When it comes to new technology, Apple is God. A fortnight ago, it released its latest miracle, the iPhone 6. It also released a first for Apple-a larger, outsized version of the original, dubbed the 6 plus. Breathless disciples camped outside Apple stores two weeks early. Three days after launch, Apple had sold a record-breaking 10 million units.
Then disaster struck. The super-size of the 6 plus, combined with its super-slim build, resulted in a weak spot that made it bend, and stay bent, if that weak spot was put under pressure, even when kept in a natural habitat, like a trouser pocket. Damage limitation remains ongoing, and there are two morals to the story. Size isn’t everything, obviously. And keep it simple.
Grocery retailers should pay attention, say the experts, especially in light of the temptation the flood of new technology offers them, like iBeacons.
Beacons were also developed by Apple, but for all the people enthusing about their potential for use in a retail environment, just as many warn that abusing them will make them a non-starter. “Everyone is talking about beacons sending offers, but nobody wants to spend more time being pinged at,” says Simon Hathaway, president of shopper marketing and retail operations at Cheil Worldwide.
In fact, as Tesco’s mobile experience director, Luke Vinogradov, told The Grocer in October, today’s time-poor, tech-rich customers want “to get in and out of the store as optimally as possible. It’s the number-one thing they request.”
That’s why Hathaway believes navigation will be at the “heart” of beacons-because it makes things more convenient for the customer. Convenience is one of the three things any new technology should offer, he adds, along with an “enriched experience” and some form of “dynamic pricing that enables a retailer to promote.”
Myriad variables
After years of being talked about, Hathaway predicts the dynamic pricing part of the equation will largely be handled by electronic shelf edge labelling, which will finally be rolled out as standard as stores are refitted over the next couple of years.
It’s easy to see the appeal. At a stroke, a supermarket could change great swathes of pricing across its entire estate, or at individual store level, depending on myriad variables, but with one aim: to keep fresh stock moving.
As for an enriched experience, Hathaway focuses on the basics, and questions why technology can’t make queue management more effective, or why the reams of paper coupons handed out at the tills, from petrol vouchers to Brand Match-style price promises, don’t go straight on to a mobile app.
Big data, social media and Lidl
It’s impossible to talk about new technology in fmcg without pointing to the work being done in the back rooms with data. One recent addition is to pour social media data into the big data mix suggests Radha R, executive vice president of retail and CPG at Mindtree, which works with clients including Whole Foods to add a technological edge to the rustic grocer.
“The social graph is just as important as purchase history data to create a 360 degree view of customers,” she says. “Getting into their social framework, finding out what they like, what they are tweeting about and matching that information to customers is difficult, but we are seeing a lot of pilots around that.”
Earlier this month social media interaction moved onto the shop floor, after Lidl took a more simplistic route to mining that data by branding fixtures with Twitter hashtags and hanging promotional material from the ceiling featuring enthusiastic tweets from customers.
“Linking the social and physical, like Lidl is doing with Twitter, is really nice,” says Tebbutt. “It’s telling its customers ‘you are part of a community’. It’s the customer as the media creator, building a pretty cool bridge between retailer and customer.”
It’s a simple concept, but that doesn’t mean smartphone coupons will happen tomorrow. Jen Smith, head of planning at media agency Maxus, says although there is “interest and excitement and a lot of testing and learning in individual stores, in-store technology is just one piece of a total puzzle that people running the business need to get right. It doesn’t exist in silo.”
The sheer variety of rapidly emerging technology is a puzzle all to itself and grocery is still figuring it out, adds Smith. “We have not learned everything yet. The foundations still need to be built up to a solid level to justify the investment. And there is no point collecting loads of data if the website isn’t optimised to work on mobile. If you can’t feed the data you have collected into a CRM programme so beacons can recognise these people when they walk in, then what’s the point?”
Cost is also an issue, adds Hathaway, especially for a retailer with thousands of stores. “We are still waiting for things to be proven,” he warns. “A lot of retailers are under a huge amount of pressure on margin. They have to be wary over where they spend their money.”
Smith also believes the ideas behind much of the innovations in technology are so easy to grasp they disguise the hard work and investment required for them to work effectively.
Tensator and Coca-Cola
Her name is Isabelle, and she wants to tell retailers how they can sell more coca-cola. She’ll do that 24 hours a day if you like, without taking a break, or pausing for breath even, because she is not real.
She’s a virtual assistant, created by technology specialists Tensator, ‘dressed’ in Coca-Cola branded clothing and spreading the word about Coca-Cola to retailers pushing a giant trolley though cash & carry operator Dhamecha Foods.
