retail news in context, analysis with attitude

Ruminations & reflections by the Content Guy

CHICAGO - The LEAD Marketing Conference, taking place this week at the Westin O’Hare, is by its very existence an act of optimism. For one thing, it is a new conference during a recessionary time when even established conferences can have trouble gaining traction. For another, it was well attended by people from all sides of the industry aisle, retailers and manufacturers as well as service providers. And finally, while focused on technology solutions, it was rooted in the art/science of marketing, and using technology as a tool to connect with shoppers.

So give them points for optimism.

Before I go any farther, I should offer two bits of full disclosure. Not only was the LEAD Conference a MorningNewsBeat sponsor for the past few months, but I also delivered the Tuesday morning keynote. So I have a rooting interest in the conference being successful.

There were a couple of statements by speakers at LEAD (which stands for Loyalty, Engagement, Analytics, Digital) that caught my attention and made me ponder future possibilities…mostly in the form of questions.

For example, Stephen Vowles, senior vice president of marketing for Ahold-owned Stop & Shop and Giant of Landover, noted that in stores using the company’s “Scan It” initiative – which allows customers to use hand-held scanners as they shop the store, making the checkout process significantly more efficient – five percent of customers are using the devices…and that 10 percent of sales are being generated by the system. In addition, he said, “Scan It” transactions are on average $7 higher than those not using the system.

Now, those strike me as pretty good numbers. But it also made me think about Ahold’s Peapod online grocery service, and wonder to what extent there is overlap between the customers ordering online and those using this in-store technology. You'd think that there must be some, since a consumer willingness to experiment with such tools would seem to be something that they would have in common. But to this point, Vowles told me, the data is not being pooled, so there really is no sense of how much overlap there may be. (Though he said that he was convinced that Peapod offers the company a myriad of opportunities to apply lessons learned online to the in-store experience.)

And then something else occurred to me. Stop & Shop hasn’t really studied to what extent use of the “Scan It” system may effect how people shop the store, though at some level you'd think it would. After all, if I’m essentially bagging my own groceries as I walk through the store, my impulse would be to buy the heavy things first (like gallons of milk) and the light and fragile things last (eggs, for example). But since eggs and milk generally are close to each other, does that mean that I have to walk the store twice to make sure stuff doesn’t get crushed? Does it require a different sort of shopping cart that takes the self-scanning process into account? Or does the store layout need to be rethought?

Now, when only five percent of customers and ten percent of transactions are going through the system, major changes probably aren’t necessary. But what if, at some point, “Scan It” accounts for 25 percent of customers and 40 percent of sales? What exactly is the tipping point? And does it make sense to start preparing for that moment now, rather than wait until the tipping point is within view?

This is both a challenge and opportunity, and they will be faced by Ahold and, in all likelihood, a number of its competitors and brethren. And I think it is fair to say that the retailers that meet the challenge and embrace it – as opposed to doing business as usual – will be the ones that will have a strategic advantage in the future.

In other words, the ones that will lead.
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