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Wisconsin grocery stores testing new technology | KRVN Radio

Wisconsin grocery stores testing new technology

Wisconsin grocery stores testing new technology
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MADISON, Wis. (AP) — At Woodman’s Market, grocery shoppers can grab a cart, fill it with food, and have a cashier ring them up — business as usual.

But for the more adventurous, the store is also a self-described “testing ground” for technology that rewires the grocery shopping process.

Walk into the store’s bakery entrance, and one is greeted by a rack of “mobile shopper” devices, small handsets that look like a cross between a scanner gun and a smartphone, made by the European tech company NCR. Customers can check one out and scan their groceries as they shop, bagging as they go. When they’re done, they head to a self-checkout lane, scan one last time at the terminal and pay.

“This will really help you beat the line on a busy weekend,” said Matthew Alba, a Woodman’s IT technician. “You could do a big order — you could do $300, and you’re out of here.”

“Kids love it,” he told The Capital Times .

Other shoppers can use the store’s “rapid checkout” lanes. It’s a setup reminiscent of airport security: Instead of their shoes and laptops, shoppers send groceries through an arch-like tunnel embedded with 360-degree scanners, which read all barcodes at once. Alba estimates the lanes are over twice as fast as traditional ones.

Both the mobile shopper and rapid checkout are remarkably efficient, Alba said, although he fields some complaints from people who worry the lanes eliminate jobs (not true, he asserts), and from those who are uncomfortable with the new process.

“People don’t want to look foolish when they’re doing something as basic as checking out groceries,” he said.

The grocery industry has long had a reputation for being “traditional,” one slow to embrace the digital revolution. But as experiments at Woodman’s and other grocers in Madison show, stores are increasingly trying out mobile, data-oriented and internet-based technology.

“This business is changing. Its customers are changing,” said Brandon Scholz, the president of the Wisconsin Grocers Association.

Some changes are visible in stores: The mobile shoppers and rapid checkout lanes at Woodman’s, shopping list and couponing apps available at Festival Foods and Fresh Madison Market, expiration date-monitoring software at Metcalfe’s and electronic transmitters that can ping shoppers’ phones at Hy-Vee.

To an even larger degree, grocers are experimenting with e-commerce, the sale of groceries online.

Jeremy Neren is the CEO of GrocerKey, a Madison startup that specializes in software for grocery e-commerce. He said that for a long time, it took convincing for clients to see the necessity of his product.

That’s no longer the case.

“If you look at the grocery industry, if you look at the regional chains, they’re family-run businesses. They’re maybe a little less prone to be progressive when it comes to technology,” he said. “Now, you’re looking at changes in the industry where people now are a little more prone to take risks. There’s been a shift in the conversation.”

Despite their somewhat fuddy-duddy reputation, grocery stores have often experimented with new retail technology. Barcodes sped up checkouts in the 1970s, while card readers and the secured networks they’re linked to overhauled how people could pay for their food. Loyalty cards generate troves of data for companies to refine their marketing, as do point-of-sale software cashiers use when ringing up customers.

The next wave of technology looks different.

Randy Hofbauer is an editor with the trade magazine Progressive Grocer, where he watches technological trends. He said there’s a new buzzword in the business: “omnichannel.” That refers to the idea that a store needs to cater to every way a customer may want to get their groceries, and have each of those “channels” integrate seamlessly.

“People want to be able to purchase products however they want, wherever they want, whenever they want,” he said.

Some customers may want to order dog food on their laptop before going to the store to select their own produce. Others may want to visit a deli in person, but order lunch meat via their phone while sitting at the service counter.

“Who knows, there could even be a person sitting at home who wants to put an order through a fax machine,” said Hofbauer.

There is growing market pressure for stores to meet “omnichannel” demands. One factor behind that is an internet giant’s splashy entrance into the grocery business.

In December 2016, Amazon unveiled plans for an experimental grocery store in Seattle — a place called Amazon Go where customers could walk in, grab the food they wanted and leave. A complex network of sensors and artificial intelligence software would track each individual customer and the items they placed in their bags, automatically billing them for each item.

Nine months later, Amazon acquired the health-centric grocery chain Whole Foods for $13.7 billion, giving it 470 brick-and-mortar stores around the globe. The move positioned the largest internet retailer in the world to become a grocery empire.

On top of that, Amazon continues to operate AmazonFresh, a grocery delivery service available in select metropolitan areas (Madison isn’t one of them).

Birk Cooper, a tech entrepreneur who works for the Madison grocery-scanning app company Fetch Rewards, said Amazon has put some pressure on grocers.

