Why grocery stores are adding IoT to the shopping list

While the majority of respondents in a recent Nielson study labelled a trip to the grocery store an enjoyable experience - or a fun family day out – it's probably not a stretch to say most grocery shoppers prioritize getting in, getting what they need and getting out. In this case, food retailers should be looking for ways to make shopping trips as painless as possible by personalizing experiences while helping customers to save money and time in-store.

Unsurprisingly given the unflagging popularity of smartphones and the rise of wearables, an increasing number of retail brands are turning to connected tech to improve the instore experience – we've already covered this in some depth. While these developments haven't entirely passed grocery stores and supermarkets by (more on that later), it may seem at first glance that food retailers have been a little hesitant to dive into the IoT. After all, sexy tech like VR and smart mirrors make headlines, but have limited utility in a food store.

A year ago we published fact sheets on the opportunities for personalization in a number of verticals including grocery, exploring the use of connected tech to adapt individual shopping experiences in real-time. This wasn't a completely new concept even then, but how far has the food retail world come since? We know online grocery shopping is growing in popularity, but the majority of purchases still happen in physical stores – so there's massive opportunity to build a better grocery experience by connecting the IoT.

Connected devices present more opportunities for engagement

Connecting technology including beacons, digital signage, price tickers and on-shelf displays gives brands potential access to huge amounts of data on customer activity during a grocery shop: tracking in-store movement, promotion exposure, tech interactions, app activity, purchases and more. This can then be used – in real time, naturally – to create a personalized customer experience that not only makes customers happy, but ultimately increases each individual's value to the brand. Suggesting complimentary products, helping with aisle and promotion location, and automatically applying relevant offers all meet the top mobile requirements of grocery shoppers - saving time and saving money.

Grocery brands have approached the IoT with various levels of enthusiasm – for some the prospect of investing in relatively new technology may seem daunting and difficult to justify (we recommend starting with tech already in place and building out from there). Others have identified the potential efficiencies and cost savings that come with automation, and still others have focused on streamlining the shopping experience, removing friction to boost customer loyalty and engagement. In short, some grocery retailers have started to do some rather exciting things with connected tech - which is a good move, because the majority of customers are receptive to it.

Recent developments in grocery & supermarket IoT show its potential

Swedish supermarket chain ICA AB and courier company Postnord AB's trial system for unattended deliveries that relies on a smart door lock and smartphone app. http://www.wsj.com/articles/delivery-service-brings-groceries-to-your-fridge-when-youre-away-1464627114

Cambridge Consultants' connected shopping cart that uses Bluetooth sensors combined with in-store beacons to track store movement and location. https://gigaom.com/2015/02/11/grocery-shopping-might-be-less-painful-with-this-smart-cart/

Kroger's IoT temperature monitoring system using water- and humidity-proof tags to manage cold storage - minimizing handling, waste and energy usage. http://www.cio.com/article/2945732/cio100/the-internet-of-things-now-includes-the-grocery-stores-frozen-food-aisle.html

Coop Italia's connected supermarket using Kinect sensors to detect and interact with shoppers as well as collecting and analyzing shopper data to identify purchase patterns and manage stock levels. http://www.technologyrecord.com/Article/coop-italia-showcases-supermarket-of-the-future-at-envision-54233#.WEYX8X2riVs

Ocado's smart platform introduces efficiencies into both order fulfilment and delivery; using robots to coordinate and pick orders in minutes, and IoT sensors on its vans to track and optimize deliveries. http://www.ocadotechnology.com/our-blog/articles/How-the-Internet-of-Things-is-changing-grocery-retail

Amazon Go removes friction from the grocery experience, allowing customers to enter the store, add products to their basket and leave without checking out. Amazon's Just Walk Out tech tracks product movements and charges the customer's Amazon account after they exit the store. http://www.usatoday.com/story/tech/news/2016/12/05/amazon-go-supermarket-no-checkout-no-cashiers-artificial-intelligence-sensors/94991612/

And removing stores altogether, Amazon's Dash button allows customers to order grocery items for delivery without having to log in or leave home. http://www.forbes.com/sites/rogeraitken/2016/09/01/will-amazons-internet-of-things-device-dash-uk-supermarket-fortunes/#6cc55bc56be1


The importance of IoT as an extension of CRM

While we'd never try to claim grocery brands are suddenly incapable of creating rewarding customer experiences in the absence of technology, we would suggest it becomes a great deal easier if it is used. Traditional CRM-based marketing will allow a certain amount of profiling, and obviously does enable brands to send promotions and link purchases to customers – though the level of granularity will probably be constrained by the CRM's capability and the marketing team's bandwidth.