Comment: In-store tech and the grocery space race

The attention that the new Tesco concept store in Watford received was indicative of how important it is for grocers, in particular, to make sure that they are keeping a keen eye on how to shape their stores of the future, especially when the UK's leading retailer is also leading online sales.

However, as Tesco's UK managing director Chris Bush explained earlier this month, Watford isn't the blueprint for all future stores. He said: "What we are saying is that every store is different, and serves a different local community with different tastes and needs…the age of the cookie-cutter supermarket is over."

So while the one-size-fits-all approach is not appropriate, there are some overriding challenges that every grocer needs to take into account, which is to deliver a compelling service offer to their customers, across all channels whilst maintaining, or enhancing, profitability.

When working out the 'magic formula' for the store of the future, retailers need to be balancing the wow factor that could draw customers into the store with the commerciality of the operation whilst keeping everything customer centric.

Putting the customer at the heart of the decision around how to bridge the online/bricks and mortar gap isn't a bad place to start. Let's take a look at the five items that are top of the customer wish list and see how grocers are responding:  

Confidence that I’m getting good value – The response to online price comparison sites has been to offer price comparison at the checkout, with customers getting vouchers off the next shop or indeed confirmation that their shop was cheaper than it would have been with the competition. Digital signage will provide greater opportunities to provide tailored time of day promotions to maximise in store purchase; time will tell if the supermarkets will encourage price comparisons while customers are making their purchases via mobile/scan apps.

Good availability – The reduction in the price of RFID tags is generating an increase in the usage in non-food areas, speeding up the time it takes for the stock count (a Kurt Salmon survey found that a typical 200 units per hour stock count could be increased to 14,000 per hour) and increasing overall inventory accuracy. Its use in the grocery departments is in its infancy and retailers need to see if the benefits stack up and how implementable the solution would be. But we know that an increase of 1% in availability will drive up to 0.5% increase in sales.

Fast and efficient customer service – Technology at the checkouts has long been in place to facilitate a speedy exit from the stores once the trolleys have been filled – either with queue technology, scanner technology, mobile payments or self checkouts. Grocers are continually looking to improve the speed at checkout; there are pockets of trials across the country: Asda is trialling 'Rapid Scan' on its main bank checkouts which is a 360 degree laser that can scan up to 100 products per hour. Sainsbury's 'scan and go' has customers downloading a smartphone app and using their phone as a scanner as they shop in the store. At the Tesco Watford store the customer is greeted with a 'scan as you shop' option when entering the store and has a dedicated checkout area to go through once completed. These scan as you go options could go a long way to remove the customer frustrations at the self checkout (maybe we can all dream of no longer hearing the 'unexpected item in bagging area…' message).

To have a choice of products relevant to me in the store... – Data and analytics provide supermarkets with rich insights to support the localisation of assortment and space planning that's moved away from a one-size-fits-all to a store level led approach that allows for localised adjacencies that better meet the needs of the customers that pass through their doors. Grocers that have implemented strong category management practices that have supported the localisation of the assortment and space have seen uplifts of between 2-4% in sales within the category.

…and to have the same product offer in store as I do at home on the web/mobile –  Endless aisle technology is used in many general merchandise stores and provided to customers via kiosks to large touch screens. There are limited examples of the technology being used to support areas such as wine and spirits and bakery for special cake orders and we will see more of this.

To make it easy for me to decide how I shop – the buzz phase of 'seamless experience across channels' comes into play here. Click & collect is an established route for the general merchandise retailers and trials of the use of lockers and other means of grocery collection are underway. UK retailers could look to France where there has been a rapid growth of click and drive through for grocery order collections. 

In a recent conversation with one of my US colleagues we were talking about how in-store technology is providing a competitive advantage to some of the US grocers and helping them increase market share. They shared with me three examples that we could be experiencing soon…

Smart shelves – using light-sensing technology to detect how long customers stand next to a particular product, whether they pick it up and for how long, and which item they pick up next. This is used to understand more about consumer behaviour and also to help manage availability.

In-aisle tracking – made possible by sensors placed in key locations that monitor shopping times, what consumers touch and what they put into their trolleys. This technology can help assess competing promotions or layouts, and its heat-map output will show high-traffic areas.

Smart carts – enabling customers to bring the shopping list they've created online onto a screen on their shopping trolley. While they are in the store, sensors on their trolley track their shopping patterns and show them ads and promotions based on the trolley's location and could also show them relevant additional purchases based on the items in their cart – and on their list – and what other customers have purchased in that aisle.

These efforts are aimed at increasing impulse buys, which account for roughly 40% of all supermarket purchases.

Kurt Salmon's Sue Butler will be writing a regular in-store technology column for Essential Retail over the coming months.