By Dean DeBiase, Published in Forbes, 03/11/2024
Innovation comes in waves, with good ones often fueled by key enabling trends and technologies. Waves can happen too fast, too slowly, too early, or too late. Many product innovations you thought would make it often come too soon, like Palm Pilot, or maybe too late, like Microsoft Zune. AI came on the scene in the 90’s but lacked the processing power and massive data needed to ignite a revolution. Yet others arrive at just the right time for a movement—like Uber—that would not have made it before the mass-market adoption of smartphones.
We hear about innovation all the time in business media, with “Innovate or die!” headlines—even in retail. Amazon introduced us to e-commerce way back in 1995, yet it took a pandemic to push through full adoption by supermarket chains. Self-checkout was first introduced in a Kroger store back in 1986, only to reach peak grocery saturation well into the next century.
Having first gained momentum in the early 2000s, driven by a recession-fueled quest for cost savings, self-checkout also received a pandemic turbo-charge as shoppers sought less human contact and grocers faced labor shortages. It nearly doubled from 2018 to 2021, according to FMI (Food Marketing Institute), and has continued to grow.
Not all innovations make it for the long haul, however, even those born of necessity. But countless pressures that started with COVID are compelling supermarkets to work harder to find solutions for labor shortages, supply chain issues, competition from online channels, inflation, theft, and personalization of the in-store shopping experience.
One innovation that may still hold some promise is the smart shopping cart, which turns these metal war horses scattering the landscape into high-tech wonders. After many false starts, the question remains: can automation in supermarkets and the smart cart be the digital transformation catalyst that gets grocery stores out of the last century?
Innovating Supermarkets and Grocery Stores Into The 21st Century
Technology companies have been partnering with retailers for decades, addressing pain points with innovation focused on everything from improving shopping experiences to boosting efficiency, reducing costs, and optimizing workflows through a wide range of applications. Some examples you may have noticed while shopping include:
● POS systems that have been around for a long time, like LS Retail, that automate checkout and integrate with inventory, CRM, and other applications.
● Systems that track inventory in real-time, automate reordering, and optimize inventory distribution across multiple locations. This article explains how Berlin-based startup Freshflow leverages AI to better forecast demand.
● Smart shelving and radio-frequency Identification (RFID) monitor product levels, expiration dates, and provide insights to optimize store layouts, product placements, and promotions. Amazon Go, launched in 2018, revolutionized this idea. Customers can just pick products from shelves and get charged automatically after exiting. It’s like the EZ Pass for retail shopping.
● Walmart has been investing heavily in generative AI to improve store operations and employee experiences, and applied AI-powered simulations to forecast everything from customer patterns to supply chains.
● Pickup and delivery services cater to the growing demand for convenience and flexibility. Tom Ward, EVP, and Chief eCommerce Officer of Walmart U.S. (WMT), moved up and accelerated their planned launch during the COVID pickup peak. It has competitively positioned Walmart against Amazon as a strong hyper-local choice.
● Personalized beauty platforms like Revive, where I am Chairman, use AI-powered facial and skin diagnostics to deliver personalized, contextual product recommendations across retail channels, whether at home, in-store, or elsewhere.
● Fortune 400 SpartanNash (SPTN) improved inventory monitoring efficiencies with in-store robots equipped with computer vision and machine learning. When I talked to CEO, Tony Sarsam, he was bullish: “They [robots] are a phenomenal tool that make sure we have the right products at the right price on the shelf, and take tedious tasks away from our associates so they can do more things that are customer facing.”
● Self-checkout stations became ubiquitous since coming on the scene in the late ‘80s, but Walmart, Costco and others are now dialing back on their investments.
● Scan-and-go solutions, like ScanPayaGo, let shoppers use their smartphones to pay as they roam the aisles and pick goods. Walmart and Wegmans have dabbled in scan-and-go with mixed success from these BYOD programs.
● Smart shopping carts have been trying to enhance the shopping experience while improving store operations and data with technologies such as RFID, cameras, sensors, and touchscreens.
Smart Shopping Carts Could Leave Self-Checkout In The Dust
Supermarkets can be slow to adopt new technologies. The industry is conservative by nature. Razor-thin margins don’t leave a lot of money on the table for technology blue-skying—an innovator’s dilemma
It’s also because grocery stores are notoriously hard proving grounds for technology. Massive SKUs, logistical challenges, and fickle, often tech-averse customers frustrate efforts to upgrade the tech stack. Some innovations rely on others which may not be deployed.
While automation technologies such as POS systems and online ordering have been proven and widely adopted, others like robotics and AI-powered personalization are still in the early stages, and face challenges related to cost, scalability, and integration. RFID tags, wireless sensors, and beacons – which in turn can drive a range of applications like shelf replenishment and ad personalization – are stuck at the starting gate. Scan-and-go solutions have faced challenges with theft and consumer adoption.
Other innovations have shown great initial promise only to disappoint. E.g., the industry jumped on the self-checkout bandwagon (Grandview Research pegged the global market at $3.866 billion in 2022), hoping that it could decrease wait times and cope with labor shortages. But many are reconsidering these investments, due to theft increases, consumer frustration and maintenance issues.
Hopefully, the self-checkout experiment educated the industry about engaging consumers with a carrot—not a stick. Made me wonder, can the spending on self-checkout stations be better allocated elsewhere?
Smart Cart Malfunctions
Smart carts, too, pose many of these same challenges, and for years, vendors promised to improve the shopping experience while delivering countless business benefits with the units.
