Super Market

High-tech store in small German town shows how grocery shopping may actually become enjoyable
By EDWARD TAYLOR
DOW JONES NEWSWIRES

Can a grocery store in the sleepy German town of Rheinberg be the future of retailing? Software maker SAP AG, retailer Metro AG and chip maker Intel Corp. are betting on it.

Business Applications of IT Services Co-Winner
SAP AG, Germany

They teamed up with around 40 other companies to create a high-tech supermarket around 300 kilometers northeast of Frankfurt. At first glance, it looks like any other medium-sized store where housewives and their impatient children dodge shop attendants who are busy restocking shelves. But a closer look past the pinboard ads for secondhand bikes and yoga classes shows there is more at work than meets the eye.

A raft of technology is attached to products, shelves, shopping carts and checkout counters -- designed to enhance and smooth the shopping experience for retailers and customers.

High-Tech Shopping Cart

Guenter Nennstiel, a machine-tool operator from nearby Moers, grabs a shopping cart equipped with a touchscreen computer and scanner and slides in his personal shopping card. Customers who have updated a shopping list online will see it appear onscreen along with a greeting alerting them to special offers.

After pushing his way past two large aerials that flank the store entrance, he scans items into the computer before placing them in the cart.

In an instant the item is registered, giving Mr. Nennstiel a readout of how much he spent, as well as access to ancillary information about the products he has placed in his trolley. "It's really not that complicated," Mr. Nennstiel says. "Even for someone who isn't computer-literate."

If he has any problems, a team of assistants is ready to help the 2,500 or so customers that pass through the store every day.

The three founders of the store -- Metro, SAP and Intel -- have picked Rheinberg to extend the boundaries of efficiency and convenience in retailing.

When a customer holds a piece of sirloin next to the scanner, she can access a graphic illustration detailing which animal it comes from, as well as nutritional details and recipes about the product. As she navigates along the vegetable and drinks section, past large plasma screens displaying the latest product offerings, an arrow on her screen shows her a bird's-eye map of where she is in the store. When she gets to the checkout, paying takes only a matter of seconds since the cart doesn't need to be unloaded. The cashier simply needs to ask the customer how she would like to pay and, reading the total amount from the touchscreen computer, takes payment.

For store managers, technology like SAP's software helps to ensure that shelves are always stacked with the right goods by tracking inventory all the way from the factory where they are made to the customer's basket at the checkout.

SAP developed the software that tracks smart tags, also known as radio frequency identification, or RFID, tags. These tags, equipped with radio transmitters, are stuck to individual products or entire pallets of goods. Although the technology still needs fine tuning, the tags, combined with special RFID readers, help to ensure that the right goods arrive in the right warehouse or on the correct shelf.

"You can make the process of distributing goods more seamless," says Christian Koch, SAP's project manager for the Metro Group Future Store Initiative, as it's formally called. Moving a product from the place where it's made to the store shelf includes a series of complex processes involving producers, wholesalers, freight companies and individual store managers.

The process is prone to error, and so the loss of a delivery receipt can mean that a shrink-wrapped pallet of hazelnut yogurt either won't get unloaded or will be confused with vanilla instead.

"A lot of delivery mistakes cannot be corrected because the truck has already taken off, or because the goods are perishable," Mr. Koch says.
,br> Tracking Information

SAP developed a lot of the software for RFID-based systems, which enables precise instantaneous tracking of goods. As trucks and customers enter and leave the store or warehouse, information from tags, combined with the retail software, alert the store's central computer about which goods have been sold and how many are left in stock, and use the information to place orders for the next batch.

Because the whole process is automated, a lot of errors can be eliminated (like the loss of a delivery receipt), although a host of new challenges are emerging, Mr. Koch says.

According to SAP, the various technologies in the store help establish workable standards for innovative retailing technologies. For instance, there's the wireless local area network standard 802.11b, which links personal digital assistants carried by staff with electronic shelf labels, checkout points and flat-screen displays.

SAP's RFID supply-chain technology allows store managers everywhere to access real-time information about warehouse shipments and shop-floor inventory levels. At around 0.50 apiece, RFID tags are still more expensive than some of the goods they're supposed to label. But in the warehouse, RFID scanners are reading the tags on pallets of goods being trucked in -- providing they're stuck to the outside edges of each pallet.

"We're having to adapt the way we stack and compile pallets," Mr. Koch says. "That's an example of what we learned when we use the technology in the real world."

With most of the technology working behind the scenes, customers barely notice the promise of new efficiencies. "The technology can do a lot more things than I can deal with," says Dorothee Brunner, a secretary from the Rheinberg area. "But the thing I like most about it is the fact that I don't have to take the goods out of the shopping cart when I check out."

-- Mr. Taylor is a reporter for Dow Jones Newswires in Frankfurt.

Write to Edward Taylor at edward.taylor@dowjones.com

Updated December 5, 2003