By William M. Bulkeley

Two years ago, when people talked about technology and retailing, they meant consumers abandoning stores and shopping on the Internet.

But now that online grocers, video stores, pet-food outfits and toys emporia have crashed and burned, retailers have a different take on technology. Instead of giving people the chance to stay at home and shop, businesspeople want to use high-tech strategies to get people into their stores - while cutting costs at the same time.

In a sense, stores are trying to combine the best aspects of Internet shopping with the strongest points of buying in a bricks-and-mortar store. In most cases, this means tailoring sales pitches to meet individual consumers' tastes and habits - while still letting them roam the aisles and touch and feel the products they're about to buy.

What will that mean in real life? For one thing, some stores are creating the real-world equivalent of the Web's ultra-specific targeted ads, putting up electronic price displays and shelf tags that can be updated with the touch of a button, or offering customers personal digital assistants that flash messages about promotions that are specifically geared to their buying habits.

The new technology also lets stores take advantage of Web retailer's low overhead. Wireless, computer-controlled signs mean fewer workers have to change prices by hand, for example. And some stores are even eliminating cashiers by letting customers pass their purchases over a scanner and swipe their own credit card. Not pointing and clicking, perhaps, but close.

Hand to Mouth
Retailers are normally tight-fisted when it comes to capital spending. But many of the new devices could pay for themselves by reducing labor costs, while boosting sales and making shoppers happier. That leads marketers to predict that consumers could see the new devices proliferate in many stores in the next three years.

Some of the most promising applications are gadgets that try to create a middle ground between the ease of shopping at home and going to the store.

In a pilot project, some 500 shoppers at three Safeway Inc. stores in Britain have been given a customized Palm Pilot called Easi-Order, a PDA with a modem and bar-code reader. Using data gathered from its loyalty-card program, Safeway, of Pleasanton, Calif., compiled personal shopping lists for each of the 500 participants, listing the items the shoppers purchased most frequently. So, the shoppers can hook their PDAs up to a phone line and check off items on the digital list - and those items will be waiting for them at the store, bagged and ready to go at whatever time they specify. Thus, customers get an easier way to shop - and the store, or so it hopes, gets happier customers who are prepared to do more business there.

If shoppers want to put more items on the shopping list, they can take the PDA down to the store and swipe the bar-code reader on the products. Safeway's system, designed by IBM, also stores lists of ingredients for favorite recipes; the user simply checks off the ones he or she wants. The system even suggests an appropriate bottle of wine.

It will send warnings about certain products - telling a customer, for example, that the jar of mayonnaise he bought three months ago is due to expire and offering a discount on a new jar.

In the U.S., office-superstore chain Office Depot Inc. is providing small-business customers the opportunity to buy a Palm Pilot with a bar-code scanner so they can go through the store and create a personalized catalog of items they regularly buy. Anytime they need, say, a new inkjet-printer cartridge, they can tap a shopping-cart icon on the screen. Next time they "hot-synch" the handheld with a computer (in other words, hook the two gadgets together to share data), the computer will automatically send the information via the Internet to Office Depot, and the selected items will be delivered.

It's a "highly efficient way to buy and replenish their office products," says Steve Ember, executive vice president of merchandising at Office Depot, based in Delray Beach, Fla.

Many stores are taking a different approach to arming customers with technology. Instead of giving customers PDAs, they're installing Web kiosks in stores. Take, for example, the labor-intensive task of creating a wedding registry. Cincinnati-based Federated Department Stores Inc. is buying more than 400 Web kiosks from NCR Corp. for wedding registries in its Bon Marche, Lazarus, Macy's and Rich's department stores. Customers can check the registry for anything a couple has listed, from any of the Federated stores, look at the item in the store and then order and have it delivered. The registries are stored on databases at WeddingChannel.com, a unit of closely held Wedding Channel, a Los Angeles-based online-registry and wedding-planning service.

Paper, Plastic, Proactive
While such efforts try to streamline the process of picking out products, other technology focuses on simplifying the end of the shopping expedition: the checkout line. Many big retailers are adopting technology that lets customers do their own scanning and bagging at the cash register.

Lars Nyberg, chairman of NCR, descendant of National Cash Register, says that "we have convinced some significant players to adopt self-checkout," including Kmart Corp, and a number of grocery chains. "In the coming five years, self-checkout will become a significant business," although he expects it will never account for more than half the checkout lanes in most stores.

