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US Supermarkets Look Beyond Standard Self-Checkout Service

By Annie Gasparro Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- While some supermarkets are stepping back in time to build customer service, others see new technology as the path to higher sales and a better customer experience. Albertsons LLC, operator of roughly 200 Albertsons stores in the Southern and Western U.S., is phasing out its self-checkout systems in the 100 stores that have them, reverting back to traditional, cashier-run lanes by August. The Boise, Idaho-based chain said its customers have missed the one-on-one interaction with cashiers. However, one of the nation's largest grocery retailers, Kroger Co. (KR) is testing a new advanced self-checkout technology that it believes will improve the customer experience and help eliminate loss due to theft or misringing of merchandise. "Stores used to be designed to keep you in there as long as possible, so that you would buy as much as possible, but, in more recent years, there has been this push to make things easier, faster and more convenient for the customer," said Joseph Agnese, food and drug retailer analyst at Standard & Poor's. Every company wants to have a differentiator and, in this day and age, moving back to only traditional lanes could help, he added. Albertsons, which is owned by private equity firm Cerberus Capital Management LP, said it is hoping that putting the human touch back in the process by replacing machines with people will win its customers over. The company said it won't necessarily add more staff to all stores for the move, but it will add staff hours. SuperValu Inc. (SVU), which owns about 450 Albertsons stores, said it isn't planning changes to its self-checkout lanes. Kroger began testing its Advantage Checkout system in March, which is a scan-tunnel system, similar to what airline customers encounter for carry-on luggage. Customers place items on the conveyor belt, and the tunnel scans them from all directions to capture the barcodes regardless of which direction they face. The company said customers have embraced the scan tunnels, which it is testing in a few Midwest locations, including its hometown of Cincinnati. The system not only decreases the potential for theft, but also will continue to provide employee interaction by having staff bagging the items and manning the machines. Systems providers have been working to improve the original self-checkout machines since they were first introduced a decade ago. Today, shoppers can choose from stores that offer the self-checkout options as well as in-aisle scanning systems and eventually payments via smartphones and other options being vetted in the industry. The trend of self-service checkout over the past decade has grown beyond grocers, with self-service kiosks rising at airports, movie theaters and even libraries. "It's more about customer preference," said Greg Egan, vice president of retail solutions for self-checkout technology provider NCR Corp. (NCR). "We've made dramatic improvements in the technology over the years but there's always going to be the folks who want that traditional interaction at the end," Egan said. "Theft happens whether it's assisted or self-checkout. And we try, with our technology, to [combat] that." Kroger's checkout-tunnel technology was created through partnerships with Fujitsu Ltd. (FJTSY, 6702.TO) and Northrop Grumman Corp. (NOC). Kroger said it will continue to offer various self-checkout systems in different markets, as well as traditional cashiers, depending on the needs of the stores. "Customers all want to get out of the store more quickly, whether through self-checkout or traditional lanes, and we are just working to help facilitate that," said Keith Dailey, a spokesman for Kroger. While Kroger wouldn't comment on the cost involved in the deploying the tunnel system, Karen Short, food and drug retailer analyst at BMO Capital Markets, said upgrading to a new level of technology such as the one Kroger is testing requires a significant amount of capital to install and perfect. -By Annie Gasparro, Dow Jones Newswires; 212-416-2244; annie.gasparro@dowjones.com

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