I came across an article yesterday describing how Bloom grocery stores in the Northeast -- owned by the Delhaize Group -- are experimenting with personal scanners. The idea is you carry the device with you on a shopping trip, scanning the items yourself as they go into the basket, reducing wait time at checkout.
Is this a new idea?
I would say this is hardly a new idea. The Sam's Club division of Wal-Mart (NYSE:WMT) tried handheld scanners about seven years ago, eventually abandoning the concept. I tried it several times, but eventually became completely frustrated with the experience.
At first it seemed really cool. I was more in control of my shopping experience. The novelty wore off about halfway through the store when I suddenly began to wonder whether I had scanned everything in the cart, or had forgotten an item. With kids in tow the problem multiplied, as the little rascals had a habit of adding items to the cart when I wasn't looking. And then there was the item I had already scanned but later decided to put back.
Just about all the major U.S. grocery chains, including Kroger (NYSE:KR), Safeway (NYSE:SWY), and SUPERVALU (NYSE:SVU) have examined personal bar code scanners but chosen to go the route of self checkout lanes instead. They reduce labor costs and give the customer a choice of whether to self scan. The technology is working well, if you can get over the irritation of having a machine tell you what to do. By the way, personal bar code scanners are expensive. It's a lot harder to walk out of the store with a self-checkout lane accidentally stuffed in your pocket.
The next big thing -- for real
Mass merchandisers know the next big thing isn't personal scanners. What will revolutionize checkout is a radio frequency identification (RFID) chip embedded in every item. As one would expect, Wal-Mart is leading the effort to make this technology work. The company first piloted RFID chips in its distribution network in 2004. There are currently 300 suppliers attaching RFID chips to merchandise cases, with another 300 coming on line during 2007.
The technology hasn't reached the item level yet, but that's the next evolution. As the chips become more affordable, we can eventually look forward to a checkout process where an RFID scanner reads the entire contents of a shopping cart instantaneously. That's the technology I'd put my money on.
The problem is it's hard to say which companies are going to be the big winners in RFID. But names to keep an eye on include Hitachi (NYSE:HIT), Motorola (NYSE:MOT), and Verichip (NASDAQ:CHIP).
For more insights into RFID, check out:
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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, and owns shares of Wal-Mart, but none of the other companies mentioned in this article. Check out the Fool's disclosure policy by clicking here.
