In the past, store owners used to know what goods were moving off their shelves but not who was buying them.
Shoppers came in with trolleys, went out with bags, and that was it.
Whether one family had corn flakes and another oatmeal for breakfast was of little concern, as long as stock levels were monitored, and the shelves could be refilled.
But understanding consumer buying behaviour is crucial if supermarkets are to stay ahead in today’s digital world. By harnessing the power of data, multi-billion dollar supermarket giants can provide a personal touch for consumers. This allows companies to become a welcome part of their customers’ lives.
Technology is transforming the grocery industry
Andrew Brothers has been at the forefront of this digital transformation. In 2015 he became Chief Information Officer at Dutch supermarket company Albert Heijn, after working with various companies including the UK supermarket chain Sainsbury’s, IBM and Whitbread.
“When I started in my early career with Sainsbury’s, technology was used primarily around ordering and distributing the product,” Brothers says.
“Now the onus is all about understanding the consumer and providing services that are quick and easy to use.
“It’s not just about distribution and checkouts anymore, but the whole consumer journey.”
From online home delivery to self-service checkouts, supermarkets are rethinking the shopping experience and the speed of technological innovation over recent years has been startling.
The power of data
Supermarkets the world over now use data to provide a better experience for shoppers – and to increase profit margins.
“Data is one of the biggest things we need to utilize,” Brothers says.
“Whether it’s concerning the customer or whether it’s optimizing your supply chain, you need to have very good data analytics technology – that’s the only way you’ll get the competitive advantage.”
One way Albert Heijn is harnessing the power of data is through its personalized Bonus Card offering. Customers with the card receive emails with personalized promotions, based on their shopping behaviour.
To get the card, customers must provide certain personal information, such as their age and address. This information is used by the company to build up its data reserves and improve its customer proposition.
In this age of digital innovation, data has become arguably the most important driver of growth for grocery chains of all shapes and sizes.
‘Data is our crown jewel’
Along with access to such vast amounts of private data comes the responsibility for protecting it from would-be thieves. “Data is our crown jewel, but it is also the consumer’s crown jewel,” says Brothers.
The European Union’s General Data Protection Regulation, which comes into effect in May 2018, is designed to give individuals more control over their personal information. It is already changing how businesses operate and will establish a single set of data protection rules for companies offering services to EU customers.
But despite this and similar initiatives elsewhere, Brothers says it is the responsibility of companies to ensure they handle information carefully.
“You have to invest and make sure your data is safe,” Brothers says. “You have to take it super seriously.”
The supermarket of the future
In many ways the supermarket of the future is already here.
Customers can select, order and pay for their shopping without visiting a store. The weekly shop is becoming a thing of the past for many.
But this does not mean supermarkets are resting on their digital laurels.
Supply chain upgrades are being prioritized by many groups so that each store gets individualized replenishment shipping quickly.
Mobile pay has been around for a few years now, but research shows it could soon be used by many more supermarket shoppers. A 2016 report said it could reach more than $314 billion by 2020.
And some shops are experimenting with checkout-free stores. The Amazon Go store in Seattle, for example, allows customers to leave without paying for goods at a register or self-service till.
It uses hundreds of ceiling-mounted cameras and electronic sensors to identify each customer and track the items they select. Purchases are billed to the customer’s credit card when they leave the store.
Albert Heijn is also using technology to make customers’ lives easier. This summer it will unveil its first checkout-free ‘tap and go’ store. This will allow shoppers to pay for items without going through the checkout.
After registering via an app, customers can select an item, tap an electronic shelf card, and go. The money will be automatically transferred from their bank account within 10 minutes.
For Brothers, future technology must be developed with simplicity in mind. He says: “If you look at what’s happening in China, you’ve got to be into the integrated mobile experience. Technology has to be about simplifying the consumer’s life.”
Find a tech partner that adds value
IT firms with a solid grounding in the retail space are few and far between. Those that know the grocery industry well can be a valuable ally.
Albert Heijn has been working with Tata Consultancy Services for the past year. Brothers says it is “a new partnership, but one that’s evolving very quickly and very well.”
He adds: “There are a number of reasons why we chose TCS, but what really stood out was their depth of retail knowledge – they work with most of the big retailers around the world.
“They have an understanding of the challenge of making sure we have the right technology to help fight the breadth of competition we have from both established and emerging retailers.”