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Buy Your Oranges With Big Blue

The next time you use the self-checkout register at your local Wal-Mart or grocery store it might be using IBM technology, thanks to an acquisition by Big Blue Thursday.

The retail stores solution division of the Armonk, N.Y.-based tech giant bought out Productivity Solutions, Inc., to bolster its point-of-sale (POS) product line for retailers for an undetermined amount. The entire company of 140 employees, based out of Jacksonville, Fla., will be assimilated into IBM's retail division.

The deal is the natural evolution of a marketing agreement the two companies have enjoyed for the past couple years, said Greg Thompson, an IBM spokesperson, where PSI provided the hardware and IBM the software, certain components and services. Thompson said IBM picked the company because of the modularity of the automated checkout machine.

PSI's self-checkout machines are used by Lowe's, Big Y Foods and BJ's Wholesale Club, among others.

There has been a burgeoning demand for self-checkout at the stores in recent years, as more and more customers look for a more convenient method of paying for their purchases. According to IHL Consulting Group, a retail industry analyst firm out of Miami, stores are seeing as much as 35 percent of their inventory getting checked out using the technology. Spending on the systems that make the technology work is expected to surpass $1 billion in market value by 2005.

"Self-checkout has become an important new trend," he said. "Customers really prefer to have one point-of-sale vendor. Checkout is the most important part of retail; it's the moment of truth, where they give you the money."

While the PSI purchase may only be a small part of IBM's existing retail stores division, the technology used is considered an invaluable stepping stone to future gains in the retail industry at the point-of-sale. Self-checkout is just one of the platforms IBM expects to roll out in the near future.

Big Blue envisions a Retail On Demand service for the shopping centers of the future, where customers aren't reduced to waiting in line to make their purchases. Instead, they'll be able to buy their milk or latest DVD using an Internet shopping card, wireless tablet PC or kiosk.

The end result, of course, is the promise of RFID , the end-all-be-all in shopping convenience. With RFID, customers could just walk out of the store with their purchases and have the bill automatically tallied against their bank account. The technology is used today, but it's primarily used at the supply chain management level to account for inbound/outbound pallets at the warehouse.

RFID at the consumer level is anywhere from 7-10 years away, said Thompson, mostly due to the cost of the RFID tag. Similar to the bar code found on packages today, the tags give out a weak radio signal for transceivers to pick up, putting the cost of a tag between 25-50 cents. That's a prohibitive cost for retailers, Thompson added.



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