Baseline has a feature on Albertson's this month. I have to admit that Albertson's is one of the companies I've always wanted to work for. There's a few reasons: (a) I grew up in Idaho and wouldn't mind a chance to have a challenging job in Boise and (b) I grew up in the grocery business--my Dad owned a grocery store for years and I spent a lot of my time there. The article talks about Albertson's technology challenges and its fight for market share with Wal-Mart.

Most retailers pull in sales data from their "point-of-sale system"--once known as cash registers--at the end of the day or twice a day. Wal-Mart pulls in sales from its electronic registers every 15 minutes. By 4 a.m. each morning, suppliers can see how their products sold the day before in every Wal-Mart store around the globe. According to Buzek, some suppliers are also allowed to see what other products were purchased by the consumer along with their own. The system is anchored by a Teradata warehouse that stores 200 trillion numbers and letters--the largest digital library of any company in the world. As a result, Wal-Mart has been able to continually lower prices in the grocery aisles while maintaining a consistent profit margin. It's a recipe that could spell disaster for Albertson's.

From Albertson's: A Shot at the Crown
Referenced Mon Feb 16 2004 21:56:33 GMT-0700

But Albertson's is taking a different tack, trying to get to know customers better (i.e. establish digital identities and tag purchases) in an effort to provide better service.

Albertson's has to get to know its individual customers better through its loyalty-card program and to offer products they might not be able to find on Wal-Mart's shelves. Wal-Mart does an outstanding job of marketing to the masses, McGarvie says, but it doesn't even attempt to get to know its customers on an individual basis.

From Albertson's: A Shot at the Crown
Referenced Mon Feb 16 2004 21:58:54 GMT-0700

But all that takes time and meanwhile Wal-Mart is chipping away at Albertson's market share.

Over the past year, Dunst says, the company installed a redundant high-speed network throughout its operations, using a combination of frame-relay and small-aperture satellite-communication technologies. As a result, sales data is ready for analysis "by the time the customer gets to their car in the parking lot," he says. Before the upgrade, sales information was processed in batches overnight. It could take up to 48 hours for managers in Boise to see if sales promotions were working.

From Albertson's: A Shot at the Crown
Referenced Mon Feb 16 2004 22:00:25 GMT-0700

But that's not far enough. Wal-Mart uses sales at the till to automatically place orders with suppliers. Albertson's not there yet. There's all sorts of "store of the future" ideas as well, including a private and proprietary system like the one Marc Smith talked about at ETCON.

In the end though, one wonders whether all the "gee-whiz" stuff will create an experience that will cause people to be willing to pay a bit more. I like shopping at Alberton's and I go there even when I know I'm probably paying more than I would down the street--I'm not particularly price conscious. However, the success of Wal-Mart proves that the same can't be said of many people.