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Grocer Uses RFID to Increase Customer Loyalty

TOP Food & Drug, a grocery chain in Washington state with 18 locations, has implemented an innovative RFID-based payment and identification program that it believes will increase customer loyalty to its stores.
Mar 31, 2009This article was originally published by RFID Update.

March 31, 2009—TOP Food & Drug, a grocery chain in Washington state with 18 locations, has implemented an innovative RFID-based payment and identification program that it believes will increase customer loyalty to its stores. The new program, called TOP Connection, is based on the flagship solution from Bellingham, Washington-based startup Accelitec called Accelitec | interact.

On the hardware end, TOP Connection pairs RFID key fobs or cell phone adhesive tags with point-of-sale readers to enable transactions. But it is the behind-the-scenes processing where the solution really distinguishes itself. There are two features in particular that TOP believes will draw customers into the TOP Connection program and grow their loyalty. The first is low price guaranteeing. Many retailers offer their customers the ability to receive the dollar difference if a product they purchased goes on sale a short time later. TOP Connection automates the process, depositing that dollar difference as credit to customers' accounts without them ever having to visit the store. The second benefit is automatic refunding. If a customer has a problem with an item after taking it home, he or she can simply call TOP to notify them, discard the product, and again have the money refunded as credit to their account.

These are just two examples of a fundamental concept behind the Accelitec | interact solution. "The point is, if some sort of refund event happens our system can put the credit back into the customer's account without the customer doing anything," Accelitec president Peter Gruman told RFID Update.

TOP hopes that such conveniences will foster trust and translate to more return shoppers. "The average grocery store customer goes shopping 1.9 times per week but only visits their primary grocery store 1.3 times per week. That means that about a third of all grocery activity is not captured by the primary grocery store," explained Gruman. "Our solution is a way of getting people to select their primary destination more often. We're trying to recapture more of that 30 percent shopper activity that is not going to the primary grocery store."

Since so much of the solution occurs behind the scenes, it seems plausible that the Accelitec solution could use magnetic stripe or bar codes instead of RFID. But Gruman said RFID offers numerous advantages over such traditional options, including customer convenience ("It's easier to get a read on a chip than it is to pull out a card from your wallet."); security ("We think we're more secure than mag stripe by a long shot."); and consolidated functionality ("In addition to being a loyalty piece, the chip can also be linked to a credit card, a debit card, and store credit."). Perhaps most importantly, Accelitec believes RFID offers a more robust platform for ever more services and applications. "We want to sell people on the whole vision for where the future is."

The customer RFID device comprises a plastic card designed by Vanguard ID Systems and a high frequency inlay from UPM Raflatac based on the MIFARE standard.

Acknowledging that loyalty programs and RFID are both lightning rods among privacy advocates, Gruman said the design of their solution is "exceptionally sensitive to the protection of personal information." No personal information is exposed, transactions are encrypted, and all data is stored at off-site databases. "We're more secure than credit cards."

So far it doesn't seem that customer pushback has been a problem. On the contrary, TOP has seen a great response. Over 60 percent of all customer transactions are now processed under the TOP Connection program, which just launched last fall.
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