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Goodbye to checkout lines? Wireless devices track purchases

By Jake Batsell
Seattle Times business reporter

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Killing time in the checkout line isn't much fun, unless you enjoy leafing through tabloids, horoscope books and soap-opera guides.

But what if you could bypass cashiers and check out with your cellphone?

That's one of myriad whiz-bang ideas on the drawing board as retailers grapple with how to weave technology into people's shopping routines. And with billions of dollars at stake, technology companies such as IBM and Microsoft are courting retailers with their visions of the future.

"We really feel there is a change coming that is probably the biggest change since bar-coding," said Janet Kennedy, managing director of Microsoft's retail and hospitality group. Last month, the group unveiled a "Smarter Retailing Initiative" aimed at landing the Redmond tech giant more retail clients.

"It's going to totally change the customer experience, the shopping experience, the way you run a store," Kennedy said.

IBM has long dominated the market for retail point-of-sale systems, which for the past few decades have been based largely on bar-code scanners. But the company's best-known model is at or near the end of its original lifecycle for many retailers, prompting IBM and its competitors to come up with new ways to tally a sale.

Self-checkout stands are in place at some grocery and home-improvement stores. But proponents say the next wave of point-of-sale systems will increasingly rely on wireless devices — including customers' cellphones and personal digital assistants (PDAs) — to ring up items.

The payoff could be enormous. In North America alone, the point-of-sale industry accounts for $6.7 billion in annual sales, said Greg Buzek, president of IHL Consulting Group, a Franklin, Tenn.-based firm that advises companies about retail technology.

What would these new systems mean to the everyday consumer? Here are some of the visions being touted by the tech industry:

• Customers would swipe their loyalty cards upon entering a store, triggering personalized promotions and alerting store employees if a high-spending customer has checked in.

• Instead of conveyor-belt checkouts, more customers will ring up their own purchases by using self-checkout stands or by logging the sale on their smart phone or PDA and automatically charging their credit card or bank account.

• Customers will browse the aisles pushing "smart carts" with small computers that will display customized deals and suggestions based on the customer's shopping habits. And with each item carrying a tiny radio frequency identification tag, customers won't have to stop at the checkout counter: They will be billed automatically when they push the cart out the door.

Some systems will help retailers behind the scenes. Last week, IBM and Microsoft unveiled technology to help retailers better manage inventories and supply chains.

IBM has partnered with Netherlands-based Royal Philips Electronics to develop systems for smart cards and radio ID, which is used to track items. Microsoft has added the radio-ID technology to its Axapta Warehouse Management software.

Some customer-focused innovations are years away from stores, but Wal-Mart is requiring its top 100 suppliers to put radio ID tags on their goods by the end of next year.

On the consumer side, IBM has developed retail technology it calls the "Store Integration Framework." But company spokesman Greg Thompson says it's premature to write an obituary for the checkout counter because new systems will be phased in gradually and are meant to serve in tandem with point-of-sale terminals.

"Point-of-sale systems are not going to go away," Thompson said. "But they're going to become more versatile."

Industry observers say it will take at least two years before the next generation of point-of-sale systems start hitting the mainstream.

"Some of it we're seeing today, like self-checkouts," said Gene Alvarez, vice president of technology research for Meta Group, a consulting firm in Stamford, Conn. "But the smart phones — that's probably going to take 18 to 24 months because there's a learning curve that the retailers have to climb."

And with any new technology, there's also a consumer learning curve. Alvarez cited picture-taking cellphones, which U.S. consumers are beginning to embrace only now, more than two years after they were launched in Japan.

While skipping the checkout counter may be an idea with near-universal appeal, consumers will be wary of exchanging more personal information for the added convenience, said Beth Givens, director of the Privacy Rights Clearinghouse, a nonprofit consumer-advocacy group based in San Diego.

Retailers will need to convince customers that their financial information is secure and that their shopping habits won't be shared with marketers or law-enforcement officials, Givens said.

"The privacy implications are huge," Givens said. "The retail industry is going to have to do quite a bit to increase the comfort level of their customers. Security is going to have to be extraordinarily strong."

The new systems also could create two classes of customers, Givens said: Customers who embrace technology will get better service and prices while those who don't — or who choose not to sign up out of privacy concerns — will pay more and get poorer service.

Technology companies argue that giving store employees more information about a customer's shopping habits will enable clerks to suggest items that are better tailored to that customer's needs.

But Robert Spector, a Seattle retail expert and author, cautioned that retailers shouldn't look to new technologies to replace the intuition of a good salesperson.

Technology based on past purchases, such as that now used by Amazon.com, "tells you what you did based on your past experiences, but it doesn't take into account, 'Yeah, but I'm tired of that, and I want something else,' " Spector said.

The best retailers hire employees who are capable of giving knowledgeable, attentive customer service, Spector said. When technology companies develop retail initiatives, he said, they often "forget that there's a human element involved."

"Without taking care of the human element," Spector said, "all this is a glorified video game."

Jake Batsell: 206-464-2718 or jbatsell@seattletimes.com

Copyright © 2004 The Seattle Times Company