Razor-thin margins in the fiercely competitive German food retail market have prompted Metro AG, one of Europe's largest retailers, to test new technologies that streamline the way shoppers pick and pay for items, and cajole them into buying more. Here, at Metro's Future Store in Rheinberg, a medium-sized city north of Düsseldorf, near the Dutch border, this reporter roamed the aisles on a typically crowded shopping day. He found the experience to be something special, as the marquee over the entrance suggested [see photo, "Read All About It!"].

Customers at the Future Store can use a number of gizmos that promise speed, comfort, and even a bit of fun: scales with digital cameras that can differentiate tomatoes from apples, so as to weigh and price them; multimedia kiosks that provide information about select foods and wines in the store; and carts outfitted with a small computer and display with an integrated scanner that allows you to call up the day's sales bargains and tally your own purchases, as well as help you navigate the store.

Photo: Metro Group

Help: The computer at the back of the shopping cart in Metro's Future Store enables the shopper to tally items as they are selected, and it calls up the day's sales bargains. Scanned purchases are transmitted wirelessly to the checkout cashier.

The innovation doesn't stop there: "smart shelves" alert staff to replenish items that are running low or are sold out, while wireless tags, so far only on some products, promise someday to altogether eliminate the tedious task of scanning manually for price.

The supermarket is serving as a test lab not only for Metro, but also for some 40 hardware and software partners, including Cisco, IBM, Intel, and Microsoft. What has drawn so many companies to the Future Store Initiative is the opportunity to probe many technologies under one roof in a genuine retail setting, says Dimitris Nikolatas, product manager for Cisco Systems Inc. in San Jose, Calif.

The entire store is covered by a wireless local-area network, based on the IEEE 802.11b Wi-Fi standard. The network links all mobile devices, such as the computers, called personal shopping assistants (PSAs), and even many stationary devices, including electronic shelf labels, checkout points, and flat-screen displays used for product promotion.

With the PSA, your scanned purchases are immediately transmitted over the wireless network to the checkout terminal—all you need to do is give the cashier your reference number assigned by the PSA and pay.

Almost all products are labeled on the shelf with liquid-crystal display labels, so that store managers can change prices effortlessly via the network [see photo, "Remote Pricing"]. Large plasma screens allow product promotions to be managed quickly and selectively from a central point.

Probably the most talked-about technical novelty of the store is its use of radio-frequency identification (RFID) tagging. The technology is a high priority for Metro and several other big European retailers, including Tesco PLC in the United Kingdom and Carrefour SA in France—all seeking ways to reduce theft and improve inventory control.

For those not familiar with RFID, a tag contains an IC chip with an antenna. Unlike bar codes, which need to be scanned manually and read individually, RFID tags don't require line-of-sight reading, and consequently, one scanner can read hundreds of tags per second. Stimulated by a radio signal, the chip transmits a unique code to identify the product the tag is fixed to. The code includes not only the product's universal product code, as bar codes currently do, but also gives the particular item its own unique tag. The impact could be huge. Retailers, for instance, will be able to quickly trace and recall a bad lot of canned goods.

Metro is testing two types of RFID technology in the store. One operates at around 13.65 megahertz, while the other is at the higher 900-1000-MHz band. The lower-frequency RFID is used to read individually tagged items within a 1.5-meter range inside the store. The higher-frequency tags are used to track pallets and boxes as they come through the shipping door from distributors. These can be read from up to 7 meters away. Philips Semiconductors, based in the Dutch town Eindhoven, is supplying both tag systems.

A slick RFID application in the Future Store—but one you don't readily see—is the smart shelf. Shelves have embedded readers that register tagged items and communicate wirelessly with a merchandise-management system. The management system automatically recognizes when goods are removed or replaced, and triggers requests for fresh supplies when items are low or out.

Although smart-shelf technology is in an experimental stage, RFID-supported delivery at Metro is already a commercial reality. Pallets and boxes are currently tagged at one of the group's distribution centers and recorded as they are delivered to the Future Store. Fully installed, the entire system will provide both real-time information on warehouse shipments and shop-floor inventory levels.

Metro is so convinced of the benefits of RFID for delivery that the company has ordered 100 of its top suppliers to begin attaching tags to pallets and boxes headed for 10 of its central distribution warehouses and 250 German stores by November.

Someday Metro expects all of its PSAs and checkout counters to be outfitted with RFID tag readers. Reading systems integrated in the PSAs will automatically register merchandise in shoppers' carts. For those preferring not to use the PSA, checkout gates equipped with readers will automatically tote up the purchases.

Of the Future Store's nearly 40 000 products, only about 30 currently carry the tags, including razor blades from Gillette, cheese from Kraft Foods North America, shampoo from Procter and Gamble, and some CDs. In fact, the day when RFID tags push bar codes to the sidelines could still be several years away, says Gerd Wolfram, project manager of the Metro Future Store. The reason: the prohibitive cost of RFID chips, which currently ranges between US $0.30 and $0.60. For Metro to deploy RFID chips economically, "the price will have to come down to around two cents," he says.

"The use of polymer [circuitry] instead of silicon could certainly help drive down the prices," says Joachim Pinhammer, director of marketing of retail systems at Wincor Nixdorf GmbH in Paderhorn, Germany, which supplies the PSA terminals.

Currently, several chip makers, including Germany's Infineon Technologies AG, are researching such plastic chips. In fact, the Munich-based company has already succeeded in integrating plastic ICs on commercial packaging film. Günter Schmid, a research director at Infineon, warns, though, that a big challenge will be to develop equipment that can print the chips economically on the packaging. Printing companies, he says, "don't know a whole lot about circuits, and chip makers aren't familiar with printing."

Privacy concerns, however, could prove an even bigger obstacle to RFID adoption than chip prices or printing. Privacy advocates, such as Consumers Against Super-market Privacy Invasion and Numbering, worry that the technology could create an Orwellian world in which salesclerks or, worse, law enforcement officials, could read the contents of a handbag with the wave of a wand. Philips has responded to these growing fears by implementing a new feature in its tags that disables them at the point of sale. Metro has introduced an RFID deactivator machine, and dropped the use of the tags in customer discount cards.

Even if the verdict is still out on some technology being tested at the Future Store, one thing is certain: shopping in Rheinberg or, for that matter, any place else in the industrialized world will likely never be the same.