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From SCDigest's OnTarget e-Magazine

SCDigest Editorial Staff

Jan. 11, 2011

RFID and AIDC News: New Kroger Bar Code Scan Tunnel Could Revolutionize Retail Checkout

High Speed UPC Scan Tunnel at Heart of New Advantage Checkout System; Reducing Billions of Touches Annually; Bearish Bet on RFID in Grocery; What will Kroger Do?

Since May of 2010, grocery retail giant Kroger has been testing a revolutionary new approach to Point of Sale and retail checkout that involves high speed imaging of bar codes or other identifiers to reduce its own labor costs and speed shoppers through the checkout process.

The new technology, which Kroger is calling Advantage Checkout, was for the first time put on display at the National Retail Federation (NRF) "Big Show" conference and exhibition in New York City earlier this week.

SCDigest Says:

Now, Kroger has to decide if, how and when it will actually roll the Advantage Checkout system out to its own stores - and potentially make the technology available to other retailers.

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Kroger, a pioneer in self-checkout systems generally, concepted the idea a few years back, and then began work with Fujitsu, an existing POS partner, to develop a pilot system. Two of the Advantage Checkout systems have been installed and been operational in a Kroger store in Hebron, KY since May, according to Lynn Marmer, group vice president for corporate affairs at Kroger.

The heart of the system is a "scan tunnel" similar in a sense to similar tunnels some airlines have tried to deploy to manage the tricky job of scanning baggage bar codes that are oriented in every possible angle.

Inside the Advantage Checkout tunnel are a battery of imaging scanners on all sides capable of not only reading bar codes, but using optical character recognition (OCR) technology to read letters and numbers and potentially to capture a picture of the product as it goes through the tunnel. A scale could also be added to the system, but has not been installed in the pilot system, Kroger says.

The result of all this is a very high read rate of product UPC bar codes despite the huge variation in orientation of the bar codes as products move through the tunnel. Current read rates in the pilot program are 98.5% percent or more, Kroger says.

(The display of the working system at the Fujitsu booth is part of our video review and comment of the NRF 2011 show, available for on-demand viewing here: NRF 2011 Video Review and Comment.)

As an example of how the system can work, if there is a bad bar code on an item, the imager using its OCR capability may still be able to identify the product based on the printed UPC number below the actual bar code.

A display at the end of tunnel tells a store operator when a product was "seen" but not identified, where quick manual handling of the item would take place. A logical step would be for the system to show a picture of the item that was not successfully scanned to help the store operator quickly identify that item on the belt. Though the system in New York did not use that approach, Kroger CIO Chris Hjelm told SCDigest in New York that it would be easy to add that capability.

After a shopper's items have all been placed on the cart, a red bar similar to the separators commonly used today to indicate when one order ends and the next begins is placed on the belt. When the scan tunnel sees that, it notes the order is complete and the POS systems produces a total bill ready for payment.

Reducing Billions of Touches

Kroger sees several potential advantages to the system for both itself and consumers.

First, it can reduce store labor by further empowering customer self-checkout. While current self-checkout systems in grocery stores have been largely successful, they are generally used by shoppers with a relatively small number of items. Advantage Checkout is designed to be used for large or small volumes of items in a shopping cart.

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Consistent with that, the high speed of the system - the belt inside the tunnel is moving at rapid pace - means the system can dramatically improve the processing time for a given customer through checkout, a benefit any time but especially so on peak shopping periods near say dinner time or on Sundays. Customers or a store associate can rapidly place products on the belt and off they go through the tunnel as the cart continues to be unloaded. While SCDigest did not get an estimate from Kroger of how many items can be handled per minute, it is clearly capable of processing many dozen of items in a short period of time.

"The key is reducing the number of product touches," Hjelm told SCDigest. "How can we eliminate billions of touches a year by both our customers and our associates? That was a key design goal."

Today, he notes, products are handled once to get them on to the checkout belt, then a second time when they are picked up for scanning.

The system brings up all sorts of interesting design and material handling possibilities, from shopping carts optimally designed for the system to how the in-feed and out-feed belt systems are designed. In Ney York, the tunnel was connected to two takeaway belts controlled by a switching bar, but there is no reason the system would have to be limited to two bagging diverts per scan tunnel.

What's Next?

Kroger says it has been observing and learning over the last seven months of the pilot, and already made a number of changes to the imager arrays inside the tunnel to improve performance.

It is also likely that Kroger may be able to somewhat reduce the physical footprint of the scan tunnel going forward.

