Photo: Powershelf
Will smart shelves ever be smart enough for Kroger and other retailers?
In an interview with The Wall Street Journal, Kroger CIO Chris Hjelm said the supermarket’s test of smart shelves has reached 14 locations.
With Kroger’s mobile app open, sensors detect shoppers in aisles to offer personal pricing and product suggestions. “I can highlight products for you on a high-definition display on the shelf edge,” said Mr. Hjelm.
As examples, he noted how a gluten-free shopper might find relevant products highlighted in the nutrition-bar section. Shoppers might receive their “personal price” or hear a ping to alert them that a bottle of wine from their shopping list is on a nearby shelf, he said.
Smart shelf proponents also tout their ability to facilitate automated pricing changes as a huge labor-saving advance. They also promise on-demand nutritional information updates.
Some smart shelves can measure inventory life or identify when shelves are running low on product or empty. Using a solution from Powershelf powered by Microsoft Azure, Giant Eagle has reduced its out-of-stock replenishment time by two-thirds and cut its out-of-stock SKUs by 50 percent on any given day, according to Microsoft.
If inventories on an item are too high, a pricing message could offer a “two for one” deal when a customer picks up an item, John Wright, Powershelf’s CEO, recently told Mediapost.
Yet adoption has been slow. Retailers have been experimenting with the technology since the early 2000s. Kroger first tested the technology in the center store of a location in Ohio in 2015. While testing continues at a slow pace, the chain appears to be intrigued by its potential.
Mr. Hjelm told the Journal, “You’ve told me what you like and what you want. I know what’s in the aisle, and I can fuse all that data to create a magical experience. We’re working on it; it isn’t deployed yet.”
- At Kroger, Technology Is Changing the Grocery-Store Shopping Experience – The Wall Street Journal
- Kroger tests ‘smart shelf’ technology – The Cincinnati Enquirer
- Microsoft transforms the retail experience at NRF’s Big Show – Microsoft Blog
- Smart Shelves Track, Dynamically Price The Products On Them – Mediapost
- What can smart shelf tech do for Kroger’s business? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you see smart shelves as a transformative addition to retail, particularly in grocery? Is the technology’s biggest potential around dynamic pricing, shopper engagement, inventory management or some other area?
Poll
BrainTrust
Jon Polin
Cofounder and President, StorePower
Ben Zifkin
Founder & CEO, Hubba
Smart shelves offer plenty of potential benefits, but it’s still only potential. The fact that a progressive and sophisticated retailer like Kroger has been testing smart shelves for more than two years and has only implemented them in 14 stores is telling.
Despite the promise of technological advancements, the benefits are usually evolutionary, not revolutionary. Will the technology be “smart enough” for Kroger and others? That depends on expectations. If the technology can make each consumer into an individual with a relevant shopping experience, that sure sounds good to me.
The biggest gains in smart shelves are in dynamic pricing. The retailer can offer the old blue-light special on demand and the labor savings are significant. The other benefits, such as customer engagement and inventory management, are close behind.
I still don’t think this is a consumer play, it’s an operations play.
Stupid shelves offer nothing to consumers or retailers. How often is a pricing label incorrect, missing or misplaced? Technology can solve basic shopping issues and create a world of enhancements, but it comes down to the same two issues time and again: ROI and management’s willingness to lead. ROI is dependent on tons of factors and management’s willingness is often lacking, so the Apples of the world and (if it’s really a roll-out) the Amazon Gos of the world will use innovation to be category leaders while others continue to give lip service and/or whine.
Hats off to Kroger for making a real trial of it.
This has been a long-talked about in-store experience and it’s really exciting to see it expanding. The economics will necessitate it being leveraged for all aspects of the business — operations, pricing and shopper engagement — to make it work. The technology and the specific applications (customer or operations) will evolve over time as the vision is a solid one.
The two most important things for a brick-and-mortar retailer to compete nowadays are personalization and enhanced experience. New smart shelves add to both. After walking the floors of NRF this year, I was relatively underwhelmed but was surprised that the only technology that got me excited was a “shelf.” There is a long way to go but I think that smart shelves will be so embedded in retail that they will almost become invisible to us.
In-store apps don’t work! Most shoppers are on a mission — not on a geocaching tour. Shoppers want to get through their list in a direct and efficient manner without distractions and/or interruptions. The shelves should be “smart” to make certain items are in-stock. That provides a real benefit to the shopper.
I agree with the comments so far — smart shelves are still an emerging technology. There is potential here to truly enhance the shopping experience (including augmented reality functions, personalized messages to shopper histories, etc.). However, this is still “potential.” Not only do the physical stores need to upgrade their facilities but the shoppers need to be re-trained too. This is a heck of a process on top of a routine trip which is notoriously quick.
Smart shelves’ biggest potential is inventory management. Whatever they can put on top of that is gravy. I am not seeing or reading about tons of consumers, especially in grocery stores, walking around with their smartphones out to get info about products. Flashing info from the shelf also seems a lot like advertising and we all know that today’s consumer is about pulling info not having it pushed to them. When you can come up with something that will make shopping easier or more convenient for the shopper then you might have a winner. In the meantime, smart shelves are more about the retailer than the customer.
And that’s my 2 cents.
ESL technology has been around for many years. The ROI calculations to attract retailers have been based on labor savings from manually changing pricing; a difficult return to justify. As the cost of the ESL devices continues to drop and other functionality such as in-shelf inventory technology can be added, the ROI justification will becoming easier.