The technology offered endless possibilities, by (theoretically) equipping shoppers with information and deals while giving stores better insight into consumer behavior and preferences that could, in turn, improve layouts, merchandising, and aid with restocking and procurement.
They also can enable retailers to interact with the shopper throughout the store visit, in a real-time, bi-directional, mutually beneficial way, much like the type of personalized engagement of e-commerce.
But smart shopping carts have not made much of a dent in the market—and many ventures have failed. A report in Supermarket News said that “Implementation is still in very early stages for touchscreen-enabled ‘smart’ shopping carts.”
Some say that they have been hard to use, too expensive, increase theft, and are tough to integrate into the store environment. Also, despite their potential, it seems clear that adoption has also been challenged by the lack of a “killer app” (I bet you haven’t heard that term in a while). But it is what‘s often missing; a compelling use case—for shopper and merchant— that justifies the initial investment to get the carts in the door, where they can deliver real value and relevant benefits.
The good news is that vendors have finally listened to these concerns, done some user experience and design work, and are upgrading their wares. Smart carts are coming down in price, and some have introduced innovations that could make these “concept cars” a shoo-in to replace the dreaded self-checkout stations.
Here, the killer app is reducing wait times and labor, like self-checkout; but at the same time decreasing theft and saving time and hassle for the shopper and the retailer. Or perhaps it could create new shopping services and more pleasant experiences.
Rolling Carts Into The Mainstream—Not The Museum
At this year’s NRF, retail tech’s biggest event, there was no shortage of vendors focused on the category, from big-dog Amazon’s Dash Cart (AMZN) to A2Z Cust2Mate (AZ), Caper and Veeve. I spoke with Israeli-based Cust2Mate’s CEO, Guy Mordoch, to see if the timing and enabling tech, like my Uber example, are better aligned now to finally start delivering on the promise of smart carts.
Having been the Executive Chairman of user experience design (UX) firm AKTA, which we sold to Salesforce (CRM), I started to unpack things there. I liked that Mordoch’s team has designed around current market reluctance issues, with insights and lessons from merchants and consumers—about what’s working and what isn’t.
“Good UX design is part of our DNA,” said Mordoch. “We get constant feedback from our customers and prospects about what works best in their stores. Our UX Design team factors this in, as well as data from smart cart users themselves – each shopper is asked to grade their experience and satisfaction in a simple survey after every session. This data informs product development changes, like making a larger screen, and carts that are lighter and easier to maneuver.”
This approach has also led them to address issues like security and add functionality that can improve shopping experiences. They also seem to be making it cheaper and easier to deploy, with an attachable panel that can provide the latest AI, vision technology, and even include a scale and RFID reader on board. As shoppers pick, scan, and pay, the cart “knows” if items have been removed or added without payment and flashes a light that alerts store associates if there is an error.
Cust2Mate’s 3.0 cart addresses key pain points. “It can be a critical hub for a frictionless shopping experience that delivers more utility and benefits over time,” Mordoch added. “It blends online and physical shopping, creating a richer, more cohesive, and efficient environment for both the shopper and the retailer, while unlocking new opportunities for success, such as in-store retail media. You no longer need digital signage or beacons, as the cart’s tablet is a personal sign that guides the shopper, providing rich content and personalized offers and ads, and the tech on board always knows and reports its precise location.”
When I looked at consumer feedback, one from a customer at Morton Williams, a family-owned food retailer that has twenty stores in New York, reflected a common theme: “I was impressed with how convenient my shopping experience was using Cust2mate’s smart cart. Not only did I save money with the in-cart coupons, but I also didn’t have to wait in line at checkout. It was so easy and hassle-free; I will definitely be coming back to this store.” Pamela P.
Media and Advertising Adjacencies – A Perfect Storm
Like Uber’s launch, technology timing and adjacent markets are aligning into a perfect opportunity storm—for merchants and marketers. But what makes the market think this will all work this time? A big motivator for merchants to invest goes beyond providing shopper convenience. They need a perfect storm for the investment to have positive ROI. To help, they can tie cart platforms into their CRM, targeted marketing, personalized messaging—and lucrative in-store media networks—to turn the entire store into point-of-purchase hotspots. These adjacencies could motivate rollouts, and fill the void left by the hangover we are experiencing in the global self-checkout era.
The Supermarket News report cited the maturity of self-checkout and that 49% of surveyed grocers are interested in evaluating smart carts over the next 12 months. All respondents’ said technology is important to achieving a diverse set of business goals, including cost controls, new revenue channels, and modernizing their stores to compete in an increasingly omnichannel industry; and that in-store technologies (like smart shopping carts) represent “low hanging fruit.”
Sometimes perfect storms around efficiencies and growth can extend the platform capabilities and accelerate deployment. On efficiencies, McKinsey’s “State of Grocery in North America 2023” points to data supporting smart cart deployment, citing labor shortages as one of the biggest challenges. More proactively, on the growth side, incorporating in-store media into the mix could help fund adoption by retailers, as that sector is expected to be a $7.3 Billion market by 2032, according to Custom Market Insights (CMI). These media platforms provide brand marketers new channels to connect directly with shoppers—even down to the cart level.
It all sounds good until you get back to the UX question—will users use it? Will they jump on the bandwagon and enjoy smart-shopping experiences enough to move it from early adopter cool to a mass-market staple? In a controlled retail environment, merchants will be a key factor in motivating shoppers. If they learned anything from the self-service stick strategy that offered shoppers pain, not gain, smart retailers will motivate shoppers with a carrot.