Daniel Hopping, a manager in IBM's retail-solutions unit, says that "self-checkout is being accepted. Two days ago, I was in a store and there was a line at the self-checkout register even though nobody was in the human-operated line."

The technology, boosters say, offers big benefits to stores and shoppers. NCR, based in Dayton, Ohio, calculates that 90% of the cost of maintaining a checkout lane is the cashier. And that means stores can afford to open more lanes, the argument goes, thus cutting queues and speeding up checkout.

For some customers, though, the advantage of self-checkout isn't speed. "In retirement communities, you sometimes see big usage of self-checkout because they like to see how much they're being charged," says Joanne Walter, NCR's vice president, future retailing. "They can slow it down."

Retailers, naturally, were worried about the potential for theft - what retailers call "shrinkage" - with self-checkout. However, NCR and other vendors have developed a number of techniques to encourage honesty.

In part, retailers rely on psychological deterrents. Self-check lanes are set up with video cameras that can be monitored by store personnel, and the lanes have video screens where shoppers can see themselves passing merchandise over the scanner. "People really don't like to see themselves stealing on video," says Ms. Walter.

Moreover, the self-checkout aisles are only waist-high, giving shoppers a sense that they can be watched easily. And there's an electronic scale beneath the shopping bags that knows what's been scanned and how much it's supposed to weigh. So if a shopper scans a candy bar while slipping a rib roast into the shopping bag, the system beeps and asks that the item be entered again.

At the end, the video screen asks shoppers to check that there is nothing left in the carriage. "You wouldn't believe the look of guilt they get," says Ms. Walter.

In addition, self-checkout eliminates security problems many retailers have with clerks conspiring with friends to steal multiple items. For example, cashiers have been caught putting a bar-code for a cheap item on their wristwatch and scanning it over and over, while covering up the bar-code on expensive items. The scale in a self-checkout prevents that, because the weight of the products in the bag wouldn't match the weight of the "product" being scanned.

Technology is also starting to change the mundane world of displaying prices. A Xerox Corp. spinoff, Gyricon Media Inc., of Palo Alto, Calif., has developed an 11-inch by 14-inch display that it is marketing as an instantly changeable sign.

Goodbye, Pricing Gun
The technology, dubbed SmartPaper, is light enough to sit atop a shelf or "gondola" stand-alone display; it is powered by double-A batteries and costs about $100. Scientists at Xerox's Palo Alto Research Center have been working for more than a decade on the device, which consists of tiny two-colored balls in a flexible sheet. The signs are controlled through a wireless radio connection from a central computer. When given an electrical charge, each ball can turn its white or black side toward the viewer, forming letters.

Federated's Macy's East divisions is starting to experiment with the signs in New Jersey. "If this is successful, it will replace all our paper signs," says Benjamin Diss, director of information systems for Macy's. "We see this as a large issue. We have sales where we have hundreds of thousands of signs that need to be updated."

Federated nationally spends up to $250,000 a month changing signs. Worse, signs that are changed incorrectly infuriate some customers, who end up arguing with cashiers when scanned prices are different than those shown on signs.

Another pricing technology seeks to replace shelf tags in grocery stores. NCR is selling electronic labels that receive instructions from a radio transmitter and can be changed at a manager's whim. Ms. Walter of NCR says it costs about $100,000 to place the wireless tags throughout the store; they can be updated by radio transmitters in the ceiling that send along a jolt of electric power to recharge the built-in battery each time the price is changed.

One of the first customers was a Turkish retailer "because inflation there is so high," says Ms. Walter.

Such products don't just offer the chance to save on manpower. There's also flexible pricing. Once a store is fully equipped, store managers can change every price in the store for sales that last for hours or even minutes instead of days.

For instance, items that appeal to seniors, who have flexibility in when they shop, could be discounted during slow times of the day to draw them in. Or stores could more easily offer time-dependent specials. If, say, strawberries are approaching their shelf life, a quick price cut in the evening might move them. If a rainstorm breaks out suddenly, a store manager could change the price of umbrellas; if the clouds clear and the temperature rises, a manager could create a special on bathing suits.

"If supermarkets can run their sales by the hour of they day, that could be a big thing," says Mr. Hopping of IBM.