New shopping technology could breed supermarket discrimination

By Michael Liedtke The Associated Press
Monday November 11, 2002


MORAGA – What if a shopping cart became a computer on wheels, a sales vehicle sophisticated enough to analyze individual buying habits so it could pinpoint which shoppers got the best prices? 

Safeway Inc., the nation’s third-largest grocer, is quietly searching for the answer by testing a smart shopping cart. The trial reveals how retailers might capitalize on the reams of consumer information they have been stockpiling since the mid-1990s. 

It is unfolding at two of Safeway’s northern California stores, one in the affluent town of Moraga near San Francisco, the other in rural Cameron Park. 

Shoppers are greeted by the “Magellan” — a shopping cart with a book-sized computer on the front handle. A side slot lets shoppers swipe their Safeway “club” cards — the identification most major grocers now require for discounts on certain items. 

Reading the club card enables the shopping cart’s computer to tap into the buying histories Safeway has compiled on most customers. The cart can then display four grocery items offered at sales prices unavailable to anyone else. 

The computer also provides a guide to each consumer’s most frequently purchased items and monitors the shopper’s steps through the aisles, flashing ads to promote nearby merchandise. 

Safeway and other grocers experimenting with similar technology believe the tools will make it easier to reward their best customers and increase sales. 

Keeping these customers happy is becoming even more important to supermarkets as they face increased competition from the likes of retail powerhouse Wal-Mart Inc. 

The grocers also believe customers will embrace the cart’s other bells and whistles, such as store maps. 

Consumer advocates fear the smart carts will cultivate a caste system in which grocers cater to big spenders by offering deep discounts unavailable to poorer consumers. 

“I am concerned that some people are going to be left behind by this technology,” said John Vanderlippe, associate director for Consumers Against Supermarket Privacy Invasion and Numbering, a watchdog group. 

The computer, for instance, could conclude that a single man generates relatively little profit compared to a mother buying groceries for her husband and two kids. 

There’s a powerful incentive for supermarkets to be more discriminating about their prices. 

Industry data show 30 percent of supermarket shoppers generate 75 percent of a store’s sales. Analysts say it makes sense for grocers to pamper the big-spending customers to make sure they keep coming back. 

But “the best customers at supermarkets often get some of the worst treatment,” said Arthur Middleton Hughes, a vice president for CSC Advanced Database Solutions, a database-building company in Schaumburg, Ill. 

As an example, supermarket customers buying the most groceries are routinely stuck in the longest checkout lines while shoppers with just a few items use express lanes, Hughes said. “Giving greater discounts to the best customers could be just one way to reward them for standing in longer lines.” 

But the technology also might work against big spenders. For instance, the smart cart might determine that a mother buys peanut butter for her kids every week, no matter the price, and conclude there’s no reason to ever offer that shopper a discount. 

Although the consumer response during the trials so far has been “fairly good,” Safeway doesn’t have any current plans to introduce the smart-cart system in all 1,650 stores nationwide, spokesman Brian Dowling said. 

“We think this could be a unique way to deliver more offers to our customers,” Dowling said. “It would be a bad assumption to conclude all the offers will only go to high-income individuals.” 

Helen Rosenberg of Moraga swipes her card through the computerized cart to get more good deals, but she doesn’t like the system. 

“It’s horrible. It’s totally like Big Brother is watching you,” Rosenberg said. 

Safeway isn’t the first grocer to experiment with smart shopping carts. Last year, Iowa-based Hy-Vee Inc. tested similar technology that used infrared tracking devices and video screens to make special offers at some Kansas City, Mo. stores. 

The company that developed that system, Salt Lake City-based Klever Marketing Inc., has been trying to sell its smart carts to toy stores, warehouse stores and other discount merchants, according to regulatory filings. Klever Marketing officials didn’t return calls seeking further comment. 

Smart-cart critics, meanwhile, hope the technology fails. 

“This idea could backfire,” Vanderlippe said. “It could help people realize just how much information they are sharing about themselves.”