When Sapiens Go Shopping: Customer Cognition at the Speed of Thought

Life on earth developed over millions of years, rising from the primordial soup: single-cell organisms giving way to more complex life, and eventually that life rose from the sea to inhabit the land. For nearly 2 million years, multiple human-like species coexisted, none gaining any lasting advantage. But then, as Yuval Harari, in his history-spanning book “Sapiens” explains, around 70,000 years ago a genetic mutation occurred, triggering a cognitive revolution that enabled Homo sapiens to quickly advance beyond all other species.

That cognitive spark changed the world, enabling imagination, conceptual thinking, expanded language and more, giving this new sapient species the ability to rule the world. That first spark of cognitive intelligence, in a relative blink of an eye, raised Homo sapiens to a new plane of existence.

For the better part of the past century, retailers have been driven by a near singular instinct: sell more products. And just as early life evolved based on the surrounding environment, so too did retail. Category management, product assortment and pricing optimization, product-based management reporting, and myriad other traits evolved to help each retail species in the cutthroat battle for survival. Recently—again, in a relative blink of an eye—a mutation has appeared, technology sparking another cognitive revolution and this time creating a new species of retailers elevated to a higher plane of existence: customer cognitive retailers.

Customer cognitive retailers use artificial intelligence (AI) and machine learning feeding off big data to create extensive shopper profiles and provide deeper insights and understanding than were ever possible before. In classic Darwinian evolution, this new species of retailer has developed sophisticated new tools as they battle for market supremacy, far beyond the club of mass promotion and blunderbuss of printed circulars. Strategic hyperpersonalization, including individualized pricing, are the new weapons of choice as customer cognizant retailers maximize share of wallet and grow customer lifetime value.

This new data-driven environment demands speed and agility in addition to raw intelligence, especially when the value of data begins to erode the moment it is created. When marketing success requires being contextually relevant as shoppers are online via their smartphones 24/7, marketing must be in real time. Customer cognition at the speed of thought.

And there is one more environmental influence impacting the evolution of customer cognitive retail. We are at the inflection point on the exponential growth curve of computer processing power, where faster change becomes increasingly noticeable. It is this faster, cheaper processing power fueling the expanding use of AI and machine learning—the primary tools of customer cognition.

Noted professor Thomas Davenport co-authored an Harvard Business Review article a while back titled "Why Companies That Wait to Adopt AI May Never Catch Up." The premise that Davenport put forth reflects the new retail environment: AI capabilities are so powerful that early adopters may open up such a performance gap with their slower competitors that the followers may never catch up.

Imagine machine learning, a subset of AI technology, unleashed on big customer data. The model ferreting out that a certain group of shoppers are at risk of defecting from the retailer next week. Or the model discovering why, of all new shoppers coming into a retailer to shop for the first time, only a small portion of them return again and go on to become regular customers. Or the model understanding at an individual customer level which products to promote at specific prices to maximize share of wallet and lifetime value.

This, and far more, is what customer cognitive retailers are working on as they emerge into a post-pandemic world. A world demanding real-time digital engagement with shoppers seeking the latest information and avoiding germ-laden paper ads. A world where digital success requires contextual relevancy and irrelevant mass promotion seen as spam.

Opportunity Lost

I have spent many years of my life as a retailer so I hopefully have more empathy than most for what retailers are going through during the pandemic. But we are now over a month into the COVID crisis and too many retailers are failing to provide the experiences needed to retain customers as we come out the other side.

Case in point: I placed an order through Ralphs (Kroger) on April 7 and was told the first delivery window was Sunday, April 12, Easter. Finding this curious, I confirmed the store would be open and Instacart shoppers (Ralphs uses Instacart for delivery) would be working. All was fine until late Saturday night, April 11, I received the attached text from Instacart telling me my order was cancelled. That was it. No offer to reschedule. Nothing. And nothing from Ralphs. No message, no offer to reschedule. Just cancelled. Happy Easter! Better luck next time.

Another example: My daughter, who lives nearby, placed an order through Ralph’s, again using Instacart for delivery. The order was to be delivered Tuesday, April 14. Instead, my daughter found her groceries left outside the garage door, having been dropped there late the night of April 10th, days before they were supposed to arrive. No communication, no notice from Ralphs or Instacart. And, the order contained fresh meat and frozen foods. Surprise!

Now clearly both of these examples lay responsibility at the feet of Instacart. Instacart has quickly hired thousands of shoppers as it tries to staff up, and no surprise that training has suffered. But, ultimately it is the retailer that will bear the blame. In both cases, the order was placed through Ralph’s site (not via Instacart) so Ralph’s was the merchant, Instacart simply the delivery.

Now let’s turn to Meijer and ShopRite. An article from Path to Purchase Institute on April 7 explains that both retailers announced that online shoppers will have to wait ‘in line’ to shop online. Waiting in line at the physical store is not bad enough, now we have to wait our turn online. Shoppers at these retailers are directed to a ‘waiting room’ until it’s their turn, and then they have only 15 min to shop. Take a minute longer and you’re kicked out. That’s certainly friendly customer service.

Really retailers? In this world of cloud-based web services, and the ability to instantly scale online capabilities, you cannot scale your websites to handle the traffic and instead put your shoppers into a virtual waiting line? And then give them only 15 min to shop, when the user experience you provide leaves much to be desired, such as finding out at the end of your shopping experience there are no delivery slots available?

Amazon is not without its headaches as spiking demand outstrips supply. The company just announced that it too is starting an online grocery shopping waitlist. But there is a subtle and very significant difference: It is only new shoppers that will go on the wait list, shoppers granted access as Amazon continues to grow capacity. Existing Amazon customers, especially Prime members, are getting priority. I personally think this is smart, Amazon is rewarding loyalty. These will be the types of things remembered when we come out the other side of the current crisis. What has Ralphs done to help me during the crisis, even though I’ve been a loyal and very profitable customer for years? Nothing.

Do traditional retailers really understand what is happening? At a time when Ideoclick reports Amazon is picking up an incremental $3-4 billion a month in revenue AND transitioning an estimated $1 billion of that EACH MONTH to the company’s Subscribe & Save, Alexa Reorder, and personalized recommendations, the best traditional retailers can do is cancel orders at the last moment, leave perishable foods outside overnight without notice, and put shoppers in virtual waiting rooms online?

These experiences are going to quickly outweigh whatever loyalty shoppers may have had to these retailers prior to the crisis. Convenient location doesn’t matter when shopping online. Favorite brands are quickly forgotten when I can’t get basic service.

There are some bright spots. Hy-Vee was able to create and launch their Mealtime To Go program in less than two weeks, providing prepared meals for purchase online or delivered to the customer’s car. Now that’s innovation in realtime that’s focused on the customer.

Or Drizly, an online shopping service for alcoholic beverages. Similar to GrubHub, Drizly represents local merchants online to sell and deliver beer, wine, or liquor - often in a matter of hours. And what’s more impressive: Drizly is able to tell you in realtime the availability of any given product at any of the retailers they have in their network. Now that’s a good user experience. Can’t seem to get food when promised but thankfully we can get wine.

And here’s another kicker. Walmart, the retailer many have derided for destroying local communities, has put community front and center from early on in this crisis according to an article in Forbes and evidenced by the Walmart app being the number one shopping app to be downloaded for two weeks straight, topping even Amazon by 20%.

Supermarket retailers have a once-in-a-lifetime opportunity to build true customer loyalty - loyalty based on service, not based on price and promotion - and it is being squandered.

A Retail Mindstep like None Before: The COVID-19 Crisis

Mindsteps, a construct created by astronomer Gerald Hawkins (no relation) several decades ago, refer to irreversible shifts in thinking that have shaped humanity; things like the development of imagery, writing, mathematics, the printing press, television, and computers.

In similar fashion, retail mindsteps refer to key developments that have shaped the massive fast moving consumer goods retail industry, such as the self-service store, product scanning, and, more recently, artificial intelligence. The ever-faster growth of technology fueled innovation is hastening the pace of these retail mindsteps.

And now we have the Covid-19 crisis - a mindstep like none before - that is happening just as key exponential growth technologies are converging, driving even greater acceleration in tech-fueled transformation and disruption. The confluence of Covid-19’s impact on people’s behavior with paradigm-shifting technologies will create indelible change across the massive retail industry.

Take, for example, the robots we see roaming the aisles in a growing number of stores. Some of these robots are doing more than scanning for out-of-stocks and pricing errors; they are using computer vision, AI, and machine learning to create a digital doppelgänger of the physical store. Why is this important? Because other technologies like 5G networks, big data, and AI, are converging to power explosive growth of augmented reality, a technology that overlays digital graphics and information onto the real world.

