Rethinking The Grocery Shopping Experience
Grocery stores haven’t changed in decades. A crowd-sourced “GPS” for the store can revitalize the experience.
After years of razor thin margins and with threats from startups and Amazon alike the grocery store industry is ripe for innovation. Consumers often find themselves wondering around the store trying to get through their shopping list as quickly as possible. Stores often change their inventory around which can be confusing and frustrating for consumers. These layout overhauls are often done based on the managers experience rather than objective data. A crowd based in-store app can ease the frustration of grocery shopping for consumers and provide valuable data for store managers.
Each store would be initially mapped with a 3-D layout of the store. The consumer would either upload their shopping list into the app or search for the items individually through the app. The in-store app would leverage Wi-Fi positioning system to triangulate where the consumer is in the store.[i] Upon entering the store, the app would not only show them where each item is in 3-D, but also optimize their route through the store. As the consumer picks up each item, they would can the barcode which would validate the positioning of the item. If the item is not where the app says it is, the consumer can provide a data point as to the new location of the item when they find it. The consumer can also use quick emoji’s to provide data on groceries. For example, if certain produce is not fresh, the user can quickly note that in the app.
This app that leverages crowds to enhance the grocery shopping experience has the potential to create significant value for both consumers and grocery stores. A recent study published what is seemingly obvious that time is becoming an increasingly valuable commodity for working adults.[ii] As such, this app would greatly reduce the amount of time each customer spends wondering around the store looking for the items on the list. Furthermore, the app would increase efficiency because of the real time updates and route optimization provided through the crowd-resourced app. The large amounts of data would provide a personalized experience with better recommendations for complementary items and the potential for targeted coupons. As consumer enter more data and use their phone throughout the store, they will be rewarded with percentage discounts on specific food items or their entire grocery bill to incentivize their usage of the app.
For the stores, this app creates value in several different ways. First, there is a massive amount of data that can be used to increase store efficiency. The business can see how customers are moving through the store, what they have in their cart verses what they actually end up purchasing, and time spent in the store. This data can be leveraged to design the layout of the store optimize sales. This will lead to quicker throughput and higher volumes which is a business model that has been very effective for Aldi.[iii] Lastly, each employee spends an appreciable amount of their time showing customers where specific items are. With the use of this app, employees are likely to spend significantly less time showing customers around and more time performing their designated tasks.
Stores will be charged a subscription fee to license this app. Consumers will likely be unwilling to pay for this app. But because this app will provide so valuable data and cost recutions for the stores, they will be willing to pay for a license for the app. Furthermore, manufacturers can pay to have their products promoted or to offer coupons for their specific items. This will further enhance the revenue stream for the store.
The current method of traditional grocery shopping is antiquated and is being disrupted by many online platforms. This crowd-based app provides a means to compete. Consumer will be incentive to be on the app because of the efficiency, personalization, and cost savings it provides. Store owners only have data as to what a customer actually purchases. This app could provide them with a wealth of information including time spent in the store, items looked at, disparities in shipping list vs checkout items etc… This information can create a positive feedback loop which could further enhance this platform and create value for all parties involved.
[i] P. Bahl and V. N. Padmanabhan, “RADAR: an in-building RF-based user location and tracking system,” in Proceedings of 19th Annual Joint Conference of the IEEE Computer and Communications Societies (INFOCOM ’00), vol. 2, pp. 775–784, Tel Aviv.Israel, March 2000.
[ii] https://www.forbes.com/sites/elizabethharris/2017/08/30/study-shows-time-is-the-most-valuable-commodity-so-heres-a-smart-way-to-value-time/#14b3b6dc2c31
[iii] https://www.feedough.com/aldi-business-model-aldi-cheap/
Thanks for the post, Curtis! Very interesting idea! I, as a consumer, definitely feel the pain point about grocery shopping… it is difficult to find all the items, sometimes the items that I want are out of stock, I don’t want to be stuck in the store for a long period of time, etc. This crowdsourced technology is indeed unique in that it offers both the grocery stores and the customers value. It reminds me of Waze… but for groceries!
I wonder how difficult it will be to get people to download the app. Some grocery stores already have mobile applications that allow for perks like virtual coupon clipping and loyalty points/discounts. Will the licensed technology be able to be integrated into existing applications? It will also be interesting to see if a reduction in foot traffic in grocery stores does occur as online ordering continues to evolve. Either way, it is great to see companies innovating to avoid shutting down!
Very cool idea Curtis! My biggest question is how easy it will be to convince grocery stores to embark on this endeavor. I agree that given the industry dynamics, they should be very eager to try something like this. However, it sounds to me like they are effectively being asked to pay in three different ways:
1) Licensing fee for the app
2) Provide discounts to consumers to incent use
3) Must pay someone to make sense of the data and take appropriate actions to drive increased performance (I presume this is outside the core competency of most store managers)
I also wonder if there could be some issues on the consumer side because the consumers that would be most interested in one of the key value propositions of the app (decreased time in the store) may be not be willing to spend time scanning barcodes. However, the discounts are sure to be tempting to a significant percentage of users and perhaps those users can provide enough data to overcome the impact of other free riders.
Traditional grocers certainly need to try something before we are all subscribing to Amazon Fresh!