New technology helps Kroger speed up checkout times

• Using sensors%2C stores can predict when more checkout lanes will be needed
• Faster checkouts boost customer loyalty%2C cited as one reason for increased earnings
• With 2%2C424 supermarkets%2C Kroger is nation%27s largest grocer

CINCINNATI -- Kroger is touting a new number it says is winning shoppers and adding to the grocer's bottom line: A wait of just 26 seconds to start in the checkout lane, down from 4 minutes a few years ago.

Getting shoppers through checkout as quickly as possible is key to building customer loyalty – cited by Kroger on Thursday as one reason earnings were up 9.6 percent in the three months ending May 25, compared with the same time a year ago.

"Nobody likes to wait in line," said Marnette Perry, senior vice president of operations and strategic initiatives at Cincinnati-based Kroger. "If we wanted to develop loyalty from our customers, we really had to respect their time and improve the checkout experience."

By year's end, the nation's largest grocer expects to complete the installation of overhead infrared sensors that count customers in all 2,424 supermarkets operated by Kroger. In the past few years, the retailer has quietly widened the use of technology to analyze most popular shopping times to better staff cash registers.

Customers can see the results of this data changing constantly on light boards at the front of stores. They show the number of checkout lanes in service now, the number needed, and the number projected to be needed in 30 minutes.

The new technology comes as traditional grocers like Kroger are increasing efforts to maximize customer satisfaction to fight off increased competition from discounters Wal-Mart and Target, dollar stores like Dollar General and Family Dollar and even drugstores like Walgreen's.

"Checkout is critical to service – people get mad when they have to wait," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York consulting firm for the retail industry. "When people are shopping, you want to keep them in the store. But when they go to leave, you want them out – because if they have to wait, it will change their whole opinion of the store."

Kroger Chairman and CEO Dave Dillon cited "inspired, customer first service" for strong financial results announced Thursday. They included earnings of $481 million in the quarter ending May 25 – the 38th consecutive quarter of profits for the retailer's continuously operating stores.

Looking to boost customer loyalty, Kroger first test marketed "Que Vision" checkout technology in stores in Toledo in 2009. The idea was to see if the grocer could time typical shopping visits by store to better schedule workers during busy periods.

Kroger officials said the results were almost immediate – transactions and sales both quickly climbed. Company officials declined to break out sales results from those stores, other than to say they contributed to the grocer's nine-year winning streak boosting sales.

Since the technology was deployed, Kroger's score on customer-satisfaction surveys has improved 42 percent on the speed of checkout, Perry said.

"There are 7 million shoppers at Kroger stores today – we'll save them 25 million minutes today," she said.

Thom Blischok, chief retail strategist for New York consulting firm Booz & Co., said saving customers at checkout means they might spend more time – and money – in the aisles buying food and merchandise.

"Grocery shopping is a time-allotted experience," he said. "If a retailer can simplify the checkout, it's win-win because the shopper can spend more time doing what they want to do, which is buying things they want."

Kroger cited additional benefits besides happier customers. Perry said the technology has helped boost sales at smaller urban stores with limited space. Because customers get in and out faster, parking spaces free up quickly.

"It makes parking lots bigger," Perry said.

Since 2010, Kroger has installed the technology at most of its supermarkets.

Surprisingly, the cost of staffing didn't rise. Company officials had thought they'd need – and were willing to pay for – more cashiers if it shaved customer wait time, but it turned out it wasn't necessary. The technology was so smart, it made scheduling more efficient.

"It's spooky, but it's getting more and more accurate," said Kristen Sebastian, an assistant customer service manager at Kroger's Symmes Township store.

Shoppers like David Edmondson, a 58-year-old FedEx worker from Symmes Township, illustrate the challenges and opportunities around speedy checkout.

"The big reason I don't shop at big box stores is because they've got 17 lanes, and only one is open and they won't open another," he said. "I'm just like everybody else: I'm busy, I've got things to do and my time is valuable."

Edmondson has shopped Kroger for decades and noticed faster service in recent years.

"Speed of checkout is always in the top five of customer complaints in the supermarket industry," said Tom Litchford, vice president of retail technology for trade group the National Retail Federation.

Litchford said balancing checkout speed with staffing costs is a constant battle for cash-strapped grocers that can't afford to keep every checkout lane open.

Andrea Glassmeyer, a 35-year-old teacher and mother, deliberately shops at off-peak times to minimize her time in the store.

"Especially with kids, it's hard to be here a long time," she said. "It's hard for them to be patient."