- The Washington Times - Tuesday, November 12, 2002

MORAGA, Calif.
Safeway Inc. is testing a smart shopping cart: a computer on wheels, a sales vehicle sophisticated enough to analyze individual buying habits so it could give the best prices to specific shoppers.
The trial by Safeway, the nation's third-largest retailer, reveals how stores 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 display four grocery items offered at sale 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 say 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 Stores Inc.
The grocers also say 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 not available 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.
Even certain demographic groups, such as unmarried shoppers, might get the short end.
The computer, for instance, could conclude that a single man generates relatively little profit compared with a mother buying groceries for her husband and two children.
There is a powerful incentive for supermarkets to be more discriminating about their prices.
Industry data show that 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, Mr. 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 children every week, no matter the price, and conclude that there's no reason to ever offer that shopper a discount.
Safeway won't discuss its long-term plans for the computerized carts. The Pleasanton grocer wouldn't even allow photographs of them.

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