Originally created 09/17/06

High-tech carts face tough hurdles in low-margin grocery business



ALPHARETTA, Ga. - It took a grocer's offer of a cookie to finally tear 4-year-old Trey Malcom away from the small TV screen in his shopping cart.

Even then, his eyes shot back to the monitor the moment he accepted the sprinkled treat from the Publix grocery store clerk. "He's in his own world," said his mother, Amy Malcom, who was for once at peace as she filled her cart with veggies and snacks.

To parents, the TV Kart and its "Bob the Builder" and "Barney" videos allow a few precious moments while they check off their grocery lists. But to reluctant grocers, it could be nothing more than another expense with little payoff in the notoriously low-margin grocery business.

Over the years, high-tech shopping carts in one form or another have been hyped as ways to keep people in stores longer and to spend more money, only to fall short of expectations. Some blurted out recipe tips or displayed video ads. Others spit out coupons while they rolled down the aisles.

Each idea might have improved the stores' hip factor, but each also had little immediate effect on bottom lines. And if grocers don't see a bump in sales, high-tech carts quickly become expendable, said Dave Hogan, the chief information officer of the Washington-based National Retail Federation.

"There has to be a business rationale," Hogan said. "A customer might think it's kind of cool, but there's got to be a payback. And they're not proving their payback yet."

Still, companies are trying where others have failed, banking on technological advances.

The Personal Shopping Assistant, developed by IBM Corp. and Cuesol Inc., allows customers to fill out a grocery list on their home computers, then log into the system at the store to organize their trip.

A small screen mounted on a cart shows a running tally of what customers buy and also can show where items on the list are located. The system costs between $60,000 and $120,000 per store, and they're being used in more than two dozen supermarkets, mostly in New England.

"I don't know that grocers are ready yet. But I believe they are. And I think they are because guys like us have finally found out what makes sense," said Mike Grimes, Cuesol's vice president of sales and business development. "In the next 12 months, we should know whether this thing will catch fire or not."

A competing device called Concierge, which is made by Toronto-based Springboard Retail Networks Inc., expects to announce a trial in a major market by year's end, said Sylvain Perrier, the company's vice president of technology.

Cabco Group Ltd., the New Zealand-based company that makes the TV Kart, argues that past attempts failed because they offered shoppers no real advantage.

"This is all about improving the shopping experience. Unless you're going to do something that's going to give a direct customer benefit, it's never going to catch on," said Doug Bartlett, the company's business development manager.

So far, more than 2,000 TV Karts have been deployed at supermarkets in eight states, mostly in the Midwest. Publix and Wal-Mart are among the chains testing their popularity.

For $1, shoppers can rent the brightly colored carts, which play an hourlong DVD of whichever children's television show adorns the side - "Barney," "Bob the Builder" or "The Wiggles."

They each look more like a toy car than a shopping cart, with oversized doors on the sides and a narrow bench on which up to two children can sit, buckle up and watch the TV in the dashboard. (The screens are about the size of a TV dinner, and cart-pushers can hardly hear the audio.) Overhead, there are two storage bins offering rather limited space for parents to pack their groceries, a frequent complaint of the parents.

In engineering the $1,500 entertainment system on wheels, the company had to develop a docking station to recharge the carts' batteries when they're not in use. To deter theft, they lodged the monitor deep within a hulking case and designed wheels that lock until they're activated by a parent and skid to a halt when they roll past a checkout line.

There's no doubt the carts are popular with toddlers, who point immediately at their favorite characters as they walk through the store's sliding doors.

"People are making special trips to the store," said Kevin Kidd, a Publix store manager who said the three carts at his store in the north Atlanta suburb of Alpharetta each log about 60 rides per week.

Yet Cabco and other cart builders still have a long way to go to impress the grocery industry's picky decision makers, said Peter Fader, a marketing professor at University of Pennsylvania's Wharton School.

"They're very reluctant to make big investments unless there's a proven payback," he said. "Something that changes behavior over time is often not worth it. It's not just in respect to carts. It's in respect to anything. Grocers just can't risk change."

If high-tech carts catch on, expect another side effect: Cart conflicts at a supermarket near you.

Two-year-old twins Sam and Lindsay Rothman were babbling happily as they strolled with their grandmother, Ann Kafetz, into the Publix store in the north Atlanta suburb of Alpharetta. But when she passed over the TV Kart for the old-fashioned variety, they broke down into tantrums.

"It's the principle of the thing," she said, defending her decision. "They have so much stuff. And they could live without it."

Not surprisingly, Sam disagreed. For the next few moments, his cries of "I want Barney" echoed throughout the store.

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On the Net:

TV Kart: http://www.tvkart.com/