The future of grocery shopping is all about data

Published: Oct 24, 2017 -  Food retailers are racing to leverage one of the most important weapons in their battle to keep people coming to grocery stores: data.

“Data is the new battleground,” says Stuart Aitken, chief executive of 84.51˚, Kroger Co.’s data-analytics unit, whose name derives from the longitude of the division’s Cincinnati headquarters and because its 750 employees do so-called longitudinal studies, researching habits of customers over long periods.

Working from a small host of research facilities beyond the sleek downtown headquarters and a lab tucked away in a suburban strip mall, Kroger’s app developers and data scientists are mining consumer information to devise the grocery store of the future. They are testing apps for shoppers’ mobile devices that will highlight sales based on whether the customer eats meat or needs help finding recipes for chicken, for example. Want to make fish tacos tonight? Another app will populate a user’s digital shopping list with the necessary ingredients available at the store.

For store managers, meanwhile, a program is in the works to allow them to literally see how products are selling in a given aisle, using augmented-reality apps on their phones that show the prices and sales figures for the products found there.

Whiteboard fever

“We play in a variety of spaces,” says Matt Wiley, a developer at 84.51˚, during a behind-the-scenes tour that wound continuously through groups of employees brainstorming ideas on white boards. The analytics unit also does consulting for such firms as Procter & Gamble Co., General Mills Inc. and PepsiCo Inc. 

Kroger, the nation’s largest supermarket chain by revenue and store count, competes with food-sellers such as Wal-Mart Stores Inc. and a growing cohort of online food-shopping rivals, chief among them Amazon.com Inc. AMZN, The Seattle-based company is generally upending retail business with its competitive prices, quick deliveries and the data analytics it uses to target customers based on their buying and shopping habits.

Food industry executives know they have to be smarter and faster to compete. Kroger has invested billions over the past decade and a half to hire engineers out of leading universities and away from companies recruiting talent with the same kinds of specialized skills—including data analytics, logistics and app-development. Recent innovations developed in Kroger’s labs include infrared sensors that monitor the number of customers in a store and automatically deploy checkout clerks as the number grows. This tool alone, Kroger says, has reduced wait times by several minutes across its stores.

In-house equipment at most Kroger locations remotely monitors the freshness of certain produce and notifies managers the second a cooler blows out. Set to roll out at stores next year: shelves with sensors designed to recognize and communicate with apps on the mobile devices of certain customers. The apps contain data about each customer’s shopping habits, and the shelves, in response, display banner ads customized for them, for such products as gluten-free or nondairy products. Kroger also is rolling out a wireless scanning device it calls Scan, Bag, Go at 400 stores next year. Customers will use the device to ring up groceries as they shop, then pay for their purchases through an app.

Other retailers are using similar devices and other technology to woo customers. At Wal-Mart’s Sam’s Club stores, members can scan goods on their mobile devices while they are still shopping and pay through an app as they exit the store. Wal-Mart, the biggest U.S. food seller by stores and sales, also has developed—but not yet deployed—a patented facial-recognition technology that it says could be used to detect dissatisfied customers and respond to their needs.

“We’re going to make shopping with us faster, easier and more enjoyable,” Wal-Mart Chief Executive Doug McMillon told investors and employees this summer.

Not all of the supermarket industry’s tech-driven efforts are about increasing sales. Costco Wholesale Corp., COST, for example, uses its ability to track every purchase to inform its customers of food-safety recalls. And at Wal-Mart, stores are using virtual-reality headsets to train employees to deal with situations from holiday-shopping crowds to spills in the beverage aisle.

Supermarkets increasingly need to woo shoppers to their stores. Only 47% of 2,145 grocery shoppers surveyed in February said they shopped for most of their food at one primary supermarket, down from 61% a decade earlier, according to Hartman Group Inc. research for the Food Marketing Institute. Food shoppers increasingly split their dollars between supermarkets, discounters, club stores, specialty shops and online food retailers, Hartman’s research shows.

Mining customer data is increasingly seen as the key to maintaining market share for supermarkets. Large regional chains, such as Michigan-based Meijer Inc. and California’s Raley’s Supermarkets, are hiring consultants to harvest data from their customers.

Read more: https://www.marketwatch.com/story/the-future-of-grocery-shopping-is-all-about-data-2017-10-24

 

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