Gartner states that 100 million consumers will be shopping in AR online and in-store this year (2020). What’s going to drive this growth? Apple, Samsung, and other tech firms are poised to bring AR glasses to the market as consumer products, fueled by apps and development tools. Apple CEO Tim Cook, in a first quarter earnings call, claims that AR is going to pervade our lives. "This is the reason I'm so excited about it," Cook said during the call. "You rarely have a new technology where business and consumer both see it as key to them.”

Imagine a shopper in-store seeing information about the bottle of wine they just picked up appear in a window in the corner of their vision, providing information about the vineyard, the grape varietals, vintage, and more. Or the shopper heading down the baby aisle seeing personalized promotions and pricing appear on the retailer’s private label diapers, wipes, and formula. Or the shopper looking at the fresh salmon in the seafood case being able to virtually browse recipes for dinner that evening.

But for retailers to participate in this exciting new world, they must have the digital foundation; namely, a digital duplicate of the physical store. That’s why what those robots are doing is so important.

Historically, changes in consumer behavior occur over time, often in sync with the adoption of new capabilities (think the shift to online shopping) or pushed by economic conditions (think greater couponing after the 2008 financial crisis) . But rarely have we seen such a fast, massive shift in consumer behavior as that caused by the current Covid-19 crisis. The profound, simultaneously shared experience of quarantining and social distancing has collided with people’s need for social interaction and, taking advantage of new technologies, driven the need for community online. The desire - need - to connect virtually is strong as far-flung family members connect via FaceTime and business now Zooms. Even happy hour has gone online as we virtually convene with old friends back on the east coast over drinks.

This fundamental change in behavior will carry over into a post-Covid-19 world, as a large number of shoppers will avoid going to the brick & mortar store, having learned how easy it is to shop online. AR will be just as powerful at home, creating virtual shopping experiences, food prep ideas and instruction, cooking directed by a virtual chef, and more.

But we’re not done yet. The current crisis has, once again, made the local brick & mortar grocery store the hub of everyday life. And now retailers have a profoundly unique opportunity to take advantage of the confluence of new technologies and the mass migration online to position themselves as the hub of a virtual community in their marketplaces.

The possibilities go far beyond online shopping. Think of virtual wine tastings (already starting). Think of virtual cooking classes - supplemented with AR tech so the store’s chef is seemingly alongside the customer in their very own kitchen. Virtual tours of farms where the store sources local produce. The opportunities are endless.

In physics, accelerators like the Large Hadron Collider (LHC) at CERN, in Geneva, smash atoms together using great force to discover new particles, to give scientists new understanding of the universe. Like the LHC accelerator, the crashing together of converging exponential growth technologies with new consumer behavior caused by Covid-19, will create untold new possibilities for retail as we come out the other side of the current crisis. And now is the time to begin thinking about them.

Identity Management in Retail: Its Time Has Come

Identity management is set to explode as archaic state laws governing age-restricted sales of alcohol and other products play catch-up as a growing number of shoppers—and the merchants serving them—move online.

The proliferation of grocery retailers and convenience stores online has given shoppers the headache of yet more usernames and passwords to manage across sites and apps. But traditional online identity management does not provide for age verification in a meaningful way, thus presenting a high hurdle for the sale of alcoholic beverages and other age-restricted products.

In those few locations where online ordering of alcohol is permitted, the order fulfillment efficiency retailers are seeking is disrupted because workers have to validate age when delivering online orders to the home or pick up in the parking lot. And these identity-management challenges are just those in the online world.

We can’t forget about every retailer’s nightmare: having some inexperienced cashier hurriedly checking shoppers’ driver's licenses at checkout to verify age and failing to prevent an underage sale. The issue of verifying a government-provided document such as a driver’s license is made only more challenging by the ease of forgery using today’s available technologies.  And, lest we forget, the issue of stolen identities and payments continues to grow for retailers.

In business, and especially in retail, existing identity management continues to be reliant on paper-based forms issued by the government—things such as driver's licenses and passports. But these analog instruments are almost antiquated in today’s digital world. Technology can provide far better alternatives, far better suited for an omni-transactional world.

Biometrics is part of the answer. Smartphones are now offering either finger scanning or facial recognition to validate the user. Companies such as Apple and Samsung are tying that biometric validation to payment, reducing fraud and speeding checkout. It was recently reported that Amazon is testing a palm scanner for access to the company’s automated Amazon Go stores and tying it to payment. But while improving payment security, these solutions do not address age verification.

Clear is a biometric-based identity service used at more than 65 airports, stadiums and venues across the U.S. that speeds a user through security. Once Clear validates a user’s license or passport and other identification, the company ties that identity to either a retina scan or fingerprint scan. As a Clear customer arriving at the airport, all I have to do is scan my fingers or eye to prove I am whom I'm claiming to be, and I am whisked to the front of the security line. The Clear service is expanding: Hertz has a partnership enabling customers to use Clear for validation and then just drive away.

While Clear is expanding its footprint, its dependency on dedicated hardware makes the solution’s extension into retail problematic. And while Apple, Samsung and other tech companies may someday get into the identity-management space, an interesting young company out of the U.K. is already making retail inroads.

In what the company believes to be a precursor to expansion into the U.S. market, Yoti has been approved as a digital ID for age-restricted purchases such as energy drinks, lottery tickets and tobacco products by the U.K.’s Association of Convenience Stores (ACS). Yoti uses the biometric facial scanning capability in smartphones and access to government services to authenticate driver’s license and passport identification documents. In the store, Yoti uses location technology along with the user’s smartphone facial scanning to authenticate the shopper and pass a validated age verification back to the POS terminal.

Along with passing back to the POS a validation of age, Yoti’s digital wallet can hold and send across to the transaction loyalty and payment details. And Yoti doesn’t stop there; think about all the interactions a consumer has during a typical day in which they have to “prove” identity. Workplace access, school access and travel are just some of the things that come to mind. And let’s not forget about healthcare. Along with verifying identity to receive service or prescriptions, Yoti’s digital wallet can pass across health insurance details.

Companies such as Clear and Yoti are providing identity-management solutions for omnichannel retailing, but state governments must now catch up. Some states are moving in the right direction and are in discussions with solution providers like these. Other states though continue to operate in the world of yesterday, leaving in place hurdles retailers and shoppers must overcome.

Three Innovation Imperatives for Retailers

The transformation of brick-and-mortar retail to the new digital world is not without its trials and tribulations. Walmart has recently sputtered as the company consolidates or divests digital initiativesgained over the past couple years. The Kroger Co.’s recent financial performance has been impacted by massive investments in e-commerce and numerous other digital efforts.

Some retail executives have sought solace in these well-publicized stumbles, believing it is validation for a “go slow” strategy, reinforcing once again the time-proven value of being an innovation follower. For decades, grocery retailers have achieved success by not being a leader, happy to let someone else bear the pain of new innovation.

But when considering the truly transformative developments that have occurred in grocery retail over the past 100 years, there’s really only three: the development of the modern supermarket, where customers shopped for themselves; the development of the barcode and product scanning; and the development of customer-identified transaction data.

Now think about what’s happened in just the past two years. The Amazon Go store opened to the public just 24 months ago. Robots are now roaming the aisles of a growing number of stores. AI-powered pricing and promotion optimization tools are used by an increasing number of retailers. We can pay with our phones or watches. And personalization is everywhere. We have hit the inflection point on the exponential growth curve of tech-fueled innovation, and tomorrow will no longer resemble today.

If this explosion of innovation fails to fire up some urgency, consider this Harvard Business Review article from Thomas Davenport, noted professor and author, who said: “By the time a late adopter has done all the necessary preparation, earlier adopters will have taken considerable market share—they’ll be able to operate at substantially lower costs with better performance. In short, the winners may take all and late adopters may never catch up.”

While retailers seem inured to the forecasts of store closings, the reality is the trend continues unabated. “More than 9,000 stores closed in 2019, way up from the 5,800 that closed in 2018,” according to Coresight Research, New York. Well-known grocery industry adviser Thom Blischok projects that 30% of existing supermarket chains will be gone by 2025. And UBS Securities of New York states that 75,000 stores will go away by 2026 if online retail grows from today’s 16% of industry sales to 25%. This is all happening in real time as Lucky Markets closes most of its stores and Fairway Market has filed for Chapter 11 bankruptcy protection, under which it intends to conduct an auction of all its assets.

Against this backdrop, many retailers are simply not moving aggressively enough. I believe there are three imperatives for retailers if they are to survive, let alone thrive, in the near future:

Prepare for the Age of ‘i’: As I wrote about in my latest book, "Retail in the Age of ‘i’," the world is increasingly tailored to each of us individually. The personalization we have come to take for granted online is quickly manifesting in the physical world as 3D printing and product customization spread. Retail, and especially food retail, is no exception. Shoppers, increasingly using their smartphones, don’t have the tolerance for spam—and that’s what irrelevant offers and promotions are. Real-time contextual relevancy is the new mandate.

