Walking into a Ahold’s new concept grocery store – B Fresh – in Allston, I noticed little green lights in the corners of the produce pricing signage. Leaning in closer, I realized the price sign for the lemons display was actually an electronic device with an eInk screen (like a Kindle). Walking down the coffee and tea aisle, mini LED screens displayed the price for each product and a blinking light drew my attention to a sale on my favorite Yogi Honey Lavender Stress Relief tea. What a pleasant experience!
My chat with a bfresh team member: https://drive.google.com/open?id=0B2XTMCWKi–uSEFiYkRydWRjdlE
Example of an Electronic Price Label (EPL) at B Fresh in Allston, MA (11/17/16)
Apparently, LED and eInk signage has been in use in Europe’s more tech-forward retailers for years, but only recently are stores in the US investing in this technology. [i] What are the benefits of this technology adoption? And will this shift be enough to compete long term with the likes of Instacart and Amazon Fresh, which are luring millennial consumers away from traditional brick-and-mortar grocers?
Increasing Operational Efficiency
Considering the number of products sold by a typical grocery store and the sheer number of promotions that are constantly rotating through the product lines, it is easy to see how an electronic system for tracking product pricing changes is needed to maintain pricing accuracy at a check-out. According to Randall Stross, business professor at San Jose State University, “A typical grocery store puts 5,000 items on sale in a week and removes sale prices from another 5,000.”[ii] To keep prices up-to-date, grocery store employees must constantly print and post paper price labels and “SALE” flags on their shelves for the duration of a promotion and then change them when the items go back to full price. If the prices on the shelves don’t match the prices programed into the register, the store not only risks losing the customer’s trust but is also subject to consumer protection regulatory penalties.[iii]
Switching from paper price signage to EPLs may generate significant labor cost savings to grocery stores. According to EPL manufacturer Altierre, stores see a payback on the investment in EPLs in 12-18 months based on reduced labor costs and improved margins.[iv] Even if this payback estimate is optimistic, going digital creates additional value streams for grocery stores and creates a foundation for further innovation.[v]
Delivering on the Customer Promise
The B Fresh store concept is trying to appeal to the Instacart generation by curating products to appeal to young professionals, providing unattended delivery service (groceries are delivered in an ice-packed container that is retrieved the next day), and locating stores in densely populated neighborhoods.[vi] The digital element of their strategy includes the bfresh mobile and bfresh delivery mobile apps. Through the mobile app, customers can scan coupons at check-out and view the menu and order ahead from the store’s Little Kitchen prepared foods counter. In the future, the store may be able to guide customers through the store using “in store navigation” on their smartphones linked to geolocation technology in the EPLs manufactured by the Swedish company Pricer.[vii]
As grocery shopping becomes tech-enabled, the winners in the grocery business will likely be the retailers who endeavor to change customer habits the least. Offering customers a multi-channel shopping experience and adopting technology that enhances that experience – as B Good is doing – seems like a promising strategy to build customer trust and loyalty at a time when grocery shopping online is not the obvious choice for most consumers.
[i] Stross, Randall. “Digital Tags Help Ensure that the Price is Right.” New York Times, February 9, 2013 <http://www.nytimes.com/2013/02/10/technology/digital-tags-help-ensure-that-the-price-is-right.html> Accessed 11/2016.
[iii] A Massachusetts Consumer’s Guide to Shopping Rights. Massachusetts Office of Consumer Affairs and Business Regulation. <http://www.mass.gov/ocabr/consumer-rights-and-resources/consumer-protection/shopping/shopping-rights/shopping-rights.html> Accessed 11/2016.
[iv] Soper, Spencer. “Amazon Showrooming Forces Stores to Go Digital on Price Displays.” Bloomberg Business Week, July 17, 2015 <https://www.bloomberg.com/news/articles/2015-07-17/amazon-showrooming-forces-stores-to-go-digital-on-price-displays> Accessed 11/2016.
[v] Williams, Geoff. “Meet the Supermarket of the Future.” US News and World Report, January 1, 2016 <http://money.usnews.com/money/personal-finance/articles/2016-01-01/meet-the-supermarket-of-the-future> Accessed 11/2016.
[vi] Harris, David L. “An Old Staples Gets New Life as a Hip Grocery.” Boston Business Journal, September 7, 2017 <http://www.bizjournals.com/boston/news/2015/09/07/an-old-staples-gets-new-life-as-a-hip-grocery.html> Accessed 11/2016.
[vii] Pricer Group, 2015. Case Study: Carrefour, Revolutionizing the Shopping Experience. <http://www.pricer.com/PressRoom/Case-Studies/Electronic-Shelf-Labels-for-Food-Retail/Carrefour-2/> Accessed 11/2016.