Supermarkets Grocery-Cart Wars

By THOMAS McCARROLL

As Helaine Alpert steers her shopping cart down one aisle and up another at the Food Emporium in Scarsdale, N.Y., an overhead electronic billboard flashes the specials of the day. On the rim of Alpert's cart, a 6-in. by 9-in. video screen automatically displays a list of specials in each aisle she passes. Electronic alert: Cup O' Noodles on sale, two for $1; veal chops, $6.99, a dollar off the regular price. "I used to scour all the flyers for bargains," says Alpert, a lawyer from nearby Edgemont, but now the computer takes care of that. Her basket filled, she takes her place in the check-out line. But rather than browse through the National Enquirer or Redbook, she passes the time playing a trivia game on the cart's computer. "It's surprising the way they're making shopping more convenient and less boring."

If President George Bush was amazed by the bar-code scanners he saw last month at the National Grocers Association convention in Orlando, he would be truly astounded by some of the technology found in state-of-the-art supermarkets like the Food Emporium. At Vons, a 283-store chain based in Arcadia, Calif., "talking" aisles are equipped with computerized voices that explain products to shoppers. At St. Louis-based Schnuck Markets, electronic "price tags" have replaced paper shelf labels. These new digital labels are linked to a central computer that changes shelf prices for 2,000 to 4,000 items a week and coordinates them with check-out registers. And at Safeway, the nation's third largest chain (after American Stores and Kroger), customers can shop from home, using a computerized catalog system to order anything from apricot jelly to zucchini. Shoppers can transmit an order, charge it to their credit card, and have delivery arranged -- all without a word to anyone at the store.

Not long ago, the most sophisticated piece of technology in most food stores was the produce scale. A grocer's idea of mass marketing was the weekly circular. Growth was taken for granted. But the nation's 31,000 supermarkets today face a different world. After expanding more than 5% a year during the 1980s, they have seen growth slowing since 1989. Last year sales grew only 2%, to $376 billion, largely because of the recession. Now profits are being squeezed more than the Charmin as stores struggle to cope with mounting takeover debt. Six of the top 12 supermarkets, including Safeway, Jewel and Lucky, were snapped up in buyouts during the past decade. The survivors face more competition than ever before. It is not uncommon to find three or four national chains -- not to mention a mass merchandiser like K Mart or Wal-Mart -- competing in the same territory. With tougher times ahead, grocery chains are turning to computers to gain a competitive edge.

! The most vital link in any chain store's system is the check-out scanner. Introduced nearly 20 years ago as labor-saving devices, computerized cash registers are now installed in about 85% of all chain stores. But today's scanners do much more than tally prices. They track what was bought, how often, at what price and quantity and, increasingly, by whom. Stores use these data to develop promotional programs that target specific groups of customers. About 4,000 store chains have formed frequent-shopper clubs that offer freebies and discounts to customers who sign up, based on how much they spend. Vons, for instance, mailed coupons for free turkeys to its VonsClub members who spent $400 or more at its stores during the eight weeks before Thanksgiving. Richmond-based Ukrop's used its scanner database to pick shoppers living in areas where a competing chain, Kroger, opened new stores and then sent them coupons.

Not every new idea passes muster. Several stores have silenced their "talking" aisles after customers complained of the constant annoyance. Low shopper interest forced New York's D'Agostino chain to pull the plug on an electronic-ordering service that enabled customers to shop from home using their personal computers. The industry is also facing growing public scrutiny over its burgeoning consumer databases, which many see as a threat to individual privacy.

But most of the new supermarket technology is aimed at shoppers inside the store, where buying decisions are made. Last week, in competition with Turner Broadcasting's Checkout Channel, NBC-TV introduced an in-store television system that will carry ads and other programming to shoppers waiting in check- out lines. Such systems will help reduce marketing expenses for companies by pinpointing their promotions more accurately. But they could also mean the end of one of the few remaining refuges from advertising.