Think about the massive changes required in systems, processes and practices across the retail organization as the business model shifts from a century of product-driven mass promotion to a world focused on growing the individual customer’s share of wallet and lifetime value.

Innovation as a process: We talk a lot about the need for retailers to view innovation as a process. Specifically, there are four steps:

• Source: A system for sourcing, discovering and becoming aware of new innovation. There are hundreds of new solutions entering the retail industry each year, and the pace is growing. Any one of those can trigger a disruption in operations, marketing or business models. How are you sourcing new capabilities when the traditional trade show exposes you to only a small fraction of new solutions?

• Curate: Retailers need a way to curate those hundreds of new capabilities to focus only on those that are most relevant to the specific retailer. How is this being done? Who is doing it?

• Engage: What is your process for learning about a solution provider’s capabilities and how they may benefit your company? How do you efficiently and effectively communicate the potential of new capabilities across your organization?

• Grow: Transformation is happening across the supply chain and across every operational area. Retailers need to define a process and establish teams to test, pilot and deploy new capabilities across their organizations at an ever faster rate.

Organizational transformation: Remember playing the telephone game when you were a kid? Someone starts by whispering a word or phrase to the next person, who then passes it on to the next person, and so on, until the last person’s iteration of the message bears little resemblance to the original. This is how innovation often happens today inside organizations. One person seeing something at a trade show and then telling someone else about it. That person then sharing it with someone else, maybe in a different department. Eventually, the original vision is lost.

Retailers should stop playing the telephone game and focus on how new innovative ideas are socialized within an organization with a goal of making faster, more effective decisions around new innovation. This is not about simply doing what you do today faster, it is about learning techniques to facilitate innovation.

In today’s world, speed counts.

10 Resolutions for Retailers in 2020

As we begin a new decade, I’d like to offer up a handful of resolutions retail industry executives may want to adopt:

Resolve to reflect on the implications of the exponential growth of technology every day.

We have hit the inflection point on the exponential growth curve of computer processing power, and tech-fueled innovation is getting faster, more pervasive and more noticeable. We have all grown up in a world of much slower, more linear change, and that mindset is what makes adjusting to a new world of exponential change so challenging. Retail executives must remind themselves every day that new capabilities change the very nature of competition and what’s possible. Tomorrow may no longer resemble today.

Resolve to make innovation a process within your organizations.

The historical slow pace of change has caused many retailers to view deploying new capabilities as discrete projects; get one done and then move on to the next. That approach no longer works in a world of increasing change across every part of a retailer’s operations and even across the supply chain. Innovation must be viewed as a process, a process that must get continuously faster to keep up with the growing pace of change.

Resolve to make the discovery and awareness of new capabilities part of your innovation process.

Retailers have historically relied on going to trade shows, or vendors bringing in some new capability, to learn what’s new. That approach is no longer effective when there are hundreds of new capabilities entering the industry each year. To provide some sense of scale, the CART team reviews well over 1,000 new solution providers entering the retail industry each year, and the number is growing—fast.

Resolve to innovate faster.

Retail organizations must adapt to this new world of constant, increasing change by learning how to not only discover but also evaluate, test and deploy new capabilities at an ever faster rate. Trying to get your existing people and processes to move faster just won’t work. Retail must invest in new training, education and even organizational structures to succeed going forward. Culture change is not easy, especially for large, unwieldy retail organizations, but it is necessary. Training and education must be reinforced through new measures of success and new compensation structures.

Resolve to be strategic, not reactive.

Retail is tactical, execution of operations all-important in remaining successful in a high-volume, low-margin business. This focus on tactical operations has worked for many successful retailers in an era of slow change. But that’s no longer the world we live in. Strategy and clear road maps are vital to success. I’m not talking about the fabled five-year plan; in today’s world of ever-faster change, five-year plans can be irrelevant before the ink dries. Instead, focus on what is NOT going to change and expend resources in that direction. Amazon CEO Jeff Bezos is noted for saying that the one constant in retail is the customer, and we can all see how a focus on the customer has helped his company.

Resolve to understand that new capabilities can change the very nature of retail competition.

New capabilities, especially real-time customer-cognition platforms and AI models of customer behavior, are already changing retail competition from a century of product-driven practices to a new world of customer-focused competition. Consider what changes when you measure success by customer share of wallet and customer lifetime value instead of category and department sales. This is where Amazon and other new competitors have the real advantage, not having to overcome decades of product-first thinking.

Resolve to develop customer cognition.

Nearly half of the top 50 grocery retailers lack any meaningful amount of customer-identified transaction data. And even those retailers with customer data, frequently gathered via loyalty programs, struggle with data silos that prevent a clear, comprehensive and meaningful understanding of each of their shoppers. Make 2020 the year to gain customer cognition, bringing together in one platform all sources of customer-related data that powers true customer-first retail.

Resolve to provide shoppers a truly seamless, cohesive digital experience.

A growing number of retailers are realizing that it’s time to bring together the disparate digital experiences they have today to provide shoppers a seamless, comprehensive experience. Retailers understand that online shopping is only one activity in a larger world of digital customer engagement and that the digital opportunity now extends into the physical store.

Resolve to provide contextually relevant, real-time marketing to the individual customer.

As I addressed in my latest book, "Retail in the Age of i," the world is increasingly becoming tailored to each of us individually, and retail is no exception. Shoppers today expect, even demand, contextually relevant marketing from the merchants they do business with. Doing this successfully requires customer cognition, AI-powered marketing capabilities and real-time platforms.

Resolve to lead, not follow.

Given the thin margins retail works on, most retailers have been content to let others have the pain and cost of deploying new capabilities and then following once the new is proven successful. This was a successful strategy in yesterday’s world of slow-paced innovation, but today, this "follower" approach can lead to disaster as leaders implement new capabilities that open up growing performance gaps that can be difficult, if not impossible, to overcome. This is especially true with the use of (real) AI-powered capabilities in critical areas such as demand forecasting, customer cognition and marketing relevancy.

Grocery E-Commerce 2.0 Update: Little Progress

Eighteen months ago, I wrote a piece about why retailers’ first-generation efforts to move online were not enough, that many retailers had jumped into e-commerce without a solid, comprehensive digital customer engagement strategy. And sadly, 18 months later, it appears there has been little progress.

There is no doubt that shopper demand for online grocery shopping is real. Study after study shows a significant number of shoppers have tried buying groceries online. The issue is not demand; instead, it is how well grocery retailers are delivering against that demand. Traditional retailers’ online efforts have been half-hearted. Online shopping is not yet profitable, and operating physical stores is more comfortable. But if traditional supermarket retailers fail to deliver what shoppers are demanding, someone else will.

A recent exploration across a dozen or so websites of well-known regional and national retailers shows the sad state of online grocery shopping and highlights the challenging overall customer digital experience. For example:

• On many retailers’ websites, it is impossible to view the store-level product catalog; all you can view are the weekly ad items and specials. To search for and view products, you have to choose “online shopping,” which sends you down a different path.

• The information available to the shopper is dependent on the path initially chosen (shop online or peruse ad items). Under “shop online,” some retailers provide filters such as organic, vegan and gluten-free to use in helping shoppers find relevant products. When searching ad items and specials, those filters are missing.

• Under "shop online" on one well-known retailer’s site, many of the products were marked “only available in-store,” which makes one wonder why they are even presented.

• Transitioning across devices while shopping is even more daunting. The master of this seamless shopping capability is Amazon; a shopper can begin an order on their desktop computer and shift to their tablet and then to their smartphone, all without missing a beat. The shopping cart is updated in real time.

If that’s not enough, retailers are missing a massive opportunity to create the digital equivalent of impulse purchasing by suggesting relevant products personalized to the specific shopper. A growing number of the largest retailers have turned to monetizing their website traffic through display ads sold to CPG brand manufacturers. Sure, presenting hamburger rolls to a shopper who has just placed hamburger patties in their shopping cart makes sense—unless the shopper happens to have a gluten intolerance.

The first generation of online shopping—e-commerce 1.0—created siloed experiences as retailers turned to one of the many online shopping solution providers happy to supply an end-to-end solution, from the digital front end to order management and fulfillment. It's not a bad idea, but a growing number of retailers are realizing that they have created a separate silo of engagement, apart from their other digital offerings. Other retailers simply outsourced online shopping to a third party, handing over valuable data and customer relationships.

A growing number of retailers are at last coming to the realization that shopping online is just one activity within broader, more comprehensive digital engagement. As I wrote 18 months ago, seizing the digital opportunity means taking a different view of e-commerce.

The e-commerce 2.0 retailer separates the all-important customer user experience from the operations of order fulfillment. The e-commerce 2.0 retailer owns the entire digital customer experience, retaining valuable customer relationships while being able to provide new services such as organizing the customer’s list by aisle for their favorite store or real-time product and recipe suggestions when the shopper is in the store.

