Take a quick walk down the street and it’s immediately clear that technology is not only being welcomed with open arms, it’s being relied upon more than ever. Smart phones, smart watches, smart earbuds and more are further inching their way into our daily habits.
That tech dependence doesn’t just go away when a consumer walks into a supermarket. The questions become: how much do retailers need to embrace technology and how can that impact the bottom line?
Headlines from the past year suggest that tech has already begun impacting the industry. Amazon’s dive into the supermarket world made waves. Walmart’s work on a blockchain system is innovative. Kroger’s experimentation with smart shelves has turned heads.
Retailers must gauge how much tech their consumers expect, and how they can use that to boost engagement and sales.
Durham, North Carolina-based Phononic — a supplier of semiconductor chips for cooling and heating, supply chain services, merchandising coolers and more — surveyed consumers for its 2019 Store of the Future Report. According to this report, 51% of American shoppers say that if supermarkets don’t “enter the modern age,” more people will look for other ways to get food. Furthermore, 41% of shoppers say grocery stores haven’t yet figured out how to use technology like other retailers have.
The good news is that some of these consumer criticisms are subsiding. For instance, the 2019 report notes that 40% of stores “haven’t changed in decades” and need to adapt to the modern age. Last year that number was 48%.
Still, it’s apparent that shoppers are looking for more.
“It’s important for grocery stores to get technology right,” the report says. “Nine in ten Americans say it’s important that grocery stores use technology better and/or more efficiently to make checking out fast. More than four in five say they need to use it to make shopping faster.”
The Tetris effect
Kevin Ryan has some experience with it comes to tech. He served as the senior brand strategist for Amazon.com before founding Malachite Strategy and Research, a CPG and foodservice-focused insights and innovation agency.
When he thinks about how retailers should embrace technology, they should could consider the Tetris effect — the way the digital world impacts the physical world.
“The virtual way of watching and listening has changed our way of thinking about categories,” he says. “Think about peanut butter. What’s next to it? You’re probably thinking about physical retail.”
Now go to Amazon, he says, and type in peanut butter. What else do you see? Peanut butter bars, ice cream, even a song called “Peanut Butter.” Categories have dissolved in the technological retail space, he says.
“It’s controversial, but young shoppers walk through the store with their phones, and that’s how they’re thinking about categories and food,” Ryan says. “The Tetris effect is changing the way we think about food.”
Consider attention poverty, for example. Consumers used to the digital world have grown to expect immediate interaction. When they click on a link or scroll to a new page, they want information or entertainment. If they’re not met with immediate content, they’re scrolling on down the road.
“You have to enhance your first moment of truth,” Ryan says. “The first moment consumers see a product you have to hit them hard, so they don’t scroll past it physically or virtually.”
Double click culture
Today’s shoppers expect more information. When they double click a link, there’s always something underneath that hyperlink. Supermarkets can help satisfy this need for more information with QR codes or smart shelves, like the ones Kroger has been testing in its stores. Shoppers can interact with the shelves through Kroger’s mobile app for product information, digital coupons, ads and more.
The system — called Kroger EDGE — is a cloud-based solution that uses Microsoft Azure to store and process volumes of data.
“It brings the information richness of the internet to the sights, sounds, touch and feel of retail,” says Brett Bonner, vice president of research and development for Kroger. “The path to purchase for an internet shopper is typically a click and wait. In this case, you’ve got all those features — and standing in front of your product is a motivated buyer ready to reach and pick.”
Ryan says transparency cues like QR codes are vital, even if data shows those codes aren’t being scanned as much as expected.
“I will hear people say that no one scans the codes,” he says. “And I say that means they’re working. My wife knows the passwords to my email accounts, but she doesn’t need to check them. It’s a canary in the coal mine. If consumers start clicking a lot, it means they are worried about your transparency. The technology is there for them, even when they don’t necessarily use it.”
The flip side
While technology is a vital part of the supermarket of today and the future, shoppers have said they’ve experienced automation anxiety, Ryan says.
“People are worried about how this technology affects our overall world,” he says.
In turn, some retailers are re-inserting human interaction. Seattle-based PCC Markets has removed all automatic checkouts because their research showed consumers don’t want automation in that area.
“You need to show the care in the making, picking and selecting of your products,” Ryan says. “Some consumers want to see the human. It’s the opposite of what they think in the virtual world.”