional and new media to communicate their messages. They also incorporate some degree of merchandising.
Create Community - Create a retail environment that is more than a traditional store. Create a club atmosphere where the swarms of the various personality brands can connect face to face with like minded individuals and lifestyle consultants(sales associates) through consultations, demonstrations, seminars, screenings, book clubs, lunch dates, birthday parties, and community group functions like PTA meetings, etc.
Create a "Third Place" - The concept of a third place that isn't home and it isn't work is prevalent in Asia where it often takes the form of an Internet café. Millions of young Asians utilize these third places to hang out and connect in person and virtually with others. The new company has the opportunity to become the chosen hangout for their customers. Provide cafes, restaurants, theatres, classrooms and lounges as part of the retail environment. Throughout it all provide computers and wi-fi connection to the Internet.
Charge a Membership - In order to create the impression of value, support the facilities, and command respectful conduct the company should charge an admission fee and offer annual memberships. In order for customers to understand the value of the experience offered by the company there should be a direct cost for them to have the experience. This is a concept between a health club membership and a CostCo or Sam's Club Card.
Partner Up - Don't go it alone. Partner with existing players to provide services outside your retailing background. Outsource the café, restaurant, bank, beauty salon, etc.
Embed in Local Communities - Leverage your new facilities to become the 21st century community center. Provide meeting space and support for local organizations and causes. Value community support across the country but act locally based on input from local members. Billy's cub scout meeting takes place at the same time Suzy's dance class meets giving Mom time to catch up on her E-mail, watch today's Martha Stewart Living and purchase the baking pans she saw on the show.

Too bad it'll never happen. The old dog is too old and set in their ways to make a run at such a radical forward thinking concept. Let's just sit back and watch as they close more and more stores.

With the story in the air about Ticketmaster looking to auction the best seats to various events to the highest bidder I think it's time to revisit this post from my classic blog.

You Could Pay for What You Get

The recent story about fans suing the band Creed for a bad performance points to an opportunity to capitalize on the value of a performance experience. Up until now the pricing and profit potential of a performance offering has been based on fixed prices. Theatre, concert or movie tickets have been priced in advance at levels set by the producers. If the actual experience called for a different price it hasn't been possible to make adjustments on the fly. Sure people have been able to demand and receive refunds when things go wrong, but what about increasing prices if things go really right?

If you have a really good experience at a concert what do you do? You buy a T-shirt and a CD on the way out. Concert promoters know that the increased revenue opportunity for exceeding audience expectations is in the increase in souvenir sales. Often there are complex revenue sharing arrangements between vendors and promoters.

Do you think the Creed fans who felt they didn't receive a concert experience worth what they paid (to the extent that they are suing to get their $54 back) were quick to get in line to buy T-shirts and CDs? What is needed is a system of pricing performances that reflects the quality of the performance itself.

Some time ago Coca-Cola had a PR blunder when they introduced a vending machine that increased the price of a coke when the machine sensed an increase in ambient temperature. People felt this was opportunistic capitalism at it's ugliest. Never mind that children do it at a young age with their first lemonade stand.

At first glance a system that can increase the price of a performance based on the quality of the experience can be seen as opportunistic capitalism. However, the system would be a win-win situation. Producers and performers would be highly motivated to produce the highest quality experience for their audience. Ticket buyers would feel the got a say in what their experience cost them.

How would it work?
Staying with our example of a concert. Ticket buyers would via a website nominate critics to attend the concert. These critics would be evaluated and selected by their online profiles and criticisms of the performers past offerings. Quality would be mediated by a trust and reputation management system. (like ebay, Amazon.com, Slashdot, etc.) A range of potential ticket costs would be determined. Say $50 to $150. The performers would be motivated to deliver a $150 experience. Concert audiences would agree in advance to pay what the critics determine. The critics, kept honest by the reputation system, would evaluate the performance and determine the ticket price. Credit cards would be charged sometime after the show.

The prime benefit of a system like this is that peripheral issues important to the audience experience can affect the revenue picture. If the promoter doesn't provide adequate security, toilets, or parking this can be reflected in ticket revenue. Fair for the audience and highly motivating for the promoters and performers.
With all of the variables in staging quality experiences variable pricing structures are necessary to provide the best value to audiences and fair rewards to performers and producers.

Riddle me this: Why does it cost the same to see an Oscar winning film and a film that critics hate? Why do movie theatres respond to increased demand for tickets to popular movies with increased supply(more screens and seats) rather than increased ticket prices? Broadway doesn't work this way. Just try to get tickets to the Lion King or The Producers.