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BERLIN, Germany – The most remarkable thing happened in the first few moments of the 2005 CIES It Conference here. A video was played onscreen. About food. As “Food, Glorious Food” played in accompaniment, the audience watched a variety of scenes of people interacting with each other over food, falling in love over food, engaging in food fights with food – but all of it had to do with food.

And in those first few minutes of the conference, there wasn’t a self-checkout, plasma TV screen, computer or hand-held device to be seen. It was just about food.

This was remarkable because it served as a reminder to the highly technically sophisticated audience that information technology is just a tactic in a broader strategy that must connect the consumer with the food sold in their stores. That’s the end game – not bells and whistles and bits and bytes that look good to engineers but have little impact on the shopping environment or the consumer experience.

(Full Disclosure: MNB Content Guy Kevin Coupe is serving as Conference Chairman at the event, both speaking about technology issues and moderating a series of discussions with the event’s speakers.)

That’s not to suggest that the attendees in any way took their eye off the technology ball. Far from it. There was broad discussion of a number of initiatives being undertaken by retailers ranging from Carrefour to Tesco, but it was clear by the end of the first day that while there have been some enormous strides taken by some of these companies, there are also places where disconnects take place, and where it will take time to resolve some issues.

Some random notes from day one…

  • Alistair Cairns, senior analyst of Waitrose, and Steve Butler, strategic program manager at Tesco, gave separate presentations about how their UK-based companies had gotten into the self-scanning and self-checkout businesses.

    Waitrose, which has just a 4.1 percent market share in the UK and has a upscale, fresh food-driven approach to marketing, got into self-scanning because “we were responding to the requirement from our customers, who wanted to scan their own products,” Cairns said. He noted that customers have embraced the system – which has people scanning products as they put them in bags in their shopping carts – with some stores generating as much as 24 percent of trade using self-scanning.

    Tesco’s Butler said that his company’s decision to aggressively embrace self-checkouts at the front end stemmed from a strategic move toward the culture of self-service that has included Tesco’s gas stations, deli, photo processing, and mobile phone payments and reprogramming.

    “This can save money, but that’s not the point,” Butler said. “It should free up staff to be available elsewhere in the store.”

    Butler said that Tesco progressed from its first trial in one store – which proved customers would use self-checkout – to introducing self-checkouts to 23 stores across different formats in 2003 and 109 currently. The results so far show that customers want self-checkout: usage in some stores is as high as 48% and continues to grow, even in stores that have been live for over two years; other store key performance indicators, meanwhile, have been unaffected.

    Butler also noted that, ironically, studies have shown that self-checkout actually is somewhat slower than regular checkouts – but that it doesn’t matter because people want to have “choice, control and privacy,” and their enthusiasm seems to cut across demographic lines.

    One interesting conclusion from both the Cairns and Butler presentations was that some form of self-scanning or self-checkout has become a necessary cost of doing business, and no longer is a differential advantage. Customers expect it, will choose stores because of it, and it may be getting to the point that it will be as ubiquitous as scanning itself.

  • Jorgen Wennberg, CEO of ICA Banken AB in Sweden, described how over the past few years ICA has created its own bank as a way of gaining greater control of its financial destiny. The journey has taken the company into credit cards and debit cards, has led it to just recently introduce e-coupons that eventually will replace paper coupons.

    The bank’s structure is an unusual one – it is a full-fledged consumer bank but does not have any branches – deposits and withdrawals actually are transacted with checkout personnel in ICA stores. Beyond that, all of ICA Banken’s other transactions taken place either by phone or over the Internet.

    But one of the more interesting turns has taken ICA into the horseracing business – it actually takes legal bets at checkout that can be charged to or debited from its cards, and if you win, the winnings immediately get deposited to your account.

    Wennberg said that this is just the beginning. “I see it as a first generation product with plenty of extension possibilities,” he said.

  • A brief description of Carrefour’s entry into the world of Electronic Shelf Edge Labeling (ESEL) was offered by Alain Saint-Martin, innovation director with the company’s IT division.

    Saint-Martin displayed a typical Carrefour reserve about the effort, preferring not to offer any details beyond the fact that 80 percent of the company’s SKUs are labeled with ESEL, and that he estimated that there is a 15 month return-on-investment (ROI).

    Interestingly, Saint-Martin said that it did a survey revealing that 57 percent of the customers in stores where ESEL was used didn’t even notice that anything had changed – but that those who did notice were satisfied that it was a positive move.

    There was one statement made by Saint-Martin that seemed to push the limits of credibility to the audience – he said that Carrefour saved more money on paper not used for old-fashioned shelf tags than it did on labor not used to change labels the old-fashioned way.

  • Finally, one of the more interesting discussions focused on the biometrics payment system being tested by German retailer Edeka Sudwest. IT director Frank Wondrak told the audience that there had been little concern about privacy issues connected to using a fingerprint to pay for products, despite the fact that the company did very little to explain to shoppers why their fingerprints are completely secure and confidential. Why? Wondrak maintained that it is because the stores testing the system are independently owned, and the customers there simply trusted the proprietors and didn’t ask any questions.

    Go figure.

    Must be a German thing.
KC's View:
One of the most extraordinary things about this conference, and not in a good way, is that there were US representatives from just two companies in the room.

Two guys from Wal-Mart.

And one guy from MNB.

That’s it. And that’s a shame.

Perhaps it is that some leaders read the word “Berlin” and saw the word “boondoggle.” But if so, that’s a serious mistake, because there are some fascinating discussions taking place here among some really expert people.

And this is how we all learn.

Next time a retailer complains that Wal-Mart seems to be ahead of the game when it comes to technology, we’d suggest that you remind them of a simple fact:

Wal-Mart showed up.