Sensors in grocery stores and customer benefit

An article in the Wall Street Journal (January 20,2017) titled “Kroger tests sensors, analytics in interactive grocery shelves” describes Kroger, the US grocery chain, deploying sensors that detect mobile devices and, through LCD screens on aisles, interact with customers’ shopping lists. The devices also permit additional information being displayed to customers regarding ingredients through the Kroger mobile app. Will such additional sensors in brick and mortar stores increase their competitiveness relative to pure ecommerce grocery options? How might such devices increase the possibility of impulse buys? Will education regarding novel menu options or substitutes that are healthier or customized pricing increase profitability for grocery chains ?

About aviyer2010

This entry was posted in consumer, Cost, Ecommerce, logistics, loyalty, mgmt5612018, Operations Management, product, technology, Uncategorized and tagged . Bookmark the permalink.

26 Responses to Sensors in grocery stores and customer benefit

  1. Christine Rasquinha says:

    For consumers that are shopping e-commerce for groceries, they may not be doing this because they are trying to find the healthiest products or research information. They may be shopping online because it is convenient and it uses less time than buying everything in the store and standing in a line. As a result, by the company adding devices that provide additional information to customers, it may only affect the current customer base who is trying to focus on being healthy and looking for items based on a recipe. By having this additional information, I don’t believe this will affect impulse buys positively because impulse buys are made with little information and having additional information that shows that a certain food is not healthy may lead consumers to not buy a product.

    • Sarinah says:

      I agree, customers do buy online for convenience and having an app to provide more information may not necessarily increase the foot traffic for brick and mortar stores.

  2. Sarinah says:

    An article from RetailWire mentioned that only 5.6% of respondents of the survey by Symphony EYC use their mobile phone to actually buy groceries during the past months. Yet the mobile apps for supermarkets are continuously being launched. A good approach to study the benefits would be to know the specific reasons why consumers go to brick and mortar stores in the first place. Is there a perception that delivery at the store keeps food more fresh because they can physically inspect the good?

  3. Jutong Cui says:

    The competence of offline grocery stores is that customers could have a visual and eyeable chance to choose the right products, while e-commerce grocery options have more convenient shopping experience and a wider variety. As the Wall Street Journal reported, among traditional food and beverage stores, e-commerce only accounted for 0.16% of the $670 billion market. For fresh food, brick and mortar stores have more advantages. This is also the reason why Amazon is also testing concepts of physical stores.
    The additional sensors can work only if the customers have Kroger mobile app. For those app users, customized pushes may guide them to walk into the store. Then personalized recommendation of healthier product through those interactive devices may lead the customer to buy the product which is not on its shopping list, which increases the possibility of impulse buys. Hence, this interactive system may increase in-store customer service and correspondingly improve the profitability. However, more convenient and automotive services need to be developed to provide better customer experience and defect the sharp rise of e-commerce.

  4. Eric Zheng says:

    The commonly agreed competitive advantage for traditional brick and mortar shops remains to be customers’ ability to touch and feel, which may facilitate immediate gratification and trigger impulse buy. Kroger’s technology to display ingredients essentially provides more information and reduces information asymmetry, which actually inhibits impulse buy. Imagine when you see some delicious cheesecakes on the shelf, and the screen suddenly reminds you that each one of them contains 500 calories per piece right before you put your hands on them. A modification will be presenting information about recommendations that promote bundling and coupons.

  5. Murilo Siqueira says:

    Most of the shoppers for brick and mortar stores are not used to mobile solutions to improve their shopping experience. The regular customer will usually pick a physical advertisement while entering the store and check the current sales, while going for the same isles they are used to and picking products on their regular shelf locations, holding their paper shopping list.
    Thinking this way, holding a phone, with a specific mobile app, being connected, while walking around the store is quite uncomfortable, and could overall delay a regular customer shopping experience.
    Although useful for some shoppers, I don’t see a reliable payback for the system just by increasing some small impulse buys.
    Shoppers looking purely for convenience would go online for the sake of being able to shop from home. A simple system like this wouldn’t be motivational enough to take somebody to the store.

  6. Yi-Hang Yang says:

    Although this system provides convenience to the customers by helping customers locate the products on their shopping lists, I suppose this is not a good idea to the business somehow. If the customers know exactly where those products are, time spent in the stores will get shortened. This means the customers are spending less time browsing through the aisles and will have lower chance on impulse buying. I’m not saying we should make the customers get lost in the store but we can provide some information based on their shopping list and attract them to look for some related products that are not on their lists.