“Prior to Amazon (announcing) the store, prior to them acquiring Whole Foods, and some of their more recent moves, grocers were already working on e-commerce. When those events happened, it made grocers rethink how urgent it was. Now everyone’s thinking, are we doing this good enough to compete with Amazon?” said Cooper.

When it comes to tech and groceries, e-commerce is probably the number one thing on grocers’ minds, according to market analysts, even though online sales remain a small fraction of the grocery business.

In Madison, at least 10 grocery stores — sites operated by Whole Foods, Hy-Vee, Woodman’s, Pick ‘n Save, Capitol Centre Market, Metcalfe’s and Fresh Madison Market — offer options for online ordering, as do superstores like Wal-Mart.

While stores wouldn’t release sales figures, many said that e-commerce comprised a small sliver of their overall profits. Clint Woodman, the president of Woodman’s, said that e-commerce amounted to less than 3 percent of its business.

But Woodman expects that number to rise. A report from Nielsen and the Food Marketing Institute estimates that by 2025, about one-fifth of U.S. grocery sales will be online. The same report predicts that 70 percent of people will, in some fashion, shop for groceries online.

According to Gallup survey data, about 9 percent of consumers currently shop for groceries online at least once a month.

Michelle Jones, a 50 year-old Sun Prairie resident, is among them. She’s ordered delivery from Hy-Vee a number of times, and while she’s learned not to order at the last minute — grocery stores with a high volume of orders often do not guarantee same-day delivery — she is happy with the time and money she’s saved.

Jones said she’s more deliberate when she shops online.

“I’m not going down aisles and saying, ‘Oh I want that!’ Or, ‘Oh that looks good!'” said Jones.

Jeff Glaze, an east side Madison resident and former Wisconsin State Journal reporter who now works for UW Health, also regularly orders food from Hy-Vee. He said he initially was hesitant about the service.

“I had some initial concerns about having somebody else select your produce and meat. Would they select the oldest produce for you to clear out the store’s inventory?” he said.

Customer skepticism over whether grocers can deliver food that’s fresh and otherwise up to customer standards is still a major factor in the e-commerce market, said Progressive Grocer’s Hofbauer.

“It’s going to be one of the biggest hurdles that people need to get past,” he said.

Fresh Madison Market has been offering grocery delivery since it opened in 2010. Store manager Kristie Maurer said the store’s online platform actively solicits details from customers about meat and produce preferences, which helps. Still, she said it can be tricky to always meet customer expectations, given how much variation there is when it comes to perishables.

“Bananas are probably the trickiest,” said Maurer. “Same with avocados — there’s everything from green to ready-to-go.”

Glaze said that he has occasionally encountered issues when ordering from Hy-Vee.

“Multiple times we’ve ended up with a single banana instead of a bundle,” he said.

But his experience has mostly been positive. “I think that concern has been quashed.”

While e-commerce dominates the grocery tech conversation, in-store and smartphone-centric technologies are also trending.

The “next big thing” is scan-as-you-go tools, like Woodman’s mobile shoppers. Hofbauer said it’s only a matter of time before they become ubiquitous, as they already are in Europe.

“A couple years from now, that’s when you’re going to see all the dominos fall,” he said.

Madison startup Fetch Rewards has piloted a scan-as-you-shop smartphone app. Instead of a scanner gun, customers can use their smartphone to scan items on the fly before paying. The software is being tested at Miller & Sons Supermarket in Verona, along with a handful of Piggly Wiggly locations around the region.

GrocerKey rolled out similar technology earlier this month. It also builds consumer apps with shopping lists and digital couponing, and is testing out a Google Maps-esque tool for navigating a store. The tool looks at your grocery list and plots the best route for which aisles to take.

For businesses, Madison’s Pinpoint Software makes tools for tracking expiration dates on inventory, a notoriously tricky thing to do. The company brags that its clients — including Metcalfe’s Market, Fresh Madison Market and Festival Foods — have reduced loss of inventory by 47 to 72 percent.

On the horizon are sophisticated camera and sensor technologies, and “beacon technologies” that use networks of transmitters to connect with customers’ phones.

Kroger, the nation’s largest grocery store chain, formed a data analysis firm in 2015 called 84.51, a reference to the geographical coordinates of Kroger’s headquarters. By looking at video of in-store traffic patterns and places where consumers tend to stop and linger, 84.51 leaders say they can help create better store layouts, figure out what should go in the “end cap” stands at the end of aisles, and refine its “adjacencies” — deciding what goes next to what on a shelf.

Kroger has also installed thousands of “smart shelves” in its stores, shelf edges laden with sensors and video screens that can display ads, track inventory, and ping customers’ phones when they walk nearby.

