Apr 30 2020

Smart Supermarkets: How IoT Is Shaping the Future of Retail

What is a “smart” supermarket, and what do they need to succeed?

Supermarkets provide an essential service — now more than ever.

Despite the increasing availability of online food services, supermarkets remain a consumer cornerstone; as noted by Business Insider, shifting purchase patterns have significantly boosted grocery store visits over the past few months as shoppers stock up on essentials.

This traffic uptick poses dual challenges: How do stores ensure they’re stocking what’s needed most, and how do they cut down on person-to-person interactions after customers come through the door?

The Internet of Things (IoT) provides the framework for “smart” supermarkets that can detect stock levels, reduce equipment downtime and improve customer service. But what does this look like in practice? And how do grocery stores effectively deploy IoT devices to boost profit margins, enhance protective measures and deliver shopping 2.0?

What Is a Smart Supermarket?

Smart supermarkets use connected IoT devices to collect physical data, relay this information to digital platforms and help grocery store staff make better decisions. 

“IoT in supermarkets is really about associating sensor tech to things that are commonly used in the store,” says Jean-Michel Fally, digital strategy partner at IBM. “But what’s changed recently is the price point: Devices are cheaper and more cost-efficient — the juice is now worth the squeeze.” 

Still, challenges remain, according to IBM Global Team Leader Bill Gillispie. Smart stores “still haven’t figured out how to effectively map consumers,” he says. “How do you send deals to customers in-store? How do you intercept customers’ planning process or give them personalized promotions?”

To deliver value, smart supermarkets must deliver both improved customer experience and enhanced corporate efficiency. The result: Store success at scale demands specific application rather than general adoption — from smart shelves to smart grocery carts, cashierless options and underlying infrastructure support.

MORE FROM BIZTECH: A guide to predictive analytics in retail.

What Are Smart Shelves?

As noted by Gillispie, smart shelves got their start in 1992 with electronic shelving labels. They’re now making a comeback thanks to low-cost connected devices that can both display prices and detect stock levels. Gillispie also points to their use in store planning. “They can give you a custom planogram,” he says, “or map your picker through the store.” 

In effect, these labels form the foundation of inventory visibility and demand forecasting — if supermarkets are constantly running out of fresh fruit, pasta or toilet paper, smart shelf technology helps align procurement with consumer purchasing habits.

Fally goes a step further, pointing to equipment assets that underlie many product shelves, such as refrigerators. “A simple fridge is on or off,” he says. “Add sensor technology, and it can hear when the cooling mechanism needs repair, see when to turn the lights off after hours or smell when products start to spoil by detecting the presence of ethylene gas.” This information can then be pushed out to applications on employee devices that alert them to stock levels, spoiled food or the need for preventive maintenance.

What Are Smart Shopping Carts?

Grocery carts also play a role in smart retail rollouts. By reducing the interaction between staff and customers, stores can improve safety and increase customer volume simultaneously. Recent “smart cart” trials in Canadian supermarkets focus on shifting the scanning and checkout process into the cart itself by allowing customers to pay for items as they’re shopping and simply leave when they’re done. 

Supermarkets need a platform to coordinate these sensors at scale, and to monitor production and maintenance."

Jean-Michel Fally Digital Strategy Partner, IBM

Contactless Technology: Cashierless Options and How Do They Work?

Supermarkets don’t have large profit margins: As noted by Fally, 3 to 4 percent is an attainable — if challenging — goal. Cashierless options have emerged as a way to increase shopping speed and simplicity but come with the potential caveat of falling profits if stores can’t accurately track and manage assets.

Concepts like Amazon Go are seeing some success; stores use cameras and sensors to detect what items shoppers pick up and automatically charge them when they leave. But as noted by Chain Store Age, this cashierless option remains relatively niche given the number of devices required to effectively manage and monitor products. Here, the more likely iteration of IoT in supermarkets of the future is a middle ground: cashierless carts or self-serve checkouts that see users scanning and paying for their items on demand.

What Do Stores Need to Support IoT in Retail?

Fally puts it simply: “We often think of IoT as ‘connected,’ but what are the practical uses of this connection?” This is the challenge for smart grocery stores: managing sensors at scale to deliver actionable outcomes.

“Supermarkets need a platform to coordinate these sensors at scale, and to monitor production and maintenance,” Fally says. 

With so much data being generated — from stock-level reports to alerts about food freshness, details of consumer transactions and purchase pattern trends — companies need platforms capable of prioritizing key data sets and delivering them on demand. This might take the form of integrated artificial intelligence detecting maintenance issues and calling repair companies, or aggregate inventory data pushed to in-house apps to help inform product ordering.

MORE FROM BIZTECH: What retailers need to bolster e-commerce.

What’s Next for Smart Supermarkets?

According to Gillispie, IoT technologies can also help supermarkets tackle a new challenge: traceability. He notes that while many stores “know they got products from a certain location and know they went to the distribution center, they then lose 100 percent traceability.”

Leveraging new solutions — such as radio frequency identification tags, which Gillispie says “cost about 5 cents per case, contain all G1, recall and providence information” —  makes it possible for both distributors and grocery stores to track items at every stage of their journey from farm to customer. That’s now critical as both handling and health become top purchasing priorities.

Grocery stores exist at the nexus of public health and purchasing trends. IoT initiatives offer the infrastructure for shopping 2.0 — smart shelves, smart carts and cashierless options that transform this essential service experience.

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