Recalls, and plans for them, are key crisis tools 8716

Stop & Shop offers a "shopping buddy," which is a touchscreen PC tablet with built-in bar code scanner. Attached to the handlebars of the shopping cart, the shopping buddy can download grocery lists, scan products as they are put into the cart, even order deli items without waiting in line. The PC is very similar to the Personal Shopping Assistant used at the Metro Future Store in Rheinberg, Germany (see page 40). At Indianapolis-based Marsh Supermarkets, the store layout is quite different from traditional supermarkets, with multiple boutique-style shops comprising stores within the store. Safeway has launched a $100 million marketing campaign called "Ingredients for Life" to identify itself as more upscale, redesigning many of its stores around a "lifestyle" theme and selling high-margin products like organics and natural foods. What's going on here? Why this flurry of innovations?

No segment of the retail environment is as cut-throat competitive as grocery. Today, more than a dozen types of retailers are vying for the consumer's food dollar, including traditional supermarkets, supercenters, club membership stores, convenience stores, pharmacies, gas stations and natural foods stores. Add to that the chunk of the total food dollar that restaurants now take—a whopping half—and it's easy to see why margins in supermarkets today are razor-thin. Traditional supermarkets make about one cent on every dollar spent, compared with ten cents at Wal-Mart. But supermarkets are getting smart and pushing back at the retail behemoth. Unable to compete on price alone, supermarkets are finding that a happy store shopper often lingers longer, and guess what that translates into? For years, the supermarket mantra has been "get 'em out as fast as possible." Now, that tactic is being questioned.

It's true that today's consumer is extremely price savvy, which is largely why the Wal-Mart model has been so phenomenally successful. If the truism in retail is, "The consumer is king," for supermarkets, in particular, that should be amended to, "The consumer is dictator." Consumers' marketing power is stronger than ever in history, and it's becoming ingrained, thanks largely to the stores' ability to track buying trends through loyalty cards. Sales are watched by product category, by price sensitivity, by store location—right down to the individual shopper. Consumers are notoriously fickle, and the meteoric rise of a product's market success can literally turn on a dime. Stores have to be poised to react with the hair-trigger response and speed of a jaguar.

At the Metro Future Store, inventory is being traced via radio frequency identification from receipt at the distribution center, through transportation to the store, stocking in the store's back room, and placement on the retail floor. Smart shelves equipped with RFID readers can sense when stock has been nearly depleted and alert employees to replenish before a stockout occurs. Metro Group claims that preventing stockouts can measurable boost sales. Tracking product so attentively allows Metro to restock exactly what the store needs, exactly when it's needed. Overstocks and expired products are greatly reduced, saving the store even more.

The supercenters of the world are not likely to go away anytime soon. But that doesn't mean there isn't room in this fiercely competitive environment for other stores to survive, and even thrive. The promise of new technologies and, yes, a few whiz-bang gadgets are altering the supermarket landscape.