What actually generates competitive advantage for a grocery store is things like what kind of groceries it carries, especially perishable groceries, where one has to “use it or lose it.” Perishable groceries have the poorest fit with computerized logistics, because the computer doesn’t do a very good job of telling whether or not the groceries have “perished.” The existing bar-code system cannot even perform the basic function of going through and pulling sell-by-date-expired items before the government health inspector finds them, and levies a fine. That’s hand labor.

What a computerized logistic system does an especially good job of is keeping track of a hundred different kinds of sugar-frosted cereal, all identical in taste, but each with the image of a different cartoon character on the box. When IP industry promoters say that supermarkets are IP intensive, they are referring to the cartoon characters. The theory is that there are supposed to be all these intimate tie-ins with Hollywood. I think you would find in practice that the different kinds of sugar-frosted flakes tend to get caught in price wars. People don’t go to one store or another store, because of which kind of sugar-frosted flakes the store has, with which cartoon character. Even if you take a child grocery-shopping, out-of-sight is out-of-mind at that age. This has nothing much to do with how successful grocery stores brand themselves.

There are choices and trade-offs, of course. For example, do you cater to someone who wants to resupply his pantry and refrigerator, or to someone who wants to buy a picnic basket instead of going to a restaurant for lunch? Do you cater to people who are essentially concerned with feeding themselves, or to people who want to show off their hospitality? How does the customer feel about eating something he never ate before? I know some traditional small family grocery stores which do very well without barcode scanners, because they have picked the right answers to the foregoing questions and designed their limited stock around them.

I walked into a Middle-Eastern grocery store, and instead of asking for a particular kind of cheese, I asked the proprietor if he had some cheese “with personality.” He understood exactly what I meant, and sold me some Bulgarian sheep cheese, and something he called “Spanish Cheese,” made by a firm in Dearborn, Michigan, labeled in Arabic, and tasting somewhere between Feta cheese and Monterey Jack, good to top a salad with. The store wasn’t very big. The refrigerator section was the size of a closet. The dairy section consisted approximately of those two cheeses, plus some butter, yogurt, etc. But, again, Selection.