Apr 30, 2003 (10:04 AM EDT)
Tomorrow's Supermarket: Digital, Digital, Digital

Read the Original Article at InformationWeek

RHEINBERG, Germany (AP)--The supermarket of the future has wireless express checkout, smart shelves that alert staff to expired cream cheese and a "VeggieVision" produce scale that sorts pears from peaches with a digital camera.

At least that's the vision the German retail chain Metro AG is promoting with a new store that showcases a number of new technologies under a single roof.

The heavy use of wireless equipment, in combination with older technology such as bar codes, is an attempt to find out what will cut costs and attract customers over the next five to 10 years.

"We are just at the beginning of the technological modernization of retailing," says Metro CEO Hans-Joachim Koerber.

Perhaps the key feature at Metro AG is smart tags, or RFID chips--short for radio-frequency identification--that broadcast data for several feet, enabling receiver-equipped smart shelves or handheld scanners to track what's in the store.

Thus, the store alerts staff to outdated products or when the milk is running low. More enticingly, RFID offers retailers the chance to make the time-consuming job of taking inventory by hand simply go away.

The new store, which opened to the public on Tuesday, is perhaps the most integrated example of how supermarkets are advancing in high-tech wizardry. U.S. giant Wal-Mart and Britain's Tesco, along with consumer product companies such as Procter & Gamble and Gillette, are also experimenting with RFID technology. Meanwhile, a number of supermarkets have self-checkout.

And just last November, Safeway Inc., the third-largest grocer in the United States, began testing a smart shopping cart--a sort of computer on wheels--that analyzes individual buying habits and can help lead shoppers to the best prices.

At Metro, customers cruise the aisles with a touchscreen on their shopping carts. For the benefit of journalists on Monday, the supermarket used supermodel Claudia Schiffer to demonstrate the system.

Shoppers log into the system by scanning a customer ID card into the touchscreen. The device lets them scan bar-coded goods as they toss them in the cart, then sends the prices to checkout through the wireless network.

That means there's no time-consuming scanning at the checkout: The cashier just flashes the total and takes your money. For repeat customers, the touchscreen fishes up their last visit from the back-room server and proposes it as a shopping list.

By calling up a store map on the touchscreen, customers can get directions to items they want to buy. Schiffer, for instance, tracked down the children's DVD "The Little Polar Bear," a package of stew beef and a matching wine.

"A red wine? Yes, a red wine would be nice," she said.

Other innovations in the store are the wireless-controlled price displays on shelves that can be instantly updated by remote. There's also the IBM-developed vegetable scale designed to recognize fruit and print out the price sticker.

Still, there are hurdles before the glitch-free shopping of the future arrives.

The scale, dubbed "VeggieVision" by developers, can't always distinguish close calls--say, between different types of tomatoes--and invites the customer to complete the choice. It won't catch on if the customer prints an incorrect price tag.

More important, only a few products have RFID tags, not enough to make their use at checkout worthwhile. Later it's hoped that the tags will enable customers to simply breeze out and have the bill appear later on their credit card.

Right now, RFID only tracks goods at the box and pallet level--useful, but not something customers will see.

Metro, which has more than 2,300 stores in 26 countries, says it is paying supplier Philips Electronics 50 cents to $1 for the chips--too much to tack on to low-priced items such as a 25-cent cup of yogurt.

Only when the price comes down--to, say, 3 cents a chip in the coming years, with order volumes in the hundreds of millions or billions--could RFID show up in the dairy section.