There is no better example of how a traditional supermarket retailer must change to remain competitive in today’s world than that provided by Kroger. As the grocery industry moves online and confronted by new competition, Kroger is becoming as much a technology company as it is a grocery retailer. “Companies are iterating not in years but in days,” Matthew Groom, Kroger technology’s general manager said. “We’re in a digital arms race. We’re a 133-year-old grocery chain that’s competing with companies that didn’t exist a year ago.”
And while technology innovation and consumer adoption of new technology have gotten faster, retailer adoption of new capabilities has remained flat. We have actually seen some retailers that have slowed adoption of new innovation, overwhelmed by the breadth and pace of change.
In this fast moving environment, where digital customer engagement is the battlefield, there are several key areas of innovation that retailers should be watching closely:
Conversational commerce: Voice is quickly becoming the way we interface with technology, the keyboard going the way of landline telephones. Retailers need to appreciate where voice-enabled commerce is headed: the ability of a consumer to literally shop anywhere and at any time simply by speaking.
Amazon is aggressively growing it’s Alexa platform, embedding the voice-enabled digital assistant in a growing array of in-home devices and extending the platform into automobiles via partnerships with Ford, BMW, Hyundai, Volkswagen, and even Garmin navigation devices. Amazon is launching Alexa for Business, intent on bringing the virtual assistant into the workplace; Alexa is already integrated to some Microsoft Office applications. The magnitude of the threat takes on greater urgency when you consider that Amazon is forecast to have 70% of the voice-enabled speaker market this year and that by 2020 it is projected there will be 128 million Alexa devices installed.
In response, Google is working hard to expand Assistant, its voice-controlled digital assistant, making it available through speakers, smartphones, headsets, and even cars. Google is assembling a consortium of retail partners, including Walmart, PetSmart, Walgreens, Costco, and others, to counter Amazon’s voice-enabled shopping platform.
Self-shopping: Kroger 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. Walmart has been rolling out its Scan & Go app providing similar capabilities across hundreds of stores.
Other companies are bringing video-based solutions to bear, providing technology like that used in the cashier-less Amazon Go store. AI powered image recognition is able to track what specific products a shopper picks up and puts in her basket, charging the shopper’s account automatically on her way out the door.
Assisted/automated replenishment: Amazon is leading the way with its Dash buttons, enabling one-click reordering of products, and integrating its Dash Replenishment Service into a growing number of smart home appliances.
Personalized pricing: Airlines do it. Hotels do it. Retailers do it. Personalized pricing is already here as Kroger and Safeway continue to grow their personalized marketing programs. Retailers should be looking ahead as personalized pricing becomes mainstream, driven by knowledge of customer economics and powered by AI and machine learning systems that automate the process.
While many retailers don’t yet realize it, retail competition has moved from mass promotion to a stealth battle for the individual customer’s share-of-wallet driven by precision targeted promotions. Personalized pricing is the next step.
Personalized wellness: Food and health are rapidly converging as health conditions are linked to beneficial products driven by sophisticated nutrition data science. Programs are coming to market that provide intelligent guidance to the individual shopper, helping them navigate the store to find products beneficial to their specific health conditions or lifestyles.
While retailers must move posthaste to digitally engage customers, they must do so with thoughtful planning and a clear digital capability road map. Too often, we are seeing significant retailers charging ahead to deploy new capabilities only to be confronted by disparate solutions requiring expensive and time consuming integration and making it increasingly difficult to provide the seamless user experience that shoppers are demanding.
Next in Part 4: Owning the customer experience, creating a digital ecosystem and closing thoughts.
Gary Hawkins is the founder and CEO of the Center for Advancing Retail & Technology (CART). He can be reached at firstname.lastname@example.org. This is the third of a four-part series. Read more in Part 1 and Part 2.