  7. David Putt says:

    I don’t think the sensors will increase competitiveness relative to pure ecommerce grocery options because online shoppers are strictly looking for convenience and you can’t get more convenient than not going to the store at all. Online shoppers can see the ingredients on the website when they shop, so having an app that tells them the ingredients in the store is not more helpful to them than what they already do. I do however think the in-store app could increase the possibility of impulse buys. When a shopper enters an aisle of the grocery store and the app tells them what is on sale in that aisle and suggests bundling goods and meal ideas based on items on sale, it could influence the shopper to buy more than they planned. If these features on the app were combined with other uses like self checkout by scanning items on the app and locating items on a map through the app, brick and mortar grocery stores will continue to compete with ecommerce grocery options.

  8. Amitesh Mishra says:

    One step deeper question would be “Who is the target audience for the interactive grocery shelves?”

    If we are talking about the customers who still buy their grocery and other items from brick and mortar stores then yes it could be value add to those customers although that would require them to use technology and app on their phones and you then question why are they still shopping in a store and not online.
    If we are talking about customers who are buying online which is 25% currently but will increase to 55% in the near future according to the below report by NIELSON.
    In that case retailers such as Kroger will not have any competitive advantage over e-commerce. There is no value add for consumers already shopping online and receiving same or similar features or suggestions or information about the products that they buy.

    Talking about impulse purchases, we are back to consumers shopping in the stores and not online. There are possibilities of impulse buys as day by day consumers are getting themselves informed and show more interest in knowing details about each ingredient of food item they might purchase.
    They might prefer knowing details and suggestions rather than searching themselves on their phones while shopping or waiting for a store person to answer their questions.

    But again from the perspective of a Retailer there are some important questions that need to answered.
    1. Does this really add value compared to the amount of investment such an idea would require?
    2. Would it enable them to retain more customers or gain consumers from the e-commerce side?

    Probably not and it is yet to be seen what ping-pong game do retailers play, now that almost all major players have their hands in physical stores and have a presence online.

  9. Kyle Fithian says:

    I do not think this feature will increase competitiveness for brick and mortar locations compared to ecommerce locations. The new features described offer marginal increase in convenience compared to home delivery and e-grocery shopping. The item could increase impulse purchases through instant coupons loaded to a user’s smartphone app. It could also provide suggestions for associated food items connected to other recipes. However, the cost of infrastructure and upkeep needed to incorporate such a system seems much larger than the potential benefits. Customized pricing could increase profitability. This could balance an individual’s price sensitivity with overall product demand therefore increasing purchases for time-sensitive food products. This would lead to less waste and more revenue for the store.

  10. Nathan Lowe says:

    I believe that the use of these sensors and other technology can become sources of competitive advantage for brick and mortar retailers because it allows them to combine the analytics and technology that the eCommerce grocers offer with the tangible experience of being in a traditional grocery store. Because the extension of technology into the brick and mortar setting is much closer to the experience that consumers are accustomed to, it will likely be adopted by consumers more quickly than the use of eCommerce grocers as the primary source of grocery shopping. Providing suggestions of what other customers purchased along with a given item would help to spur impulse purchases (like Amazon’s suggestions for products). Finally, novelty items and health conscious options often command a higher price for a similar product, and customized pricing encourage consumers to purchase in higher volumes. Therefore, each of these have the potential to increase the profitability of grocers.

  11. mfoust35 says:

    Looking at the integration of sensors into brick and mortar grocery stores, I think these stores immediately become more competitive as compared to ecommerce grocery options because they will increase total amount spent per trip and possibly upsell certain items. The number of impulse buys will certainly go up, especially in larger stores, as part of the reason more products are not bought is because a customer possibly couldn’t find them or didn’t know they existed. With the customer being better informed, the customer could also see the benefit of spending less time as the grocery store which most customers would see a positive advancement. Furthermore, with the customer being better informed about novel (and most likely more expensive items), they will at least consider buying them, which makes the grocery store better off than when the customer was uniformed. This point also applies to the healthier options as well. The idea of customized pricing could also increase profitability as these sensors could inform customers of items that would normally go well together or even entire meal ideas thus the chance of upselling or selling more items becomes possible. Though pure ecommerce grocery stores may be the only grocery stores in the future, the advent and implementation of analytics devices will stave off the ecommerce take over for a while longer as individuals that prefer to have options at their fingertips continue to stop at brick and mortar stores.