The shopper is able to flag favorite products, receiving a notification whenever the products go on sale or a coupon is available. The shopper can browse the entire store-level product catalog using powerful search and filter tools to quickly find products of interest. Expanded nutritional information is available along with sustainability info. The shopper can self-identify specific health conditions that are used to drive recommendation of beneficial products powered by leading-edge nutrition science. The entire experience is contextually relevant, with personalized search and relevant recommendations to aid in product discovery. Lastly, placing desired items on the shopping list, the shopper can make the decision to shop for themselves or to send the list to the store for click-and-collect or home delivery.

Implementing e-commerce 2.0 requires a retailer to overhaul many of their legacy systems to provide real-time insight to store-level inventory, implementing predictive and strategic personalization and contextual relevancy capabilities; developing a comprehensive, seamless digital front end; and securing granular, expanded product nutrition data.

Amazon gets this and is already moving to more tightly integrate the Whole Foods online shopping experience with the primary Amazon platform used by tens of millions of shoppers. Rather than have online grocery shoppers have to figure out a new experience, Amazon is enabling shoppers to peruse the product offerings of their local Whole Foods store, filter the selection by a growing number of special dietary needs and interests and place products in the Amazon cart many are familiar with. Tied to expedited two-hour delivery in many markets, this is a powerful combination.

Supermarket retailers must realize that they are no longer in charge of innovation—shoppers are. And shoppers are rapidly adopting new technologies and growing accustomed to new experiences provided by digital deities such as Amazon. The opportunity to powerfully merge the physical and digital worlds of grocery shopping is awaiting those retailers ready to truly place the customer at the center of innovation.

Three Keys for Mastering Innovation

As anyone who attended CES or NRF in the opening weeks of this year can attest, tech-fueled innovation is speeding up. We see robots everywhere: digital video capabilities that are poised to transform brick and mortar store operations, automated delivery vehicles and far more. Traditional retailers are fast becoming overwhelmed.

I’ve spoken with a number of top 25 retailers and some of the largest wholesalers in the past few weeks, and each one of them is slammed, unable to even think about looking at another project, and are effectively saying the same thing: “We have too much on our plate now; let’s revisit this in a few months.”

And what happens in a few months? It gets pushed back again. Retailers, even large ones, are already tapped out trying to keep up with new innovation, and yet we’re just getting started.

This pace of change and disruption is enough to make retailers become apoplectic with frustration that they can’t keep up. And yet they must. In a world of exponential technology growth, tomorrow no longer resembles today.

But here’s the bigger problem: Retailers are trying, and many of them are creating new positions, new departments and new business units charged with leading their companies' innovation initiatives. But retailers remain stuck in a linear world with how they think about and deploy new capabilities.

Inevitably, retailers focus on the “what”—and by focusing on what specific solutions they need to learn about and implement, are quickly overwhelmed, leading to the inevitable “Let’s come back to this in a few months because we’re too busy” syndrome. In today’s world, there is always going to be another capability coming along, and at a faster and faster pace.

Instead, senior executives should be focused on understanding the “why,” to understand that this ever-growing pace of innovation is a result of the exponential growth of technology. And with that realization, they should focus on adapting their organizations to succeed in this new world. In a time of exponential growth, moving too slowly can mean being left behind and unable to catch up.

Scott Emmons, former head of innovation for Neiman Marcus, tells it like it is: “I can say with confidence that traditional players in the U.S. and abroad are not innovating the right way. Processes are broken, execution is too slow, politics stalls decision-making and resources are too scarce.”

Here are three things retailers can do:

1. Manage Innovation as a Process

Think about what happens today. Retailers go to trade shows or rely on their share groups to learn about new innovation. While all good, this approach provides a very limited view of new capabilities.

Some larger retailers will set up their own innovation labs, at times partnering with universities or tech incubators; Target’s partnership with Tech Stars is a good example. While not a bad idea, this approach suffers from providing the retailer a biased and limited view of new capabilities.

In a world in which hundreds, or even thousands, of new solutions and capabilities are flooding into the retail industry each year, those approaches simply are not enough. The first challenge for retailers is gaining awareness and education around of all these new capabilities.

One new approach, quickly becoming a best practice, is offered by Retail Tomorrow (a part of GMDC). The group works with a retailer’s executive team to understand specific areas of challenge, interest or opportunity, and then curates the most appropriate cutting-edge solutions sourced from around the world, to come together with the retailer’s team for a day of education. Innovation happens inside those conversations.

2. Develop an Innovation Culture

A few months back, Amazon released its quarterly results. Looking past the financial information, Amazon announced 42 major product and service releases in that three-month period. Yes, that’s 42 major product announcements in three months. The average retailer is overwhelmed by making one major product or service announcement in that time.

Most every retailer today understands the importance of technology-fueled innovation. But to break through the growing logjam of new innovative capabilities, retailers must create a culture of innovation. And this starts at the senior executive team level.

Retail executives must shatter the old “We can’t do that” or “We’ve always done it this way” thinking if they have a hope of surviving in this new age of innovation. Denny’s (yes, that Denny’s) regularly brings in students, and people outside their industry, to meet with the executive team, all in pursuit of shaking up staid thinking. Innovation doesn’t just happen; you have to work at it.

3. Make Your Organization Agile

Agile is a project management philosophy often used in software development. It's characterized by dividing tasks into short phases of work, and frequent communication to reassess and continuously adapt.

The Agile movement is increasingly being applied to organizations as a way to help companies adapt and succeed in the new world of ever-faster change and disruption. The easy way to think about this is to consider the traditional organization as a machine that is very structured and process-driven. And, like most machines, it performs well when applied to a given task or job but quickly breaks down when used for something else. A tractor works fine in the field but doesn’t do too well on a racetrack.

The new paradigm is to consider the organization like a living organism, able to quickly respond to its environment. Amazon is a great example of this, able to innovate quickly across many disparate areas to bring new products and services to market fast. And Amazon is transferring that agile philosophy to Whole Foods.

(Published in Winsight Grocery Business; Three Keys for Mastering Innovation)

Real-Time Insights on Amazon Prime and Whole Foods Integration

It’s been a year since Amazon acquired Whole Foods Market, triggering a grocery industry innovation war and a stampede online. While there has been increasing activity since then, the actual impact of Amazon’s entry into brick-and-mortar retail has been unknown … until now. The integration of Amazon’s Prime loyalty program to Whole Foods has accelerated changing shopping behavior, and a recent study by Sense360 brings to light powerful insights about just what’s going on.

And traditional supermarket retailers have good reason to be concerned. With an estimated 80 million Prime members in the U.S. and an estimated 20 million of them shopping at Whole Foods Market, the potential impact Amazon can have through this integration is massive.

Here are the top 5 insights shared by CART and the Sense360 research team in the recent webinar:

Amazon’s integration of its Prime loyalty program at Whole Foods is designed to create an everyday benefit for Prime Members, and it appears to be working. From the behavioral data gathered by Sense360, Amazon shoppers are 27% more likely to visit Whole Foods than non-Amazon shoppers. Both Whole Foods and Amazon shoppers appreciate value, with both groups indicating “value for money” and “good everyday prices” as top motivators. 

Through its Prime integration at Whole Foods, Amazon is creating a powerful, self-reinforcing value proposition—a flywheel—that’s driving business. By offering new discounts and savings at Whole Foods only for Prime members, Amazon is acquiring new Prime users, who not only continue to shop at Whole Foods but are in turn drawn into Amazon’s greater ecosystem. At the same time, Amazon is attracting a growing number of existing Prime members into the Whole Foods stores because of the new savings, all of which creates a powerful competitive advantage that other retailers are challenged to address.

The impact of this strategy is driving significant lift in traffic for Whole Foods, especially from Amazon Prime members. According to the Sense360 research, 90% of Prime members who participated in Whole Foods deals planned to take advantage of them again on future shopping trips. Research data also showed that Whole Foods increased its conversion rate; the percentage of all grocery shoppers that visited Whole Foods grew from 4.8% to 5.8%.

Amazon’s strategy is affecting almost every retailer—and the pain has just begun. The impact of Prime at Whole Foods is still early, and yet it is already helping Whole Foods gain share of customer and share of market. Factor in Amazon taking Whole Foods’ private label products online, making shelf-stable products available to any shopper across the U.S., and the opportunity for growth explodes. Amazon is now a direct competitor to every retailer and, increasingly, to well-known consumer product goods manufacturers.

By extending Prime into Whole Foods, Amazon is now collecting shopper-identified grocery purchase data. Put together with the 20 years worth of data collected across Amazon’s platform, Amazon most likely has the largest trove of shopper data of any company in the U.S. Data-decisioning is at the heart of how Amazon operates, and retailers attempting to compete without rich shopper data are increasingly disadvantaged.

Amazon is well known for personalizing each interaction with online shoppers, presenting products it believes you are interested in from past browsing, searches and purchases. It is only a matter of time until this personalization begins to make its way into Whole Foods’ marketing now that Amazon is gathering shopper-identified transaction data via the Prime integration.

