Dive Brief:
- Kroger is piloting a project called “digital shelf edge” that uses in-store sensors and analytics to provide product recommendations, custom pricing and other interactive elements through customers’ mobile devices, according to The Wall Street Journal.
- The new systems are currently installed in 14 stores near the company’s Cincinnati headquarters and will roll out to more locations throughout the year.
- This effort comes as Kroger faces growing competition from e-retailers and stores with highly sophisticated technology, like Amazon Go.
Dive Insight:
At first blush, this trial of sophisticated store technology seems to signal Kroger’s intention to match headline-grabbing Amazon Go, which debuted in Seattle last month. But it’s the tech giant’s online capabilities, rather than it's in-store bells and whistles, that probably have the nation’s largest supermarket chain most worried.
E-commerce represents only 2% of the grocery industry’s sales right now, but it’s an area that’s ripe for growth. Amazon, along with fast movers like Boxed and Jet.com, with their world-class logistical and technical capabilities, are quickly encroaching on the grocery trade.
In that context, Kroger’s move is a way of upping the value of brick-and-mortar stores. 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.
This is an emerging trend across the retail industry. Lowe’s recently outfitted one of its California store’s with a bilingual robot guide, while Neiman Marcus has installed interactive mirrors in select stores that let shoppers do side-by-side comparisons of outfits, send videos to friends, and more.
In addition to lively interactive experiences, these technologies offer new ways 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. What will this information say that isn’t already apparent on product packaging?
