In-Store Technology: Customer-Facing Retail Tech Report — Grocery Edition

We have all been part of the digital revolution in some way or another over the last several years. Whether it’s the transformation of mobile apps, introduction of self-checkout lines, or most recently the influx of smart technology and AI, digitalization has and continues to transform the value chain in every industry—and retail is no exception.

As in-store shopping surges back to relevance three years after the pandemic, retailers are renewing focus on the in-store experience to address fundamental pain points and enhance the shopping experience, all while finding new and innovative ways to manage cost and optimize operations.

So why do retailers invest in any particular tech?  We at CRG have created a simple three-point framework to synthesize why retailers make in-store investments:

This framework highlights the three strategic areas a technology can address and create meaningful ROI. Through Operational Excellence, a retailer can create efficiencies and enhance margin. Improving Customer Experience helps differentiate as a retailer.  And by way of Top-line Enhancement, a retailer can, of course, sell more goods and services. As these principles do not change, we will use this framework in future editions of this report.

In the first segment of this ongoing series, our retail and tech experts dive deep into three distinct technologies—Electronic Shelf Labels, Dynamic Digital Merchandising Screens, and Smart Carts—to understand how they perform against this framework and add value for retail operators.

The global ESL market is projected to reach $3.5 billion by 2031 at a 15.5% CAGR, and it’s easy to see why. Although widely used in Europe, the technology has recently piqued interest in the U.S. market with the partnership between Walmart and SES-Imagotag, who together will deploy 60 million tags across 500 stores in a Phase 1 rollout. We expect to see more retailers adopt this technology since it addresses several pain points for retailers and consumers alike.

Benefits We See Today

Though there are several benefits to ESLs, there are also activities that need to be performed regularly in order to maintain a sophisticated network of such devices, including maintaining connected inventory tracking systems, keeping pricing databases updated, monitoring connectivity, and troubleshooting technical issues.

As such, the feasibility of this tech can vary greatly depending on the size of the retailer and specific requirements (e.g., number of devices and frequency of updates).  That said, we believe more and more retailers will turn to it because of the inherently high ROI potential despite the additional implementation and support costs.

Benefits We See Today

As with any technology, there are a host of new challenges that come with the adoption of dynamic digital merchandising screens.

Consumers have expressed a level of concern over data privacy due to the sensors and cameras built into the systems. Because digital cooler screens are connected to a wireless network, they can be vulnerable to cyber attacks. Retailers need to make sure their network is secure and take measures to protect against potential data breaches.

There are additional operational factors to consider with the use of these digital screens.  They may break down, the system used to monitor inventory may fault, and the ads may freeze on a static graphic.  While these issues may not happen frequently, they are important to consider as retailers evaluate the use of this technology in their stores.

Furthermore, various available features range from tallying items added-to-cart to personal grocery list integration to item locators within the store to pulling relevant product information. The feature add-ons continue to expand rapidly across smart cart manufacturers as the technology and adoption accelerate.

Benefits We See Today

Select examples of retailers introducing their versions of this tech:

1. Kroger: KroGo carts, a collaboration between Kroger and tech firm Caper, are enhanced shopping carts that feature built-in food scales and cameras for quick shopping and checkouts.
2. Wegmans: Shopic, one of many tech firms in the smart cart space, is collaborating with Wegman’s to test an AI-powered clip-on unit that can attach to an ordinary shopping cart and deploy computer vision to identify products and display pricing.
3. Albertsons: Albertsons has partnered with Veeve to pilot smart carts with Scan, Pay, and Go technology that combines bar code scanning, computer vision, and built-in food scales to allow customers flexibility and time savings.
4. Amazon: Available at select Amazon Fresh Supermarkets, and now select Whole Foods, the Dash Cart helps customers bypass the checkout lines using sensors and computer vision with the added benefit of being in the Amazon ecosystem (i.e., billing is automatic on the Cloud to an individual’s Amazon account, and purchases are recorded for future reference).
5. Schnucks: Schnucks recently announced it will expand its partnership with Instacart by introducing Caper Carts, Instacart’s smart carts, into some stores this fall. The carts will use AI to allow customers to bag as they shop and checkout from anywhere in the store.

In addition to the upfront costs, concerns such as technical issues, user errors, charging capacity, theft/shrink, etc., are all challenges that come with the adoption of this technology and beg the question whether this tech is worth investing in long-term or is just a novel idea.