On July 4th, red, white and blue sheet cakes and cookies fill grocery aisles. But if those seasonal items don’t sell out that day, grocery stores will scramble to slash prices to move them before their expiration date. But what good are sales if the right consumers are unaware? In the latest Intelligence of Things Tracker, Michael Klein, director of retail, travel and hospitality at Adobe Experience Cloud, tells PYMNTS how analytics derived from in-store IoT tech can help grocery stores target promotions and increase sales without the creep factor.
Shoe sellers can dust off a pair of unsold sneakers and keep them on the shelf until they sell, but businesses like grocery stores don’t have that luxury. Instead, they must keep a tight focus on moving goods out the doors — especially items with an expiration date.
As such, grocers are turning to old retail standbys — sales and discounts — to help spur purchases, and for good reason. One 2017 survey found 38.5 percent of grocery shoppers would buy more if given coupons, and more than 39 percent would buy sooner.
Sales and promotions won’t attract customers if consumers don’t know they exist, though, and many stores are now working to find improved, tech-fueled ways to better promote their discounted goods. Nearly half of surveyed consumers told PYMNTS they had used a grocery store’s app regularly or occasionally last year, with most reporting they did so to get better deals, discounts and price comparisons.
Michael Klein, director of industry strategy, retail, travel and CPG (consumer packaged goods) at Adobe Experience Cloud, believes Intelligence of Things (IoT) may provide a stronger solution yet. In a recent interview, he explained that properly utilizing new tech could help retailers that rely on a brick-and-mortar presence to better connect with customers, reduce inventory inefficiencies and increase revenue.
Zeroing In On Shopper Segments
Any company planning a new promotion wants that campaign to connect with the right customers, specifically those who are most likely to take advantage of it. That’s often easier said than done, however. Hundreds of customers walk through grocery stores’ doors every week, each with different purchasing plans and shopping habits. Discerning which of these is most likely to use a promotional price to stock up on a particular item is often like finding a needle in a human haystack.
Klein believes combining in-store IoT offerings with analytics that help with discounting and other marketing campaigns could provide a solution. This could aid retailers with time-sensitive inventory in reaching the consumers who are most receptive to a promotion, hopefully ensuring they act soon and buy before the expiration date.
To that end, the Adobe team is currently beta testing a cloud-based platform to help businesses with large brick-and-mortar footprints provide customers more targeted in-store marketing and services. This would allow retailers to identify the customer profiles most likely to take advantage of particular offers, going beyond one-size-fits-all couponing campaigns to send in-store promotions to customers in the middle of shopping — the time when they’re most likely to make or add to a purchase.
Adobe’s platform taps into a store’s existing customer relationship management (CRM) system and technology, such as beacons, radio-frequency identification (RFID) and Wi-Fi triangulation, among other options, Klein explained. It compiles information from these sensors with consumer data from the store or its supplier partners to identify fine-grained customer segments, such as “shoppers with two children and a preference for sweets” or those who always purchase organic produce.
“We’re leveraging a variety of sensors that are available in the marketplace, [and we] acquire the information from those signals and sensors, and bring them into the Adobe Experience Cloud,” Klein said. “With our analytics and optimization capabilities, we’re now able to leverage that data for better segmentation.”
Retailers can then send in-store promotions to the customers who are most likely to find the offers relevant and compelling. Customers opt-in by signing up with the store’s app, allowing the retailer to send promotions via notifications or SMS messages and detect where they are in the store. If it has an in-store digital display, a retailer could even feature promotional offers when a participating consumer approaches.
“Through opt-in, [we can] recognize a user in the physical space, and then, through other mechanisms, such as our campaign orchestration tools — whether through mobile app or SMS mechanism — [we can] communicate with the consumer,” he added.
In addition to grocery stores, big-box retailers and apparel sellers, other segments have shown interest in the software, Klein said. Telecom firms looking to improve in-store customer engagement at their many locations have, too.
Trading Privacy For Promotions
Grocers and other retailers collect and analyze a wide information set to target the right customers. This often includes consumers’ purchasing histories, browsing behaviors, neighborhoods, birthdays and household income ranges, among other factors. While some consumers are wary of privacy violations, Klein said most show a general willingness to trade information in exchange for a service they find valuable.
“There’s sensitivity, but the data has shown us that somewhere between 70 [and] 80 percent of consumers are willing to share their information to receive a valuable experience in some way, shape or form,” Klein said. “That could be in the form of discounts, special access, events, services — all the different mechanisms and nuances that drive customer loyalty.”
The trick for retailers is to recognize where consumers place their boundaries. When Adobe was demonstrating its solution several years ago, it envisioned retailers using it to recognize customers as they entered and immediately sending staff to greet them. There came a recognition that customers did not want — such as service and attention pushed on them — though, and they would rather it be made available to be called upon if and when they wanted it.
“We’ve gone a different direction where we now allow the consumer to be in control, [and retailers to] be a little more passive,” Klein explained. “We’re not having an army of store associates accost you and try to sell you something when you break the barrier of the front door. It’s about [asking], ‘How do [we] use technology to assist with the customer journey, rather than intrude on it?’ and then allowing consumers, when they’re ready, to raise their hands.”
Tapping Into Grocery Tech
There’s an even bigger hurdle that grocers must clear if they hope to implement IoT innovations, however. Grocery represents a complicated business that is typically not very well-suited for innovation, which makes matters more difficult for solutions providers. Grocers also tend to have slim operating margins, making investment in new tech risky. Amazon Go’s camera-based approach is too expensive for most, Klein noted, and though applying RFID tags to CPGs can effectively track products, it also eats up profits.
“If it costs $0.04 to $0.07 for an RFID tag to go onto a product that only costs $1 or $2, that could blow up the whole profit margin structure,” he noted.
Flexible solutions can tap into the technology — Wi-Fi and beacons, among other items — already present in the store environment, though. Grocers may be playing tech catch-up and, therefore, forced to be more judicial about where they spend their dollars, but many are realizing the need to invest in data, Klein said.
Those investments will likely become even more crucial as IoT innovation continues to progress in the coming years. Answering consumer needs will increasingly mean helping them easily acquire the items they want and at desirable discounts. In-store sensors and data analysis platforms will provide retailers the understanding they need to keep offers relevant and compelling, and keep customers shopping with them, too. Retailers that don’t embrace IoT might continue to find themselves throwing expiring inventory out the door — and potential revenue along with it.
About The Tracker
The Intelligence of Things Tracker™ showcases companies that are leading the way in all aspects of the Intelligence of Things. Every month, the Tracker looks at what these companies are doing across the ecosystem and in several categories, including Personal, Home, Retail, Transportation, Wearable, Mobile, Infrastructure, Data and more.
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