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Retailing sector relying on high-tech advances to increase sales, aid customers
Smart Stores Heal
Larry Lewark CIO for Macy's technology division, shows off a handheld shoe locator, technology being used in select stores like the Northpoint Mall location where he is pictured, Nov. 2, 2007, in Alpharetta, Ga. The locator is used by sales associates to send a wireless signal to the stock room to speed the retrieval of shoes. Lewark, Macy's top point person on technology, predicts that in five years customers routinely will pay for merchandise with a few clicks on their cell phone or other personal digital devices. - photo by Associated Press

WASHINGTON - Red pumps. Silver slingbacks. Bronze flats. Black suede boots. Size 7 1/2, please.

Without leaving the customer's side, Macy's sales associate Felicia Dixon uses a small, handheld electronic device that essentially summons the shoes in the right style, color and size, from the stockroom. It is not quite magic: A clerk in the backroom receives the request electronically and brings out the merchandise.

The shopper does not have to hunt around for a clerk each time she wants to try on a different style or needs a different size. Better service means happier customers, and that could lead to more sales.

At least that is the hope, from the retailer's perspective.

Stores spend $34.5 billion a year on all kinds of technology, from the cables and routers behind-the-scene to in-store devices such as price checkers, self-service checkout stations and electronic kiosks for customers, says the National Retail Federation.

With older equipment needing to be replaced, spending for high-tech upgrades is expected to increase, the federation says.

Some workers might view technology such as self-checkouts threatening their job. Other devices — electronic price checkers or Macy's shoe locator — might make their jobs easier.

Still, the number of jobs in some segments of the retail industry is diminishing, and economists believe that technology has played a prominent role.

An Associated Press analysis of Bureau of Labor Statistics' employment data found that department stores have slashed 247,100 jobs since June 2001, when employment in that sector peaked. The number of jobs at food and beverage stores has fallen by 118,800 since April 2000.

Technology that allows companies to produce more goods or provide service to their customers with fewer workers or with their current staff is a factor in some job losses, economists say. A second is consolidation when a company buys out a rival or merges with a competitor.

"No local union has ever reported laying off people because of self-scanners. We installed these machines and now the direct result is X number of jobs have changed," says Jill Cashen, spokeswoman for the United Food and Commercial Workers International Union, whose members include workers at grocery stores, department stores and other retailers.

"It is a very gradual and subtle shift in our bargaining units, where maybe after some amount of time of self-scanners being in a store, a cashier retires or transfers to another store and that position isn't filled," Cashen says. "There have been some advances in technology that has certainly made the working environment better for our members," she adds. "But it is not always a cut-and-dry situation."

Productivity — the amount a worker produces for every hour on the job — has grown at a faster rate in the retail industry than in all industries across the economy. Had this not occurred, there now would be nearly 4.5 million more jobs in retailing, according to Mark Zandi, chief economist at Moody's "Arguably it has been hard on workers," Zandi says.

Yet companies say a reduced work force is not the main goal of technological innovations.

At the Macy's in Arlington, Va., store manager Paul Gassner says extra workers were hired when the shoe locator technology was brought to the women's shoe department some two years ago. He said it has "significantly improved sales" and proved to be a big time saver. It lets sales associates such as Dixon get shoes on customers' feet more quickly by saving employees the time of having to keep running back to the stockroom.

It took Dixon a week or two to master the device. Now it's easy, she says.

More familiar to customers is the self-checkout.

The retail industry spent $380 million on installing new self-service checkout units in 2006 and is expected to rise to $457 million this year, says Greg Buzek, president of IHL Consulting Group, a research and consulting company that specializes in technology for the retail and hospitality industries.

Making the investment in self-checkouts may not necessarily yield a big payoff for the retailer.

The average self-service checkout machine costs $21,000 and has a typical life of five years, Buzek estimates.

In contrast, a regular cash register costs on average $4,000 and has a longer life — typically nine years, Buzek says. Often, the self-service checkout machines are clustered in a group of four at stores, with one store clerk designated to oversee the self-checkout squad, he says.

The average wage of a grocery store cashier is $19,060 a year, according to the Labor Department.

In addition to cost, there are concerns about theft. Some stores have a clerk both watch and help customers at self-checkouts. Many stations at grocery stores have scales that weigh customers' bag as a way to detect cheating.

At one grocery store, David Hogan, the National Retail Federation's top technology guru, noticed that the fairly high-margin items such as gum, candy and magazines were no longer in the aisle with a self-checkout machine. People were not buying them there.

"They are so focused on getting in line, not screwing up that they are not grabbing the candy, grabbing the magazine, grabbing all this stuff," Hogan says he was told by a grocer. Now the grocer is trying to sell different items, including produce and roasted chickens, in the self-checkout lanes, Hogan says

Experts say the appeal for companies of self-service checkouts is to free workers in the store to do other tasks and to give retailers more flexibility in scheduling workers where and when they are most needed.

Stores also are increasingly interested in ways to use technology to provide more information about products or other things while shoppers are in the store.

One example is the interactive kiosk. Through a live video link, a customer can ask an expert about equipment needed to install a home theater system or how to connect computers at home via wireless routers or what kind of hiking equipment or kayak to buy.

Hogan says that in the future, shoppers might be able to pay for their purchases by touching a finger to a screen or electronic pad, which would match a digitally stored imprint of the finger, and typing in a personal identification number.

Larry Lewark, Macy's point person on technology, predicts that in five years customers routinely will pay for merchandise with a few clicks on their cell phone or other personal digital devices.

Chad Doiron, senior strategist at Kurt Salmon Associates, a management consulting firm for retailers and other companies, looks down the road and sees what he calls interactive mirrors — mirrors that double as computer screens — to help customers decided on what clothing to buy.

"You are standing in front of the mirror. You are holding an item. The item has an RFID (radio frequency identification) tag. The screen can display that item, can display other colors of that item, what other things are in stock for that item — different colors and sizes," Doiron says.

Another idea is using the interactive mirror/computer in a fitting room. With a touch of a button on the mirror screen, a customer can notify a clerk to bring a specific item to try on. A customer also may want to use such technology for a virtual fashion show — imagine standing behind a projected image of dress or skirt or other article of clothing, he says.

Could there come a time when grocery store clerks, department store sales people and other retail workers will seem a quaint thing of the past?

No, says Mike Mojica, partner in Accenture Consulting's retail practice.

"You need to have a human face to be part of the mix," he says.


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