  12. Muhammed Karadayi says:

    I agree with Nathan that additional sensors in brick and mortar stores can increase Kroger’s competitiveness comparing to pure e-commerce grocery options. By these sensors Kroger offers its customers more information about the product and Kroger can attract picky customers who really care for the ingredients. Some customers can give up to buy a new product because they don’t know the product quality and ingredients. If Kroger puts these sensors, new products can be bought more quickly with the help of immediate information which can increase impulse buying. Also, customers can see this as a better service and be more satisfied with their shopping experience. Suppliers who want to introduce new products to customers can offer better prices to Kroger to increase their products impulse buying.

    Additionally, with this technology Kroger will have more exact data for each individual customer habits, who use the mobile app, like how much time spent by the customer in the grocery store, in which order the customer buys the products, how many times in a month the customer visit the store, which ingredients the customer doesn’t like. Therefore, these sensors can increase competitiveness of Kroger by increasing the data for customer habits and providing better customer service.

  13. Milind Patel says:

    I agree with Kyle in that I don’t think sensors in brick and mortar stores will help with competitiveness because of the IT infrastructure costs. It would be very difficult to endure those costs and compete on prices with grocery stores like Walmart and Kroger. Those infrastructure costs cannot be passed onto the customers. However, I think the idea of having technology to manage inventory at grocery stores is something that will be taken on by the big grocery chains soon. Target has already been working with MIT on developing spectrometers that can be used to reduce costs related to wasted, expired food products such as fruits and vegetables.


  14. Shashank Chinnolla says:

    The internet of things is revolutionizing the way we do things and the grocery industry is one of the first to catch the wave. The use of AI in determining what products the customer is buying ( without actually having the customer to physically check out and pay, is another advancement (similar to AmazonGo) in which the grocery market is trying to increase customer satisfaction and reduce the time spent by the customer in the shop. By integrating this data with the app and pinging the customer when he is near the product would definitely increase the sales of such products as well. This ping can also include health benefits and long term effects on health if consumed which in turn would prompt the impulse buying nature of the customer.

  15. Emily Zhang says:

    Different characteristics or shopping behaviors already make customers choose whether they would shop grocery online or at store. This sensor would affect few customers limited with specific type of shopper, like housewife. For example, usually for men who have a shopping list on their mind or notes, they will just directly go to those products, grab, and go. He would even not look at his phone and give Kroger a chance to promote. I guess only those customers who would like to spend one or two hours hanging in the store would be interested in this service.

  16. Xiaodan Liu says:

    The sensor which display ingredients of the product on the shelve will somehow convenient those customers who still habitat shopping at stores to see and feel the actual products. However, this will only works for those people who has the APP on the phone plus they would like to spend their time waiting in line or either go around between shelves to see different products. Now more and more people would like to do shopping online, as long as they know what they want , they can just add those products to shopping cart, checkout and wait product deliver to them. The additional information has all displayed on webpage, they can choose to check it or not. Thus the app will be useless for those people who prefer to shopping online instead of step out home spend extra 1 or 2 hours to buy grocery at stores. So, I don’t think such additional sensors in brick and mortar stores will increase their competitiveness relative to pure eCommerce grocery options.

  17. Koustuv Pal says:

    These sensors will definitely increase the competitiveness of grocery chains because in the future marketing focused towards individuals will be the norm and grocery chains would dish out options catering to the individual preferences. Secondly sensors can also help to identify the products that does not reflect in the bill which basically means sensors can give an idea about the products that the customers took off the shelf to check but did not buy.This information can better prepare the grocery chains to devise prices and allocate shelf life to products that a customer will buy impulsively or products that the customer would otherwise have not bought.
    Healthier alternatives and customized pricing will increase sales and thereby profitability if the product is of good quality and tastes good.

  18. Amer Nasrawi says:

    The challenge facing shoppers who still prefer the physical experience is finding their items once they are in the store. With the exception of those expert more frequent shoppers, almost all of us struggle to find what we’re looking for. If Kroger can find away to make the experience at their store easier by leveraging these sensors in combination with interactive screens. That might create a new improved experience for the customer once they visit the physical store.
    On the other hand, this will not solve the challenge presented by on-line grocers when it comes to the most traditional items that almost every household buy on regular basis, and it might be still more convenient to get them from online grocer at anytime.

  19. Manita Dagar says:

    Using sensors in a brick and mortar stores does have the benefit of providing additional information about the products to the customers which improves customer service, but it doesn’t necessarily lead to more footfalls in the store. People who prefer such stores over eCommerce stores prefer those for various reasons such as accessibility, delivery time, control over the quality of the product(self -inspection) etc. While on the other hand, eCommerce stores are convenient and had the advantage of additional information before the stores decided to use sensors to provide the same service.