Another technology that will speed the use of all shelving technology will be the Internet of Things (IoT). Instead of installing the computing infrastructure in the store to support in-shelf technologies, IoT will provide access to the shelf information using small devices connected to the Internet with shared web-based applications. This architecture should speed implementation of in-shelf technologies of all sorts.
I firmly believe that consumers will soon accept real-time, personalized in-store promotions at the shelf edge. Many details need to be in place and synchronized including CRM, a seamless, slimmed-down mobile app, some form of location identification, a personalized promotion generator, excellent Wi-Fi and even carts that hold smartphones. And then a big awareness campaign for consumers to get acceptance rolling — a slow process with many rewards for the retailer that can make it work.
The key to adoption for Kroger, and any other retailer, is personalization of the information to ME as a shopper. You have the information. You have the connected product tags. You have my agreement to log in. Now put that ecosystem to work for me and make it relevant. If it is simply a method for reducing operational costs through efficiency of updating prices, this will not take off.
If operationalized effectively, the smart shelves innovations could provide dividends and a quicker ROI. However, as the comments have indicated, smart shelves are still very much in the developmental, evolutionary stages.
Beacons, and real time SMS in store interactions generated a similar buzz a few years ago, however, these have yet to take off. Perhaps the combination of beacon technology, mobile payments, integrated loyalty programs, combined with innovations such as smart shelves, could be the right combination to provide significant benefits for Kroger, and their competition in the grocery arena.
Smart shelves have the potential to be incredibly transformative to the entire shopping experience. It’s more than just process-driven innovations like checking out the customer with a smartphone app as they shop, as with Amazon’s latest Amazon Go grocery store experiment. The greatest potential for smart shelves is in creating a far more personalized experience for each customer. In the past, personalization has been limited to broad strokes based on store demographics. Rather than knowing what, on average, customers are likely to buy, smart shelf technology has the potential to make highly personalized, one-on-one recommendations and sales promotions on the fly that are customized for each individual shopper. As a result, shoppers will have a closer relationship with their store, will exhibit more loyalty and will have a deeper emotional connection that will result in higher sales.
Smart shelves will add to the ability to properly stock, promote, price and more. This will go well beyond grocery stores into many other retail industries. Smart shelves will allow retailers to leverage data in ways we haven’t thought of yet. And, when AI (artificial intelligence) starts to interpret the data, it will be even more powerful. Get ready for the future. Actually, it’s already here!
In-store sensing and at-shelf performance management represent another case of an overnight innovation that has taken 20 years to emerge.
The tech is evolving — getting more reliable and cheaper to build and deploy. But the practices that make it useful are lagging badly. Let’s face it — a likely reason why Kroger hasn’t rolled its electronic price tags across the landscape yet is probably because it hasn’t worked out how to get the payback, at scale. With 30,000 items per store and 2,400 stores, that’s like 70 million tags to buy, install, and maintain. Not to mention the store wireless networks, back-room servers and system integration. Utter reliability is paramount too, and confidence requires more than just a quick proof-of-concept. The creative use of these devices for shopper marketing is an art in its infancy.
Progress may be hard, but I firmly believe electronic price tags are are definitely coming. They are already more widespread in Europe than in the U.S. The low-hanging benefits are rapid price changes and possibly some labor savings.
From the perspective of inventory management, merely reporting on-shelf availability data to a management dashboard is not enough. Those OOS-sensing smart shelves must be intricately interwoven with store perpetual inventory, reordering and replenishment practices in order to have a material impact. Most retailers aren’t very good at those things now. Adding a new sensor to the mix will make things harder at first, not easier.
There is definite potential for both operational and shopper experience benefits to smart shelves. We’ve seen plenty of examples of operational benefits but still deployment is slow. I think this is more a factor of the back end systems needed to support the smart shelf not being ready yet. This is a larger problem for retailers who need to invest more in infrastructure (servers, network, etc.) to support these new applications.
With shoppers, it’s more of a behavioral issue. Even if you get the shopper to download your app to enable this experience, how likely are they to look at their mobile device every time at every shelf? There are some examples of this, but it’s a complex system to deploy and it’s been a slow process (look at GameStop for their beacon deployments/tests). Overall management and installation of these technologies are still fairly complex for most retailers to handle.
Smart shelves is a bit vague terminology. I believe the most fundamental characteristic of smart shelves is the ability to have bi-directional communication with the shelf. Once you established this capability, the features can be added gradually. Out of stock is probably the immediate and most painful challenge, but planogram matching, digital pricing, click ‘n collect, shelf conversion rate are a few to follow.
Smart shelf labels are definitely the way of the future and they make a lot of sense for products that have frequent price changes, like grocery. Digital shelf label technology has been around for 20 years and Kohl’s has been using digital shelf labels in its shoe department for more than 10 years. However, the technology is getting a lot better — brighter, high resolution signs and integration with mobile apps and location-based services.
Changing prices is an extremely laborious process that cost retailers a lot of time and money. While there are a lot of great benefits of digital shelf labels, probably the biggest driver of ROI is the labor savings on changing prices. According to The Cincinnati Enquirer article, a typical Kroger store takes more than two weeks to completely re-price by hand with new tags. With smart shelf labels, a representative at the corporate office could change prices at its approximately 2,800 stores within a few seconds. Not only does this save labor costs, it enables the retailer to change prices dynamically based on supply, demand, weather, or other customer or environmental context. I believe the time has finally come for this technology as the hard savings appear to be there.