Retail Disruption
Retail has been experiencing massive disruption for several years. It seems that every few days there is another report of a retail chain that is in bankruptcy. The Amazon effect is real. Amazon has moved into the brick and mortar business now, putting even more pressure on already stressed retailers. They acquired Whole Foods, and as I wrote about a few months ago, Amazon is bringing technology to retail operations with the new Amazon Go format.
How is a retailer to compete in this changing landscape? I believe the Cincinnati based grocery chain, Kroger has solid strategy. I am only going to address to current technologies that they have started to roll out to their stores. One I love, and one I do not like.
Scan-Bag-Go
The grocery shopping experience is not very efficient. Think about it, the workflow starts at home, when you look at some empty spots in your refrigerator or cabinet and make a list of things to purchase at the store. Once you get to the store, you walk around, pushing a cart, which you fill with items you want to purchase. Once you fill your cart, you get in line to check out, where you empty your cart, it is scanned in a serial fashion, and then bagged, and put back in your cart. Then you empty the groceries into your car (assuming you live in the Midwest and drive to the store). Once you arrive at home, you carry the groceries into your home, and then transfer them to your home pantry.
This work has so many non-valued added steps. Kroger in Piqua now has a new technology solution to a part of this issue, called Scan-Bag-Go. It works like this: Ideally, you arrive at the grocery store with your own bags. This is environmental friendly, but you can still use plastic bags if you forget, or do not have reusable bags. On you way into the store, you pick up a handheld scanner. You enter your loyalty number into the device, and then you are ready to shop. As you walk around the store, you pick up items from the shelves, scan them with the hand held scanner, and put them in your bag. Once your finished, you take them to the self-checkout lines, but instead of emptying your cart and scanning items there, you just scan a barcode on the checkout console, and all of your items show up on the screen. You simply pay using your preferred payment method, then push your full cart out the door. Now if I could get a robot to do our shopping, and cooking.
This is great use of technology to make a process better. In the Amazon Go store, you don't even have to scan. You walk in, load up, and walk out. The billing happens automatically.
Kroger should be commended for this big step forward. Well done!
Mobile payments
Another areas of innovation is mobile payments. I am a big fan of mobile payments. I use my Watch to make payments for gas, food, and other merchandise at locations around the globe. It works.
What does mobile payments have to do with retail? It is about the customer experience. Win the hearts and minds of consumers by providing a better experience with less friction. This is one of Amazon’s value proposition. They make it so easy to click (one-click) and then your order shows up. Mobile payments makes it easier to give retailers your money. 😳
Now back to Kroger .. and this time, I belive the did the wrong thing. A few weeks ago, I went to Kroger to pick up one item. Even for one item, I still used Scan-Bag-Go, and scanned out. Sadly, I forgot my wallet. It would have been great to just use my watch to pay.
Kroger has decided to go with a new mobile payment and loytality system. It uses a QR code for the payments, much like what Walmart has been attempting. QR codes are not seamless, and I worry about security too. I understand the desire to have a loyalty system (read, tracking system), but this is not putting the customer first.
Over the past three years, I have had multiple interactions with Kroger on twitter about the need for a mobile payment system, such as Pay. They always respond with a kind note, letting me know they will pass it on to their teams. This is not the best technology, and will likely fail. Its like using a horse and buggy instead of a new Tesla.
Jobs
With these new technologies in place, I hear a lot of concerns about job loss. This is the the fist time that new tech has entered into a workspace and created concern about jobs. When robots entered into factories, I was sure that jobs would be lost. What seems to happen is jobs move. New jobs are created to support change. I don't know what will happen here yet, but change is a sure thing. I will be watching to see how this plays out. I am hopeful that merchants and retailers like Kroger can find a way to stay in business. That is the bigger risk to local jobs.
Next Steps
Kroger, and other smart retailers will continue to use technology and process improvements to compete with Amazon. It will be interesting to see where this goes. Those that don't evolve and innovate will close up shop and go home. It's that simple.
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~ Rick
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