And Amazon will not stop at just marketing relevancy; they will focus on what I think of as strategic personalization, tailoring the information, products, and even pricing, to the individual shopper with a goal of maximizing spending, shopping frequency and retention over time. Very few retailers have the data and systems capabilities to go to market this way; Kroger is perhaps the most attuned to this approach, having focused on precision targeted, personalized promotions for the past decade. But Amazon’s entry onto the grocery field of battle will give Kroger a fight as both companies look to leverage shopper data.

By integrating its Prime loyalty program into Whole Foods, Amazon has fundamentally changed grocery competition. And the battle is just getting started.

(Published in Winsight Grocery Business; Real-Time Insights on Amazon Prime and Whole Foods Integration)

Amazon Prime at Whole Foods: What’s the Impact?

When Amazon acquired Whole Foods a year or so ago, many industry pundits speculated that Amazon would extend its Prime loyalty program to the brick-and-mortar grocer. While it took some time to accomplish the necessary systems integrations, Amazon did just that: It rolled the program out in the past couple of months, providing special discounts and savings to Prime members shopping at Whole Foods.

And integrated it is. As a Whole Foods shopper, I was struck by the good job Amazon has done executing the integration of Prime across the store. From signage at the entrance and other points around the store touting the benefits of being a Prime member, to signage on sale products announcing savings for Prime members, to the training of staff and cashiers, the execution in the store we shop at was well done. Downloading the Whole Foods app, I signed in using my Amazon credentials; a QR code was created that is scanned at checkout, identifying me as a Prime customer and triggering the special prices and deals.

As WGB recently reported, Prime is being well-received by Whole Foods shoppers. “Prime members have adopted this [Whole Foods] benefit; it's one of the fastest rates we've ever seen for a Prime benefit,” Amazon CFO Brian Olsavsky said in a conference call reviewing Amazon’s second-quarter financial results. “They've already saved millions of dollars on everything from seasonal favorites to … popular daily sales.”

Beyond the obvious impact of Prime helping drive Whole Foods sales, what else is happening? What are other implications of Whole Foods being so tightly integrated with Prime?

The first, and perhaps most important, implication is data. Amazon, through the Prime integration, is now able to link purchases made at Whole Foods with that same shopper on Amazon’s broader platform. To a company like Amazon, data is everything; it is the fuel that powers the Amazon engine. Amazon will gain powerful insights by understanding shopper purchasing behavior across the brick-and-mortar store and online. And there are other implications in today’s omnichannel world of retail. Amazon, the digital deity, is a master of digital engagement, providing a seamless experience across all touch points. Is that prowess transferring to the Whole Foods experience?

CART is releasing an exclusive report powered by Sense360 exposing powerful insights on the impact of Prime at Whole Foods, including:

Change in Whole Foods market share.

How Prime Day impacted Whole Foods and competing retailers.

Do Amazon app users visit Whole Foods more often?Whole Foods' overlap with other grocery retailers.

Insights by customer segment.

https://www.winsightgrocerybusiness.com/retailers/amazon-prime-whole-foods-whats-impact

Customer Touch Points and the Human Experience

I was visiting someone in the hospital the other day and, looking about the room, noticed an Amazon Echo installed on the wall opposite the hospital bed. There was a sign under the device telling patients that they could ask Alexa to call their nurse or make other requests. In speaking with the nurse I learned that Amazon is working with the hospital in a pilot to test the application of Alexa in the hospital environment. Beyond the hospital, Amazon is pushing Alexa into the hospitality industry, where a growing number of hotels are putting the digital assistant in rooms so guests can request services just by asking.

While this alone is fascinating, and it illustrates just how far and how fast voice-based technology is moving, it really opens up a larger discussion on customer touch points. Retailers today have a fast-growing number of ways to connect with a shopper, inside and outside the store. And, more than ever before, retailers need to be mindful of the human experience they are providing across those myriad touch points because in today’s digital world, user experience is everything.

Consider the many ways a retailer can touch a shopper: In the digital world, that includes the website, mobile, email, text, social media and more. A Deloitte study calls out that “more than 60% of customers interact through multiple channels and irrespective of time, place, device or medium, they expect consistency.” In the store, retailers can engage using kiosks, mobile, and the POS. We can’t forget about print, including the weekly ad and direct mail, along with TV, radio and other mass channels. And of course, just like in the hospital, voice will soon be everywhere.

A good exercise for retail marketers to go through is to create an inventory of all the touch points they currently use, and then alongside that create a list of other touch points that could be deployed or used. Once the list of existing touch points is created, work to understand which shoppers are using each and why. For example, do high-value shoppers regularly use your mobile app? Do more convenience shoppers gravitate to your website?

Don’t forget about your associates; often they are the only interaction the shopper has with your business. The Wall Street Journal had an article recently about how airlines are arming their flight attendants with extensive data on their flyers to facilitate service on board. As a very frequent flyer, I have experienced this firsthand: The attendant addressed me by name and asked if I would like my usual drink. Retailers have untapped potential to arm in-store associates with product and customer intelligence via smartphones to help them provide better service.

One of the largest challenges traditional retailers face is having disparate capabilities and an inability to provide the seamless digital experience across devices and touch points that today’s shoppers are expecting … and demanding. Another Deloitte study (Customer Ambitions Delivered) says, “Research shows 89% of market leaders expect to compete primarily on the basis of customer experience - a number that has jumped from 36% four years ago. As more companies realize the benefits of engaging with their customers along every touch point, customers are growing accustomed to top-of-the-line experiences. Modern customers expect a tailored experience—one with flexible purchasing options, painless technology integrations, and ample opportunities to provide feedback if they receive stellar or subpar products or services.”

Retailers can then extend the inventory of the touch points exercise, thinking through the “mission” of each touch point and its role in growing retailer brand awareness, shopper acquisition, growth and retention. Core to this is making every interaction across each touch point contextually relevant to the shopper. Again, the human experience is critically important.

Every customer engagement at every touch point provides an opportunity to learn more about the shopper and, for digital touch points, provide a more personalized experience. To do this requires identifying the shopper as quickly and easily as possible so that you respond with relevant offers and information. Increasingly, we are seeing digital displays and signage in the store incorporate cameras and other sensors able to provide additional analytics and insights to customer behavior.

Best practices:

Create and maintain a list of customer touch points used. Consider grouping the touch points such as digital, print, in-store, etc., to better understand your capabilities.

Create a "mission" for each touch point, which forces you to think through how it can be used to support shopper acquisition, growth and retention.

Work to create a platform infrastructure that "feeds" each touchpoint to create the seamless—and relevant—experience shoppers want.

Use every touch point and customer engagement to learn, improving the relevancy of the engagement and learning to make the touch point more valuable.

Any digital touch points should be fed by real-time intelligence reflecting the latest interactions the shopper has had with you. https://www.winsightgrocerybusiness.com/retailers/customer-touchpoints-human-experience

The Amazon Doctrine and the Innovation Arms Race

Amazon CEO Jeff Bezos has long understood the value of being out in front as technology innovation fundamentally alters the rules of competition. While other companies have long based competitive strategy on technology, what’s different is this point in time: We are at the inflection point on the exponential growth curve of computer processing power where noticeable change happens at an ever-increasing pace. Amazon is leveraging its innovation leadership position harnessed together with its vast resources to overwhelm the traditional grocery industry, relegating many retailers to the proverbial corner convenience store.

Sound familiar? It should. In the 1980s, President Ronald Reagan, in what was to become known as the Reagan Doctrine, leveraged the powerful U.S. economy with the country’s burgeoning military innovation to launch an arms race with the Soviet Union. The result, as we all know, led to the collapse of the USSR and the end of the cold war.

Last year’s acquisition of Whole Foods by Amazon triggered a grocery innovation arms race, throwing traditional retailers into a war few were prepared for. How bad is it? As Recode recently reported, Amazon spent nearly $23 billion on innovation research and development last year (2017), up 41% from the year before—more than any other U.S. company, That’s more than Microsoft, Intel, Facebook and even Apple spent on R&D.

To put that in perspective for the grocery industry, a report from the IHL Group states: “Amazon’s 2016 R&D spending was more than the top 20 retailers (excluding Walmart) technology spending combined … and about 75%-85% of the top retailers’ IT budgets is spent on simply maintaining and upgrading existing systems. As such, retailers are completely outgunned when it comes to spending on IT.”

And yet more evidence of the Amazon doctrine in action: The battle for voice-based commerce is already over—long before most retail executives knew the battle had even started. According to USA Today, “Purchases made through devices like Google Home and Amazon’s Echo are projected to leap from $2 billion today to $40 billion by 2022.” Here’s the kicker: “Amazon is forecast to have 70% of the voice-enabled speaker market this year (2018), per Tech Crunch. By 2020, it’s projected that there will be 128 million Alexa devices installed.” Amazon is aggressively expanding the Alexa platform, weaving it into everyday life, through partnerships with auto manufactures, home appliance makers, and even Microsoft to bring Alexa into the workplace.

