Wi-Fi Goes Shopping

By Gerry Blackwell

September 25, 2003

Making it easier to find what you want: a German grocery chain is trialing a wireless Personal Shopping Assistant application. Meanwhile, another is using Wi-Fi to track shoplifters. It's all in a days work when your network is location-aware.

Global patterns and trends in technology deployment and adoption make a fascinating study. In the case of Wi-Fi, North America clearly led the way initially. Now, at least in some areas, Europe is taking the lead.

Consider the case of Wi-Fi locationing technology. Many of the companies providing the technology -- Bluesoft, PanGo Networks, Newbury Networks -- are U.S.-based. But arguably the three most interesting and innovative applications to date are all in Europe. PanGo's PDA Guide at the Tate Modern Gallery in Lond (which was covered here) is one. Another is an unannounced pilot deployment by Bluesoft in a major German grocery chain that will use Wi-Fi locationing and asset tracking to help reduce alcohol theft (see more below).

Locationing technology from Ekahau, headquartered in Helsinki, Finland, is at the heart of the most ambitious and innovative location application yet. It's a Personal Shopping Assistant (PSA) developed jointly by UK-based software firm Multichannel Retail (MCRL) and German-based hardware integrator Wincor Nixdorf.

The prototype wireless PSA was developed for the Metro Group Future Store Initiative. Metro Group is the largest retailer in Germany. The Future Store, in Rheinberg, is a refurbished Metro grocery store fitted out as a showpiece to test and demonstrate new retail technologies, the PSA being just one of many.

The PSA is a custom-designed tablet PC with integrated Wi-Fi capability and bar code reader. The customer comes into the store and takes one of the devices -- there are 60 of them -- from a charging rack and clips it on to a shopping cart.

They must be Metro Group loyalty card customers to use the service. As soon as they swipe their card over the PSA's bar code reader, the unit retrieves -- over the store's 20-access point Cisco Wi-Fi network -- data on any past shopping activity or shopping lists they might have created at the store's Web site before coming in.

As the they move around the store, the device feeds them information based on which aisle they're in. It will remind them of items that are on their shopping list and/or items they frequently purchase.

It will also remind them of infrequently purchased items in that aisle that they may have forgotten but need. Of course, it also uses the system to advertise in-store specials. A search function lets customers key in the name of an item and then shows them where it is in the store on an onscreen map.

As they pick up items customers swipe them over the bar code reader. When they check out, they go through a special express check out where their order is already added up and all they have to do is pay.

"For the customer," says MCRL managing director James Pemberton, "the benefits are obviously the convenience of not having to ask where things are, and the speed -- and of course the savings from the promotions."

For the store? "First," Pemberton says, "they're getting loyal customers, because only by using the service regularly [so the system learns their shopping patterns and preferences] do you get the full benefits."

It also reminds customers of things they might otherwise forget, so the store doesn't lose some of that consumer's spending to convenience stores and gas stations. Finally, the service is an effective way to promote store brands or sponsored specials and increase total basket size.

None of this is proven, of course. The PSA, like most of the technologies on show at the Future Store, are experimental.

Because the wireless network itself isn't particularly stable and the Wi-Fi client devices chosen aren't optimal for the locationing part of the application, the software-only Ekahau positioning technology can only pinpoint the location of a customer to an aisle -- most of the time. It can't tell what product section she's standing in or passing.

"This is not representative of what it would be like in a real store where the environment would be a little more static," Pemberton says. "We're hopeful that over the next year we can get [positioning] down to the level [of product section rather than just aisle.]"

Despite the flaws, there has been steady use of the service -- "a number in the hundreds each week checking out using the PSAs," Pemberton says. When the Future Store launched in April, there were lots of "VIP" users and curiosity seekers, but now it's ordinary customers using the PSAs on a regular basis.

"I think Metro Group will take quite a long look at all the solutions at the Future Stores," Pemberton says. "Over time, though, as they prove the business case for these solutions, they'll gradually begin migrating them to other stores. In the case of the PSA, it's too early to make that decision yet."

Metro Group has, however, agreed to extend the trial until at least the end of 2004.

Meanwhile, other retail chains are taking a keen interest. Although he has no other deals to announce, Pemberton says several other retailers in Europe are talking to him about trials. Plans are also afoot to partner with another hardware company and market the system in the U.S.

The MCRL part of the technology is hardware and locationing system agnostic, Pemberton points out.

To deploy a PSA system like the one at the Future Store in Rheinberg would cost a typical grocery chain about $150,000 per store. That includes hardware and software, including PSAs and the positioning system, plus training and full implementation by a systems integrator.

One wonders, though, how long the plastic-housed custom PSA units will last. How many will be dropped and broken? How many will disappear?

Maybe Metro Group should talk to Bluesoft about that last point. Bluesoft is working with another German grocery chain on a Wi-Fi-based theft reduction system. Or it could be the same chain -- the company isn't at liberty to say who the customer is at this point.

Bluesoft is focused primarily on applications involving wireless access tracking. A big one is tracking grocery shopping carts. Theft or loss of grocery carts is "an $800-million problem worldwide," says Bluesoft vice president of business development Andris Berzins.

European retailers are interested in a system that could track carts going off the property and automatically lock their wheels when they do.

Bluesoft's German customer has a big problem with alcohol theft and wants the technology to do more. The system will automatically red-flag any cart that goes down the alcohol aisle and continue to track it.

If the cart goes through a check-out line, the system stops tracking it. If it leaves the store without going through a check-out line, that's a pretty good indication of a thief at work and the store can take action.

Bluesoft's technology, which Berzins says can accurately locate a Wi-Fi device or tagged asset within a few meters, currently uses outboard hardware at each access point location and Wi-Fi tags -- 2.5-inch-square devices -- that cost about $65 each.

Berzins is talking to most major access point OEMs (original equipment manufacturers) about integrating Bluesoft hardware into their products. He predicts many will build in Bluesoft capabilities soon and that the first integrated devices will appear early next year.

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