Now, it has to decide if, how and when it will actually roll the Advantage Checkout system out to its own stores - and potentially make the technology available to other retailers. Kroger holds a number of patents related to the system. While it is unlikely that Kroger would get into the POS systems business directly, and instead use a partner such as Fujitsu, with which it is in active discussions, how exactly this will play out will be a key interest to the retail industry. If wildly successful, would Kroger make the technology available to key competitors? That's likely the multi-million question.

It is also worth noting that the development of the system is obviously a bet that item-level RFID tags capable of being read en-masse or at high speeds are not coming to the grocery industry any time soon - else Kroger or any retailer would not have made the investment in this UPC-based technology.

"That's correct," Hjelm told SCDigest. "We don't see RFID coming at the item level to the grocery industry any time soon. I don't know if the products could support a one cent tag, let along tags costing five cents or more, and even if we got to a cent or less, the rollout across all the vendors would take years."

What's your take on this Kroger Advantage Checkout system? Do you think it can be successful in mass deployment? Should or will Kroger make it available to others any time soon? Let us know your thoughts at the Feedback button below.

Recent Feedback

2011-01-13

Let`s start by assuming it works--if it doesn`t work nearly perfectly, it will end up being a customer service disaster. The question would be whether the system pays for itself; do the reduced touches save sufficient labor costs to pay for the machines?

The upside is faster checkout. The downside is reduced customer contact.

Stephen Needel
Managing Partner
Advanced Simulations

2011-01-13

Other than the fact that it looks like a tanning bed for rodents and won`t handle large items, the idea seems sound. I would love to hear the feedback of the operators/cashiers who have actually used the device on the ground.

Fabien Tiburce
President
Compliantia Retail Audits

2011-01-13

Anything that actually improves self-checkout would be welcome by consumers. With the high speed of the system, I wonder if items can actually be bagged quickly enough by consumers as there are often not staffers to assist with this process. Will items just bunch up at the end of the register if consumers actually use it for large orders? In that case, it might not be a win.

Odonna Mathews
President
Odonna Mathews Consulting

2011-01-13

Do customers checking out really want "touches" or do they just want faster checkouts? The local Home Depot has self checkout. The self checkouts are always being used, even when the clerks at the traditional checkouts are standing around with no lines. I have even seen people wait for a self checkout when they could have gone to a manned checkout.

When it comes to checkout...it is all about speed. Customer service at checkout is "how fast can you get me through?" not "isn`t it a nice day today?" Even my 87-year old mother opts for the self checkout because, "Oh! It`s just faster."

If I am Kroger, I roll this out as fast as possible and I certainly do not make it available to competition. They will find their own soon enough.

Gene Detroyer
Entrepreneur, Advisor, Consultant, Counselor, Independent

2011-01-13

It looks a little too much like an MRI machine for me. That aside, I think the issue is whether customers would rather zip through an automated checkout, or have a pleasant, efficient checkout with a courteous associate.

In stores that are really mainly competing on price and not service, this system should work IF it gets up to a read rate of 99.9% or so. At a 98.5% read rate, someone with 30 items in their basket is going to have an issue more often than every third trip.

Would you rather use this thing or check out in a Publix, where there are typically no lines and no self check outs? Oh, and the associates are friendly and fast.

Al McClain
CEO, Founder
RetailWire

2011-01-13

I have become pretty accepting of the self checkout lanes in my store. The whole reason for the "tunnel" format is to make it clear that items have been properly presented to the POS system. If a customer walks past the tunnel with a product in their hand it is pretty obvious and new video technology is becoming able to detect these maneuvers.

It seems the barcode read accuracies I recall reading are approaching the 99% level without additional input. The time consuming part of self checkout is still bagging and tendering. I don`t see anything here that addresses either of those. There is no mention of cost, so I don`t know how it compares to plain scanners.

Sure looks like a solution looking for a problem to me.

Bill Bittner
President
BWH Consulting

2011-01-13

Just what we need - another device that scans our bodies while it scans our groceries.

I`m so old-fashioned, I would cheer for a system that allowed the checkout clerks to put product on a belt, self-scanned it inside a smaller tunnel (for product only), and then had someone bagging it up for me on the way out. Of course I have some friends that wouldn`t even want their food subjected to whatever the tunnel would do, but I`m not that extreme.

Paula Rosenblum
Managing Partner
RSR Research

2011-01-13

If this thing works, it`s pretty darn cool!

Jonathan Marek
Senior Vice President
APT

2011-01-13

This looks like trying to solve an old problem without changing the paradigm. Fact is, not all consumers are using or accepting self scanning. Ahold is expanding the use of the wand. The real change is coming from the cell phone. If anyone has not visited an Apple store, this is the future to look at. This new checkout is too little too late and likely costs too much.

W. Frank Dell II
President
Dellmart & Company