    So, it depends on the overall dynamic of these factors and not just the improvement of one particular factor, like in this case, additional information.

    Also such devices might lead to impulse buys for some products which are not on the list, but discourage impulse buys which are not healthy for the customer. Like the example stated above by Eric about cheesecakes, it might be discouraging to some customers. So, in my personal opinion, such applications will result in decline of impulse buys, but again how the Store plays this, for example suggest substitutes that are healthier or offer customized pricing, might change the endgame.

  20. Jau an Chen says:

    I think this function won’t increase the competitiveness of Kroger but it would allow the company get some useful information to their database and analyze their customer behaviors. There are two prerequisite for this function, one is having Kroger app and the other one is changeable shopping list. And it would only help customers who still hesitating for specific brands or packages, these customers would affect by this function but won’t buy more.
    When it comes to impulse buys, it always related to price or limited products. By this function, it could only help customers to decide which to buy but not buy more. And If Kroger expending use this sensor to every store, should Kroger pass this cost to their customers? or they could absorb by themselves? Passed costs to their customers would probably loss part of their customers to their competitors. So, i do not see any critical benefits to apply this sensor.

  21. Xin Wen says:

    I think these additional sensors will increase the competitiveness and also the sales revenue. For example, when a customer goes to the grocery store with a shopping list, and the Kroger mobile app provides her some other ingredients related to her shopping list. This could attract her to buy other things which are not in the list. But, if people who used to online-shopping, I guess, they will still do the online shopping.

  22. Man Lu says:

    Kroger’s new technology seems to promise a more efficient shopping trip — one that saves time searching the store and highlights products shoppers might be interested in but don’t have on their lists — while at the same time offering interactive elements similar to online shopping. In short, Kroger is creating a better experience for its shoppers.
    Moreover, the sensor offers a new way to collect data. In Kroger’s case, the company already knows a lot about its customers through loyalty card data, and digitizing the store could provide insights about how customers move through the aisles, what items respond well to promotion, and so on. This is a delicate balance, though. Product recommendations should nudge rather than bombard customers, who likely won’t want the equivalent of pop-up ads invading their shopping experience. The same goes for the amount of product data provided to shoppers, which could easily overwhelm.

  23. Senthil says:

    Using sensors to detect individual customers and customer traffic at stores is a smart move by Kroger. Ecommerce shopping attracts the customer and improve the likelihood of purchase by providing various suggestions using their products browsing history. The idea that Kroger is testing in its stores, replicates the ecommerce shopping model. By providing the similar items or items that are healthier or better and cheaper, customers will like the shopping experience at stores. By suggesting personalized list of products to the customers and their response to the suggestions, helps Kroger to improve their learning about customers preference. This learning helps to improve the demand forecasting and attracts customer to visit store and increases impulse buying practice.
    The practice of providing customized options and pricing increase the profit of grocery stores in different ways. First, it improved prediction of demand and reduces supply chain cost. Second, customer purchases all grocery items in the store if they get all their shopping list items in a customized low cost. Stores can predict the customer behavior and suggest an entirely new product in the shopping list. If the customer has affinity to the product, they will end up buy it impetuously.

  24. Adam Davis says:

    Personalization seems to be a growing and winning trend in many industries. If Amazon can do it with books, it seems like a wise idea for grocery stores to do the same. With a seemingly infinite variety of brands for the same product, some of these recommendations could help to offset the “analysis paralysis” that customers face. I could see the issue of customers’ desired privacy coming up, however. Also, the natural direction this will lead in, however, is stores without cashiers, which is likely to have a substantial impact on unemployment.

  25. Vinay Gundam says:

    Looks like brick and mortar stores are fighting tooth and nail to become relevant in the age of online retail. The idea of providing more curated information to customers is interesting and if done right has a potential to revolutionize shopping experience. The article suggest that app uses the shopping list of the customer to help them find the products they want. If that is the case then customers will quickly find what they want and all the traditional strategies of making the customers loop in the store to make impulse buys will be gone. But the upside is if customers are hooked to the app and are not checking out products by themselves, it’s possible to create a bias and make customers buy highly prices items or items what the stores want to sell. Given the ability of stores to control what customers buy, there will be significant incentives or complaints from the companies of different brands. The sensors will create more insightful data and brick and mortar stores can use this data to stock up products what customers are inclined to buy and reduce inventory or even sell this information to product companies for better rates, increasing the stores’ profitability.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s