Amazon's Formidable Lead

But innovation spending is not the entire challenge. No matter how much a retailer may spend on innovation today, it cannot overcome the lead Amazon has built. Patent filing activity provides a view into the overwhelming power of the Amazon doctrine. Amazon received 1,963 patents in 2017 and holds more patents than any other retailer in the industry (7,096). By comparison, Walmart, perhaps the most serious traditional retail competitor, holds only 349 patents.

It may already be too late for a good number of traditional supermarket operators. The innovation arms race has gone nuclear as Kroger partners with Ocado to build automated fulfillment centers and Nuvo to use automated self-driving vehicles to deliver orders. Beyond digital disciples such as Kroger and Walmart, few retail companies have the wherewithal to invest so heavily in new innovation in an effort to keep pace with Amazon, the deity of digital.

Innovation spending aside, many multibillion-dollar regional retailers are what I think of as digitally discombobulated. Many of these companies are trying to do the right thing, investing in e-commerce, putting the customer at the center of their business strategy and launching new digital services. But too often these retailers end up with overlapping capabilities, expensive or impossible system integrations, digital silos, and fractured user experiences.

The very nature of competition has fundamentally changed and many industry executives do not yet get it.

How important is user experience? Very. My wife and I regularly order restaurant meals delivered to our home. Living in southern California, we have our choice of delivery services; DoorDash, Grubhub, Eat24, Delish, Uber Eats, and many more. Yet for all those choices, Amazon Restaurants has won nearly all our business because of a seemingly simple thing: I can track the delivery driver in real-time through the app, knowing—literally to the minute—when dinner will be at our door.

What should frighten retailers the most is that this battle is just getting started. As innovation accelerates, it is driving convergence between historically disparate capabilities and even industries. Companies such as Label Insight are using AI to deconstruct the typical package nutrition information into dozens or even hundreds of granular data points. Separately, health industry innovators are using cutting-edge data science to understand the individual person’s unique, granular nutritional requirements based on gender, weight, age and specific health conditions. At the same time, Apple is reported to be working on noninvasive real-time monitoring of an individual’s glucose levels. A well-known university is able to ascertain a person’s vitamin levels from a teardrop.

And then there’s ScriptSave, with its long history of innovation in the pharmacy space, knitting together disparate capabilities to transform and personalize the health and wellness space. Think of it as a virtual dietitian helping guide the shopper to beneficial products across the store, ultimately driving recommendations off real-time health monitoring. And then embedding this capability at the intersection of food and healthcare.

What's the Next Move for Retailers?

What are retailers to do? Is there any way to compete? Here are a few thoughts:

Think integrated platforms not point solutions. This is especially important when considering customer-facing digital capabilities. Avoid disparate solutions powering up a splintered experience; one AI “brain” should be driving personalized, relevant engagement across every channel and touchpoint.

Don’t build tech internally. Unless you are Kroger or Walmart, don’t think about building IT solutions internally; technology is moving too fast and has become too specialized. Instead, leverage advanced cloud-based solutions that provide a “technology putty”—leading edge capabilities molded to your brand and operations.

Move faster. If there is one thing that I think endangers traditional retailers more than anything else it is the slow pace at which they are moving. There is no place for five-year plans; the game will be long over by then. Remember, you are now in a world of exponential growth of innovation—speed counts.

So, is all lost for traditional retailers? Is the dominance of Amazon and the digital disciples a foregone conclusion? No, but retail executives must understand that shopper expectations now rule, that tech-based innovation is the new battleground, and that tomorrow will no longer resemble today.

https://www.winsightgrocerybusiness.com/technology/amazon-doctrine-innovation-arms-race

Leveraging Shopper Insights From Chaos to Action

Multidimensional shopper data is the new primordial ooze giving rise to powerful insights leading to increased retail performance. Novel technologies are providing new data on shopper behavior every day, inside and outside the store. So how do retailers, already overwhelmed by innovation, bring order to this chaos of data and develop actionable learning? There are three steps to successfully gaining and leveraging shopper insights.

The journey begins with simply gaining an awareness of all the sources of data, both old and new, that are available today. As e-commerce and digital engagement grow in importance, an understanding of shoppers’ digital behavior has become a cost of entry. The physical store is fast becoming digitized as video and other sensors provide views to true shopper behavior in the store in the form of shopping path, time in store, dwell time, department, aisle, category conversion rates and more. In addition, anonymous facial recognition technology provides age, gender, ethnicity and even sentiment (happy, sad, angry, frustrated, etc.) of shoppers throughout the store visit.

Third-party data from companies such as Experian or Acxiom can be used to supplement traditional customer purchase data, providing share-of-wallet measures and hundreds, if not thousands, of additional attributes that can be appended to shoppers’ profiles. Lastly, expanded product attributes provided by companies such as Label Insight power insights to lifestyles and preferences gleaned from the products shoppers purchase.

Next is bringing order to the chaos. While the most powerful shopper insights are driven by cross-pollinating data from different sources, all too often data is siloed or held in different departments, thereby creating barriers. To address this challenge, retailers should appoint a dedicated “shopper insights czar,” for which one executive would have responsibility for bringing together in one place all related shopper data available and thus create one source of truth.

Increasingly, data from a growing number of sources can be attributed to the individual shopper. Retailers often think of shopper attributes as being driven by purchases—things like spending or brand loyalty scores or discount propensity. But department, aisle and category conversion rates can also be stored as attributes for the shopper. Digital behavior provides yet more attributes: digital channels used, website pages viewed, mobile app behavior, social media use and more.

These attributes—and we’re talking about dozens, hundreds and even thousands of attributes updated and appended to each shopper’s profile—are the materiel in today’s stealth battle for shopper share of wallet waged in the digital world.

The third step is taking action. Stakeholders across the retail organization can work with the shopper insights czar—who is also charged with sifting through the data to uncover new insights that can provide competitive advantage—to bring disparate data to bear on specific initiatives for improved performance.

Here are several examples of shopper insights as discovered and used by actual retailers:

One retailer noticed a strong correlation between increased aisle conversion and the promotion of specific cereal brands; whenever one of three cereal brands was promoted (irrespective of price) on the front page of the weekly flyer aisle, traffic increased significantly. And when aisle traffic increased, sales of adjacent products increased more than 7%. Imagine doing ad planning by factoring in the impact of promoted items on aisle and category conversion rates.

Another retailer looked at sales of rotisserie chicken and prepared foods by hour, day and customer segment. Jumping out of the data was a new understanding of when the retailer’s most valuable customers were shopping and purchasing prepared foods. Using those new insights, the retailer was better able to schedule resources and plan production, ensuring a high level of service and shopping experience for the retailer’s best shoppers.

A leading Canadian retailer leveraged insights from the customer data gathered through its loyalty program to improve the effectiveness of advertising. Through customer surveys and focus group research, the company discovered clear correlations between its most valuable customers and specific media publications and radio stations and redirected its ad spend to those vehicles as it sought to attract more "best customers."

In the human world, shopper insights remain as much art as science. Yes, retailers can follow an insight “blueprint” developed by other companies and gain some benefit, but bigger gains can come from retail execs who are able to blend a knowledge of retail, psychology of shoppers and comfort with data into discovering new insights.

As data continues to grow exponentially, and with it the accompanying growth of attributes tied to the specific shopper, the ability of a human to sort through the complexity to take meaningful action becomes increasingly difficult. New AI-powered solutions though are tailor-made for this world, automatically surfacing correlations and insights not apparent to a human being. Coborn’s provides its shoppers weekly emails recommending sale items and digital coupons specific to each shopper driven by several hundred data attributes derived from the customer’s purchase data, product search online, the shopping list on the app, and far more. This level of personalization is only possible using latest technology AI engines.

The good news: There are a growing number of new AI-powered capabilities being brought to market designed to help retailers sift through and understand new insights from data. The challenge: Too many retailers, including multibillion-dollar-a-year companies, aren’t ready, lacking the clean, curated and accurate data needed to power these systems.

https://www.winsightgrocerybusiness.com/technology/leveraging-shopper-insights-chaos-action

E-Commerce 2.0 Comes of Age

Primed by studies projecting 20% of industry sales moving online within the next few years and triggered by Amazon’s aggressive moves to grow its online grocery business—especially its acquisition of Whole Foods—supermarket retailers have rushed into e-commerce. Nearly all retailers have rolled out vertically integrated online shopping solutions that provide a digital storefront, order management and order-picking and -fulfillment capabilities. But online shopping solutions have become commoditized, offering little meaningful difference in the shopping experience or fulfillment operations.

