Wisconsin grocery stores testing new technology

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By ERIK LORENZSONN
The Capital Times

MADISON, Wis. (AP) — At Woodman’s Market, grocery shoppers can grab a cart, fill it with food, and have a cashier ring it up — business as usual.

But for the more adventurous, the store is also a self-described “testing ground” for technology meant to rewire grocery shopping from top to bottom.

Walk into the store’s bakery entrance, and you’re greeted by a rack of “mobile shopper” devices – small handsets that look like a cross between a scanner gun and a smartphone. Customers can check one out and scan their groceries as they shop, bagging as they go.

When they’re done, they head to a self-checkout lane, scan their groceries one last time at the terminal and pay.

“This will really help you beat the line on a busy weekend,” said Matthew Alba, a Woodman’s IT technician. “You could do a big order — you could do $300, and you’re out of here.”

“Kids love it,” he told The Capital Times .

Other shoppers can go to the store’s “rapid checkout” lanes and take advantage of an arrangement that is in some ways reminiscent of the gates used for airport security. Shoppers who chose that option send groceries through an arch-like tunnel embedded with 360-degree scanners, which read all the barcodes at once. Alba estimates the lanes let groceries be scanned more than twice as quickly as standard ones.

Both the mobile shopper and rapid checkout are remarkably efficient, Alba said, although he fields some complaints from people who worry the lanes eliminate jobs and from some who are uncomfortable with the new procedures.

“People don’t want to look foolish when they’re doing something as basic as checking out groceries,” he said.

The grocery industry has long had a reputation for being slow to embrace the latest in technology. But as experiments at Woodman’s and other grocers in Madison show, stores are increasingly trying out mobile, data-oriented and Internet-based technology.

“This business is changing. Its customers are changing,” said Brandon Scholz, the president of the Wisconsin Grocers Association.

Some changes are visible: The mobile shoppers and rapid checkout lanes at Woodman’s, shopping list and couponing apps found at Festival Foods and Fresh Madison Market, expiration date-monitoring software at Metcalfe’s and electronic transmitters that can ping shoppers’ phones at Hy-Vee.

To an even greater extent, grocers are trying out e-commerce with sales of groceries online.

Jeremy Neren is the CEO of GrocerKey, a Madison startup that specializes in software for grocery e-commerce. He said that for a long time, it took convincing for clients to see the benefits of his products.

That’s no longer the case.

“If you look at the grocery industry, if you look at the regional chains, they’re family-run businesses. They’re maybe a little less prone to be progressive when it comes to technology,” he said. “Now, you’re looking at changes in the industry where people now are a little more prone to take risks. There’s been a shift in the conversation.”

Despite their somewhat fuddy-duddy reputation, grocery stores have sometimes been quick to try out new retail technology. Barcodes sped up checkouts in the 1970s, and card readers and the secured networks they’re linked to made a big difference in how people can pay for food. Loyalty cards generate troves of data that let companies refine their marketing, as does the point-of-sale software that cashiers use when ringing up customers.

The next wave of technology looks different.

Randy Hofbauer is an editor at the trade magazine Progressive Grocer, where he watches technological trends. He said there’s a new buzzword in the business: “omnichannel.” This refers to the idea that stores should not only find ways to accommodate customers no matter how they might want to get groceries but also make sure that each of the resulting “channels” – the different means of shopping – are joined together seamlessly.

“People want to be able to purchase products however they want, wherever they want, whenever they want,” he said.

Some customers, for instance, might want to order dog food using a laptop before going to the store to select their own produce. Others might want to visit a deli in person, but order lunch meat using a phone while sitting at the deli service counter.

“Who knows, there could even be a person sitting at home who wants to put an order through a fax machine,” said Hofbauer.

There is growing market pressure for stores to meet “omnichannel” demands. One big contributor to this has been Amazon’s splashy entrance into the grocery business.

In December 2016, the online retail giant announced plans to open an experimental grocery store in Seattle — a place called Amazon Go, where customers could walk in, grab the food they wanted and leave. A complex network of sensors and artificial intelligence software would track each individual customer and the items they placed in their bags, automatically billing them for each.

Nine months later, Amazon had acquired the grocery chain Whole Foods for $13.7 billion, giving it 470 brick-and-mortar stores around the globe. The move positioned the largest internet retailer in the world to become a grocery empire.

On top of that, Amazon continues to operate AmazonFresh, a grocery-delivery service operating in various metropolitan areas.

Birk Cooper, a tech entrepreneur who works for the Madison grocery-scanning app company Fetch Rewards, said Amazon has already begun putting pressure on grocers.

“Prior to Amazon (announcing) the store, prior to them acquiring Whole Foods, and some of their more recent moves, grocers were already working on e-commerce. When those events happened, it made grocers rethink how urgent it was. Now everyone’s thinking, are we doing this good enough to compete with Amazon?” Cooper said.

When it comes to tech and groceries, e-commerce is probably the biggest priority on grocers’ minds, according to market analysts, even though online sales account for a small fraction of the grocery business.

In Madison, at least 10 grocery stores — sites operated by Whole Foods, Hy-Vee, Woodman’s, Pick ‘n Save, Capitol Centre Market, Metcalfe’s and Fresh Madison Market — offer options for ordering online, as do superstores like Wal-Mart.

Although these stores wouldn’t release sales figures, many said that e-commerce makes up only a small sliver of their total profits. Clint Woodman, the president of Woodman’s, said that e-commerce amounted to less than 3 percent of its business.

But Woodman expects that number to increase. A report from Nielsen and the Food Marketing Institute estimates that, by 2025, about one-fifth of U.S. grocery sales will be online. The same report predicts that 70 percent of people will, in some fashion, shop for groceries online.

According to Gallup survey data, about 9 percent of shoppers currently buy groceries online at least once a month.

Michelle Jones, a 50 year-old Sun Prairie resident, is among them. She’s ordered delivery from Hy-Vee more than once. Those experiences have taught her not to wait to the last minute to order. Grocery stores that receive a lot of orders often do not guarantee same-day delivery.

Wait times apart, Jones said she is generally happy with the time and money she has saved from shopping online. Jones said she tends to be more deliberate when she’s buying grocers from a website.

“I’m not going down aisles and saying, ‘Oh I want that!’ Or, ‘Oh that looks good!'” said Jones.