Cisco's Real Time Retail Solution Is the Basis of Metro's Future Store Initiative

April 30, 2003

By Jenny Carless, News@Cisco

Imagine the store of the future... Shopping carts with "Web pad" screens offer an item locator, a recipe advisor, and a coupon dispenser. Kiosks let customers explore product characteristics, compare prices, or order goods that aren't in stock. At the checkout, an entire shopping cart is scanned in a single pass, thanks to special Radio Frequency Identification (RFID) tags. In addition to these obvious benefits to the consumer, the retailer also gains from more targeted, transparent marketing, reduced costs through the supply chain, better communication with employees and improved customer retention.

These are not far-fetched dreams of a Utopian retail world. The store of the future is here - today. In Rheinberg, Germany to be exact.

The METRO Group's (a leading European retailer) Future Store Initiative recently opened a refurbished Extra supermarket, METRO's brand of small local supermarkets, in Rheinberg that uses retail applications like those described above, and more. METRO has worked with Cisco Systems, and approximately thirty other technology leaders including Intel and SAP to architect, implement, and operate the advanced technologies and accompanying business and human processes required to create this revolutionary retail "store of the future."

Internet Technology Enables Futuristic Applications

Many cutting-edge applications exist today - in isolation - in leading retailers around the world. For example, one company implements electronic shelf labels, another has mounted Web pads on its shopping carts, and still another uses in-store TV to push promotions. Yet what no other retailer has achieved is to tie all these elements together - until now.

METRO Group's Future Store Initiative has adopted Cisco System's Real Time Retail solution, which uses technologies such as IP Telephony, mobile wireless networks, and intelligent content delivery, to implement and tie together a series of new retail applications. Real Time Retail enables METRO to improve communication with employees; enhance the customer experience by offering multiple ways to shop, pay, and interact; drive new revenue streams for METRO using in-store media; and bring new efficiencies and cost savings to managing its supply chain.

"Running these applications within a chain of stores with real time connection to head office created a bandwidth requirement that traditional networks could not meet. But with the greater availability of broadband and the ability to integrate voice, data and video over a single IP architecture, the store of the future vision is now a cost effective and practical reality," said Chris Huggett, Cisco's business development and marketing director for retail, CPG, and transport in Europe, Middle East and Africa.

Some of the ways the Extra store in Rheinberg is applying these new technologies include:

Mobile point-of-sale systems: Staff equipped with portable 'queue busting' check-out devices can roam the store to speed customer fulfillment, provide merchandise information and inventory data at the customer's side, and suggest alternatives when an item is out of stock.

Web-enabled kiosks: Self-service kiosks enable customers to learn more about products, find items, check product availability, and purchase goods.

Multimedia signage: Internet technology can deliver more content for dynamic audio-visual systems at a fraction of the cost than previous videotape or static systems. Integration with inventory systems means that only available products are promoted.

The aisle-less store: Emerging burn-on-demand and print-on-demand technologies for CDs, DVDs, and books allow stores to focus inventory on best-sellers yet still offer a complete product range.

Radio-frequency ID (RFID): Hailed as the successor to barcodes, manual inventory checks, and anti-theft devices, discreet RFID tags emit radio signals that encode item, price, and other data, such as whether the item has been purchased.

Benefits to Retailers

In-Store Mobility: Cisco is providing wireless LAN (WLAN) infrastructure to deliver store mobility solutions to the Extra store. These offer a dependable, high quality platform for store mobile/scanning devices that run on secure IP networks.

These mobility solutions will improve efficiency throughout the store, both at the point of sale through self scanning devices, and at mobile checkouts through increased productivity from cashiers. All of this adds up to reducing check-out times, improving customer satisfaction while reducing costs.

Mobile solutions will bring to life new applications to the store such as RFID Picking & Labelling that enables real time stock control, "smart shelf" that lets the store easily and quickly recalculate the shelf-space assigned to any product due to seasonal change or sales figures, and "customer counting" that enables the store to count how many visitors and customers the store receives and how long they stay.

Multichannel Communications: Cisco Systems IP Telephony will deliver significant cost savings to the METRO Group through the convergence of data, voice and video systems. IP Telephony will also give purchasing managers, sales associates and other staff access to new productivity-enhancing services such as integrated messaging and voicemail, access to store inventories, the provision of directory and web services directly on their telephone and the flexibility of moving to any phone and retaining their user profile. It means giving store staff who don't use a PC access to email and the web. This will provide a massive reduction in paperwork. To offer a comparison, one UK supermarket chain has estimated that its head office sends 50,000 pieces of paper to stores every week.

Improving supply chain and customer tracking visibility will help the METRO Group maximize sales. For example, if a customer needs help locating a product, store staff can easily access product descriptions, pricing and availability all without leaving the customer.

Store as a Medium: Cisco Systems Content Delivery Networking (CDN) broadcasts audio/video content and data, typically from a central source, to any number of network-based delivery points. In the case of the METRO Group this will be throughout the store for display on kiosks, plasma screens, and hand-held Personal Shopping Assistants. Being able to deliver video across the network provides the flexibility to be able to change the content at will, opening the possibility for METRO to broadcast different presentations for different times of the day and days of the week. Using the same infrastructure, METRO will also be able to deliver employee communications or staff e-learning, or providing nutritional information on food.

Cisco Systems technology is changing the face of retail. METRO Group's Future Store Initiative provides other retailers with clear evidence of the new ways in which technology can help provide customers with real-time product information, verify enterprise-wide communication functions, and empower employees with greater mobility and connectivity.

Jenny Carless is a freelance writer based in Santa Cruz, CA.