This first-generation approach to online grocery shopping—let’s call it e-commerce 1.0—has created siloed digital customer experiences, reinforced by the other disparate digital efforts deployed by retailers. This siloed digital experience is the antithesis of what shoppers today are demanding. Even worse, retailers using third-party services that completely disassociate the shopper from the retailer’s physical stores and digital presence.

While some retailers see using a third-party service as a way to move fast, the retailer is in reality walking away from the customer base they have spent years building in their brick-and-mortar stores.

Tech-enabled shoppers are tough taskmasters and retailers’ first-generation e-commerce initiatives are no longer enough, especially for digital-native younger shoppers who have grown up in an Amazon world where product search and discovery are an inherent part of a seamless digital experience across devices and channels.

Seizing the opportunity provided by comprehensive digital customer engagement means taking a different view of e-commerce. This next generation—let’s call it e-commerce 2.0—separates the digital customer experience from the operations of managing and fulfilling orders. E-commerce 2.0 provides the shopper a seamless user experience designed to foster product discoverability while giving the shopper options as to when and how they actually get their products (shop themselves, click-and-collect or home delivery).

Safeway and Kroger each provide examples of a splintered user experience. On the primary Safeway website, a shopper can browse the weekly ad only, there is no access to a store level product catalog to aid in finding products of interest. To do that, the shopper has to click over to the online shopping site. The mobile experience is worse. A search of the app store finds the usual Safeway shopping app, an online shopping app, a pharmacy app, and a rush delivery app powered by Instacart. Not exactly a seamless user experience.

Kroger, while being one of the best digital marketers in the U.S. supermarket industry, is encountering growing pains. A customer can browse a store-level product catalog that features a few filters such as gluten-free, organic or low-fat, and can select items to put on their shopping list for Kroger’s click-and-collect service or to shop later themselves. But if the shopper wants home delivery, he is directed to another site with a different look and feel that’s powered by Instacart. If the shopper wants nutritional guidance, she is sent to Kroger’s new OptUp app, where she can see a product’s overall nutrition score—but that’s not available through the website, only through the separate OptUp app.   

An e-commerce 2.0 user experience is very different. The shopper is able to flag favorite products, receiving a notification whenever they go on sale or a coupon is available. The shopper can browse the entire store-level product catalog using powerful search and filter tools to quickly find products of interest. Expanded nutritional information is available along with sustainability info. The shopper can self-identify specific health conditions that are used to drive recommendation of beneficial products powered by leading edge nutrition science.

The entire experience is contextually relevant with personalized search and relevant recommendations to aid in product discovery. Lastly, placing desired items on the shopping list, the shopper can make the decision to shop for themselves or to send the list to the store for click-and-collect or home delivery.

The e-commerce 2.0 retailer separates the all-important customer user experience from the operations of order fulfillment. The e-commerce 2.0 retailer owns the entire digital customer experience, retaining valuable customer relationships while being able to provide new services such as organizing the customer’s list by aisle for their favorite store or real-time product and recipe suggestions when the shopper is in the store.

So why should retailers focus on deploying the next-generation 2.0 digital marketing ecosystem when they’re still rolling out first-generation solutions? Three reasons:

Food retailers everywhere are competing with Amazon and other sophisticated digital marketers and a seamless, comprehensive, relevant user experience is now a shopper expectation. It's not a nice-to-have, but a must-have today.

Shopping online is only one digital activity and the vast majority of grocery retail sales continue to happen in the store; retailers should be focused on driving digital engagement with all their shoppers.

Compelling digital engagement built on a personalized user experience is shown to drive a 5% lift or more in customer spending along with increases in trips and retention.

I can already hear retail executives griping, “I’m still rolling out our first-generation online shopping capabilities and now you’re telling me that we need something different?”

Digital transformation is not a single event but an ongoing process. Retailers are no longer in charge of innovation—shoppers are. And shoppers are rapidly adopting new technologies and growing accustomed to new experiences provided by digital deities such as Amazon, which means traditional retailers must adapt to a world driven by increasingly fast innovation.

https://www.winsightgrocerybusiness.com/technology/e-commerce-20-comes-age

Looking for Sales Growth? Be Relevant to Your Shoppers

Every retailer is looking to increase sales, and there is no better way to do that than by providing savings on products each customer wants to buy. Marketing personalization is proven to increase sales to participating customers by 5% or more. 

Marketing personalization—precision-targeted promotions relevant to the individual customer household—has been a cornerstone of The Kroger Co.’s widely admired customer-centric strategy for more than a decade. I can speak to the power of personalization from my own retail experience, where we routinely saw identical customer household increases of 7% or more in year-over-year spending from customers who participated in our personalized marketing program. Well-known regional retailers are seeing similar results from their programs.

And if you need another reason to pursue marketing personalization, consider this: Shoppers today expect promotional relevancy. They are getting it from Amazon, Kroger and other key retailers. Personalized marketing is rapidly becoming a cost of entry as supermarket industry competition focuses on digital customer engagement and shoppers bypass mass promotions in the same way they fast-forward through irrelevant ads on T.V.

While retailers with loyalty programs have a head start, traditional loyalty is no longer a prerequisite for providing marketing personalization. Leading solutions enable any customer to identify favorite products and build a profile to help in providing relevancy. With the use of AI, even a few transactions can begin to provide powerful insights for personalization.

Extending the Benefits, Evaluating Options

As online sales grow, retailers have customer-identified transactions by default. But they should extend marketing personalization to all customers—not just online shoppers.

Sophisticated marketing personalization is no longer the province of only the largest retailers. There are a growing number of solutions available to retailers of all sizes. The most important things to look for when evaluating solution providers include:

True segment-of-one personalization. Customer segment-based targeting is no longer the most effective approach. The best solutions leverage big data to maintain hundreds of attributes for each individual shopper and apply AI to drive personalization.

Strategic personalization. While giving customers offers on items they frequently purchase does provide some value, leading retailers strategically grow customer share of wallet by communicating a mix of relevant promotions to each shopper: some offers on frequently purchased products to win the shopping trip, and then savings on other relevant products to grow basket size.

Omnichannel integration. Many solution providers will state that they are omnichannel, but most solutions provide only an API requiring the retailer to integrate the targeted content into their website, mobile app and email. The best solutions are tightly integrated with web and mobile apps, providing a real-time view to intent: what’s on the shopping list, the digital coupons the customer just clipped, products searched for and so on. This kind of integration requires sophisticated IT resources, and even large regional retailers should look to solution platforms that include this capability.

Vehicles. Create regular communication vehicles that customers look for, such as a weekly personalized ad, a weekly digital coupon email that communicates the most relevant coupons for each customer, etc.

Looking across retailers with effective personalized marketing initiatives, we see these best practices:

Good-quality data. Good product descriptions, accurate pricing and product categorization are key to good personalization.

Large offer pool. Effective personalization is dependent upon having a sizable offer pool to draw from; a minimum of about 500 offers is necessary for effective personalization, and more is better. Many retailers grow frustrated seeking to obtain incremental offers from their brand partners. Instead, they should look to content they already have:

Personalize existing weekly ad specials by presenting only the most relevant sale products to each customer.Leading digital marketing platforms can be opened up to your local and regional vendors to create digital offers, helping expand your offer pool.Better utilize temporary price reductions by creating “hybrid” offers—one value to all shoppers that is signed at the shelf, and a controlled number of richer offers to drive strategic share-of-wallet growth.

Measure. Measuring the percentage of total weekly sales generated by digitally engaged customers helps retailers close the loop and provides a powerful feedback mechanism.

Drive participation. If participating customers increase spending, doesn’t it follow that retailers should want to grow the number of customers in a personalized marketing program? Promote the program everywhere: in-store signage, the weekly ad, email, website, social media, etc.

Consider this: If customers participating in a personalized marketing program generate a 5% increase in sales, and if those customers account for 10% of total weekly sales, that represents an increase in overall top-line sales of 0.5%. If retailers can drive participation to affect 50% of sales, they can increase overall top-line sales by 2.5%. The best I’ve seen: a retailer impacting over 60% of weekly sales by customers participating in personalized marketing.

The benefit does not stop there. As retailers drive customer digital engagement through personalized marketing, they can intelligently reduce traditional ad flyer print and distribution spending, and even grow gross margin by eliminating wasted mass promotion.

Marketing personalization is transformative for retailers who really understand it. From sales gains to margin increases, in my experience, marketing personalization is the most powerful way to grow your business.   

https://www.winsightgrocerybusiness.com/technology/looking-sales-growth-be-relevant-your-shoppers

The Convergence of Food and Health

Food represents an estimated $5 trillion a year industry in the United States. Nearly everywhere we look in the physical world—and increasingly online—food is available, including over 37,000 supermarkets, approximately 1 million restaurants, 150,000 convenience stores and more. You can grab a soda and snack as you explore Home Depot’s cavernous stores, deliberate office supplies in Staples or search for clothes at Nordstrom’s. Food has never been more available.

