In the past two years, gift cards have flooded the retail industry. They're offered by ultra-high-end jewelers, doughnut shops and everyone in between. The reason is simple: They boost sales. "All the research shows the typical shopper will buy 25% more than the amount that's on the gift card," says Greg Buzek, president of IHL Consulting Group, a retail consultancy in Franklin, Tenn.
There's another nascent technology that nets a similar 25% bump in sales: personal (sometimes called portal) shopping, in which loyalty-card customers grab a handheld device when they enter a store and scan purchases themselves.
Buzek and others believe personal shopping, which has been tested by retailers including Stop & Shop, is poised for growth because of its impressive top-line potential. "What's nice about these [personal-shopping programs] is that there are many up-sell opportunities based on what the customer is already buying," Buzek says. For example, a customer who scans coffee filters and has previously bought high-end coffee might be shown an onscreen coupon for a pound of Starbucks coffee beans.
Stop & Shop, a division of Dutch retail giant Ahold, says its program has boosted revenue by up to 75% for some shoppers, with an average increase closer to 25% — enough for the grocery chain to expand the test program throughout its 350 stores. The program uses IBM mobile devices and Cuesol Inc.'s Cart Companion software. IBM's Store Integration Framework software integrates data and streamlines workflow.
Analysts have estimated that the cost to prepare a store for personal shopping is about $180,000 — but that figure doesn't take into account the extensive infrastructure changes required. Nevertheless, as Buzek says, "The payback is pretty severe." Expect to see personal shopping soon at a store near you.
Ulfelder is a freelance writer in Southborough, Mass.