It’s not clear when that kind of technology would arrive in Madison. Roundy’s is a Kroger’s subsidiary that operates Copps and Pick ‘n Save stores in the area. Roundy’s spokesman James Hyland said in an email that Roundy’s has yet to receive smart shelf or other “technology innovations being tested by the Kroger Co.”

However, Hyland also wrote that it would only be a matter of time.

Hy-Vee representatives wrote in an email that the company uses beacon tech to connect with customers’ phones. It can send push notifications to anyone who walks in the front door of the stores, if the shopper has the Hy-Vee app.

Many local and regional grocers say they would be hard-pressed to install sensors or try out video analytics. Fresh Madison Market’s Maurer said such tools are good for those who can afford it.

“Big players can play around with it because they have the money,” she said. “When you’re an independent, you have to be a lot more judicious with how you spend your money.”

Plus, she added, she is uncomfortable with the idea of tracking shopper movements or interfacing with smartphones, and customers may be as well: “To be honest, that freaks me out a bit.”

Grocers who haven’t deployed e-commerce strategies or the latest in-store tech say they’re feeling various degrees of pressure to adapt. But adaptation can be a tricky thing.

The Willy Street Co-op was one of the first stores in town to embrace e-commerce, launching an online store in 2007. That store shut down about two years ago due to the complicated logistics behind fulfilling orders. Now, the co-op is back to the drawing board.

“We couldn’t do it efficiently,” said Brendon Smith, the store’s communications director. “We were stocking off the shelves to fulfill orders. We didn’t have a big enough warehouse space.”

Smith added the co-op still does delivery for homebound customers.

Just a few blocks down the road from the Woodman’s west-side “testing grounds,” Brennan’s Cellars has risen from one of the city’s most beloved local food chains. Owner Tim Mulcahy opened the new location in December after the old Brennan’s franchise known for artisanal cheese and fresh produce shut down last summer.

Mulcahy said he’s “weighing his options” with e-commerce and in-store technology, describing them as a force that “cannot be ignored.” He wants to overhaul the store’s website and enable some limited food delivery options. Whether he’ll build out an all-encompassing online store, he does not know.

He pointed to cost as a factor, saying that when a small grocer like him invests in new software, he has to make sure it’s going to be worthwhile, given the industry’s low profit margins.

E-commerce is indeed costly for grocers, given the necessary labor and delivery. Almost all grocers charge more online to make up for that, with pickup and delivery fees, or slightly marking up prices.

He added that he doesn’t see Brennan’s as a direct competitor to larger grocers who are making big moves with e-commerce and technology.

“It’s pretty cutthroat with the big-box grocery retailers. They’re trying to offer everything to anyone,” he said. “We’re more in the specific items — artisan-style cheeses and meats.”

Hofbauer said that in 2018, it’s hard for grocers to get away with not having an e-commerce strategy.

“If you weren’t going to do it, you’d have to have a hell of a differentiator to cause people to get into your shop — some sort of service no one else can provide, some curated assortment no one else can offer,” he said.

GrocerKey’s Neren agreed: “If you’re a grocer, and suddenly 5, 10, 15 percent of your customers begin ordering online and you don’t serve them, you have no chance of staying in business.”

Even the most traditional of grocers acknowledge the changes. Jenifer Street Market, a small independent store tucked within the Marquette neighborhood, introduced debit card readers for the first time just last year. While it has a social media presence, it’s among the few grocers in town without a website.

Its owner, Steve McKenzie, declined to comment on the market’s technological status. However, he suggested that it would be unwise for any grocer to ignore the industry trends.

“Don’t tell me that every millennial you see doesn’t have an iPhone or an iPad in their hand,” he said.

Whether grocers should be scared about Amazon specifically is a different story. Amazon Go was supposed to open in early 2017, but thanks to some alleged bugs with the sophisticated array of sensors, its opening has been pushed back to an unspecified date.

Hofbauer added that Amazon has made some eyebrow-raising decisions with Whole Foods, such as cutting ties with mom-and-pop suppliers that had long been attached to the brand.

“There are chinks in the armor with Amazon and Whole Foods,” said Hofbauer. “Competitors are seeing that.”

Woodman isn’t worried about the big-scale competition. He said he’s going to try to stay ahead of the curve when it comes to technology, and continue to pilot things like the mobile shopping devices and rapid checkout lanes.

His grandfather, the founder of the grocery chain, was always one to push innovation, he said. When barcode scanners were first introduced, Woodman’s stores were among the first to install them. He wants to keep up that tradition.

“We’re offering the same things that they are now, at lower or similar prices,” he said. “Why wouldn’t someone choose the local grocery store to order from rather than Amazon?”

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