“After the success of the Share a Coke campaign last year, we were keen to ensure our customers understand how the campaign can benefit them and how they can get involved,” says CCE digital director Simon Miles.
“Digital shopping marketing innovations such as Isabelle are a creative and fun way to reach our customers with the campaign and are a piece of genuine digital innovation.”
The technology has also been trialled in Asda to greet customers into stores and tell them about the 10% APG. “With applications across multiple sectors, the Tensator Virtual Assistant can make a very real difference in FMCG and grocery markets by increasing efficiency and capturing the imagination of shoppers of all ages,” says Ajay Joshi, head of media and technology at Tensator. “Conventional POS and shelf positions simply don’t cut it anymore. Shoppers want to be wowed. They need an immersive experience if we are to draw them away from online channels and back into stores. This is why we are about to see a technological evolution in grocery retail.”
“You say digital or automation and everyone thinks it means quicker and cheaper, but actually what you are getting is more of everything,” she argues. “It generates more data, more learning, more connection points and more levers to pull. That makes it way more interesting in terms of what you can find out about your customers, and how you can apply that is also brilliant. But it also makes it harder because we are adding more elements into the mix.”
Endless aisles
Despite these challenges, there are examples in grocery where old-fashioned bricks-and-mortar stores and emerging technology work in perfect harmony.
For instance, the touchscreens, like those at M&S (above), that resemble giant iPhones have allowed supermarkets to offer thousands of extra SKUs from even their smallest stores. Dubbed ‘endless aisles,’ these touchscreens have enabled Asda to offer its entire George clothing catalogue in each of the 147 small supermarkets it opened in 2011, bringing more variety to customers and also introducing them to Asda.com. This week, a spokesman says “over 50% of customers that order from one of our order points have never shopped online with Asda Direct before.”
Endless aisles were also a feature of Tesco’s revamped Watford store, taking pride of place in its toy and homeware departments. However, along with the increased choice for customers, and the increased inventory a retailer can offer, Nick Tebbutt, a senior creative at Critical Mass, suggests there’s a subtler reason why the endless aisle concept is a winner.
Pleasurable process
“It’s less about the shop selling more, and more about helping people to buy more, which is a much better angle of attack for retailers,” he says. “Selling more means using broadcast advertising, sending offers, offering discounts, whereas if you are saying ‘can we help you buy more?’ the emphasis is on making the process more pleasurable for the consumer. Can we suggest a complementary purchase, for example, rather than can we bombard you with bogofs? Using technology to be helpful is a trend, and if you can use technology to build a relationship with a customer by being helpful, you are winning.”
A clever example is ‘Shopper Assist’, which looks like a normal mirror but offers added value for both retailers and customers, according to Peter Luff, president of Ipsos Retail Performance. “In supermarkets, there are less changing rooms for people buying clothes, so people just hold the garment up in front of the mirror. Shopper Assist has digital screens behind the mirror that can read radio-frequency identification (RFID) tags and display prices, information about the product and make complementary suggestions,” he says.
RFID tags have recently been incorporated into the garment manufacturing process by Tesco and M&S to enable accurate supply chain management. “We’re saying let’s take that tech and leverage it for a sale,” says Luff. “And it doesn’t have to be as blunt as saying this item matches that one. A retailer might start to bring forward higher-margin products, say a belt for the trousers.”
Utter genius
The sheer amount of new technology on trial makes it hard to predict what will succeed, but a common thread running throughout the predictions for what will have traction in the years to come, and what won’t, is whether retailers invest in technology that benefits their customers more than them.
For instance, Clubcard was a giveaway mechanic that was easy for customers to grasp. The technology whirring away underneath was of tremendous benefit to Tesco. The combination of both made it a winner. And it’s still going strong 20 years on.
“Something like near-field communication has failed to grip because customers can see that the store wants to use NFC tags to sell them more, but not why the technology is relevant to them,” says Tebbutt. “Retailers shouldn’t see the relationship between them, the customer and the technology in isolation.”
That warning even goes for the “utter genius” of some of the technology Smith sees on a daily basis.
“Every day I have somebody coming in to talk about a new piece of kit, a new piece of technology or hardware and they are brilliant in terms of what they are capable of, but the missing link in an awful lot of cases is why should the average mother going to the supermarket be bothered? How is it helping her?” she says.
“I don’t think any one thing has nailed it yet, but the piece of technology that will be in every future store, is the one that makes it easier for the customer at the end of it, in the same way that stores now scan items rather than having people type in codes.”
And it doesn’t get any simpler than that.
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