While food has become pervasive, healthcare in the United States has become the most expensive in the world. The U.S. healthcare industry is projected to be a $5 trillion a year industry by 2023, representing nearly 20% of the country’s GDP. The Milliman Research Report 2017 states that annual medical costs for a family of four are $26,944. Healthcare costs do nothing but increase, as anyone can attest.

Our health is inextricably tied to the food we eat as study after study has shown. Tracing the history of processed, carb-rich and sugar-laden foods in the U.S. we see a clear correlation with the growth of obesity and chronic disease. The connection between food and health was clear more than 2,000 years ago as Hippocrates, the ancient Greek physician, proclaimed “Let food be thy medicine and medicine be thy food.”

And though they touch each person daily, these two massive, pervasive and intertwined industries are largely disconnected at the individual consumer. I often use the example of the person who goes to the doctor and is diagnosed with diabetes, is given a prescription and is told to exercise and eat better. That same person returns home to find a mailer from her local supermarket with specials on soda, chips and ice cream. Sadly, that story reflects the reality of food marketing today.

And here’s the result of that disconnect: 60% of Americans have a chronic health condition; 42% of people have two or more chronic diseases. The Mayo Clinic reports that 70% of Americans take a prescription drug and more than half take two drugs. The average lifespan for a person living in America has declined for two years in a row. Healthcare costs outstrip inflation every year. Estimates of lost productivity in the U.S. due to chronic disease are in the hundreds of billions of dollars. The lost quality of life is immeasurable. Food and healthcare are broken and must be fixed.

I would argue that we as an industry bear a responsibility to provide information to our customers to help them make more informed purchasing decisions and guide them to products beneficial to their health. We are seeing a convergence of food and healthcare that is accelerating as recent events show.

Amazon is aggressively moving into the grocery business amid rampant speculation that the company will make a move into the pharmacy business.

CVS seeking to acquire Aetna in a massive merger, driven in large part as a response to Amazon’s moves.

Google is helping move healthcare data to the cloud, organizing and opening it up to advanced analytics and insights and API access. That API access conceivably makes it far easier to begin connecting healthcare data with food purchasing data.

Walmart is readying to acquire Humana, the massive managed care organization.

All these activities point to impending disruption in healthcare and, as called out in numerous articles about Amazon and Walmart’s moves, the ability to connect food purchasing with health data.

Supermarket retailers have long realized the importance of health and wellness programs. Many retailers have placed dietitians in their stores as a resource for customers to assist with label reading, meal planning and to answer questions. Many of the same retailers have also implemented shelf-signage programs such as the recently announced Guiding Stars program at Ahold; products throughout the store labeled with a star rating that provides guidance to customers as to the nutritional value offered.

While helpful, programs such as Guiding Stars are being superseded by efforts making use of the vast data attribution possible today from companies such as Label Insight, which uses AI and machine learning to deconstruct the brief nutritional summary found on packaged foods to identify hundreds and even thousands of specific, granular nutrients, minerals and vitamins, found in our food products. This massive increase in available data is powering more evolved programs such as that of Raley’s, which uses the extensive data attributes to identify products as helpful for specific health conditions, identifying items at the shelf and in their online shopping service.

But even this effort is being supplanted by a more personalized approach. ScriptSave, which offers programs and services in more than 60,000 pharmacies across the U.S., is leveraging knowledge of prescription data (via a HIPAA-compliant process) to accurately infer a health condition for the participating shopper; in addition, shoppers participating in Script Save’s WellRx program can self-identify health concerns and preferences.

Using the nutritional requirements related to specific health conditions, ScriptSave can filter the 40,000 products across the typical supermarket, identifying those products that are beneficial to the individual shopper, making those recommendations available via the WellRx app and through the participating retailers’ digital channels.

Discussions are currently under way at major retailers across the country as this kind of intelligent guidance connects the dots between the food industry and healthcare, ultimately leading to improved wellbeing for tens of millions of consumers.

ScriptSave’s personalized wellness initiative is a prime example of the convergence between the worlds of healthcare and food being made available by technology.

https://www.winsightgrocerybusiness.com/retailers/convergence-food-health

Tackling Retail’s Big Data Challenge

Data has long powered modern retail, helping Walmart become a master of supply chain logistics and fueling Kroger’s customer-centric strategy. Artificial intelligence and the cloud are fueling explosive growth in retail big data, and are transforming customer marketing. And as the retail industry moves online and customer digital engagement is the battlefield, the quality and quantity of data will determine the winners and losers.

This new world requires data discipline more than ever. And this is an area that is particularly challenging to smaller retailers and even some regional chains. Data discipline will make or break retail success from this day onward. Here are just a few examples of issues I’ve encountered in talking with retailers:

One retailer still had super-abbreviated product descriptions that were used years ago with the old (much narrower) receipts. Product descriptions coming from the retailer’s item file are used to power online shopping—abbreviated descriptions just won’t do it for e-commerce as customers won’t understand what the product is.

Another retailer’s item file lacked any kind of product categorization on nearly 50% of the products carried. Many retailers lack even somewhat accurate product graphics. Retailers with these issues cannot realistically install any kind of marketing personalization capabilities that rely upon product categorization.

And yet another well known regional retailer had many products at store-level that were not represented in item files at the headquarters office; i.e. the merchandisers and buyers at the corporate office did not know what products were in the store. This situation is simply frightening; how can a retailer do effective promotion planning, demand forecasting, let alone any kind of optimization, when HQ doesn’t know what products are in each store?

Data quality issues such as these come back to haunt retailers when they look to deploy new capabilities such as online shopping, promotion optimization or marketing personalization—capabilities that are rapidly becoming a cost of entry to compete. And these are issues with what should be basic levels of data required to operate.

Leading retailers are leveraging fast growing data attributes attached to each individual shopper and each product.

Customer-identified transaction data is just the beginning as solution providers such as Birdzi calculate and maintain hundreds of data attributes for each individual shopper, from brand loyalty scores to discount propensity, and from product purchase frequency to category spending indexes. Add to this third party data from companies such as Experian or Acxiom that provide dozens or even hundreds more data points.

Category tags, package sizes and pricing form the core of product based attributes. Label Insight is using AI and machine learning to deconstruct the handful of nutrition attributes on a package to encompass dozens, hundreds and even thousands of additional attributes for any given product. Deep nutritional data attributed to individual products is quickly growing in importance as food is increasingly linked to a shopper’s health condition.

The velocity of data is growing as various solutions use real-time shopper location—both inside and outside the store—to provide contextual information. An understanding of the shopper’s intent is provided by a real-time view to what products have just been added to the shopping list, what digital coupons have been clipped and what products have been searched for.

Cloud-based solutions enable regional and smaller retailers to access cutting-edge marketing personalization solutions driven by advanced data science to power relevancy across every digital engagement with each individual shopper. The cloud also brings sophisticated pricing, promotion and product assortment optimization capabilities to retailers cost effectively. But the efficacy of these solutions is directly dependent on the quality and quantity of data feeding them.

Retailers embarking on data driven strategies would be well-served to first assess the quality of their core data (product descriptions, categorization, pricing, product cost, vendor codes and more). Retailers with loyalty programs should examine how clean and up-to-date their customer contact data is along with how customer loyalty IDs roll up to households (this area is particularly vexing as retailers often just distribute cards). Building on a now-solid base, consider bringing in third-party data to permit scoring share-of-wallet by customer household in addition to other attributes that can improve targeting and personalization.

More than ever before, retail success is driven by data. For retailers that understand the power of data—and especially customer and product data attributes—marketing nirvana awaits.

https://www.winsightgrocerybusiness.com/technology/tackling-retails-big-data-challenge

The 3 Immutable Laws of Retail Innovation

Everyone in the retail industry, from the cashier to the CEO, knows that transformation and disruption are changing the way we shop. But too many retail executives are dealing with the symptoms of innovation rather than addressing the underlying forces. And this approach is dangerous, leading executives to make short-term tactical decisions without benefit of understanding the larger battle being waged.

There are three immutable laws of innovation that frame today’s retail environment:

Law #1: From today onward, innovation will occur ever-faster.

Computer processing power is growing exponentially, and is driving the use of artificial intelligence using big data to power new innovation. We are at the point of inflection on the growth curve where the pace of change noticeably increases. Innovation is being driven by new technologies and capabilities that are themselves feeding off new capabilities, creating a tsunami of innovation that is growing ever stronger.

Law #2: Retailer deployment of new innovation will remain sequential and linear.

Any retailer has limited bandwidth and resources to evaluate, acquire and employ new technologies. This means that retailers tend to deploy new capabilities in a sequential fashion; a new website, followed by a new mobile app, followed by promotion optimization, followed by something else, and so on over time. Each new innovation often requires associate training, changing operating processes and other impacts. This linear growth of innovation is problematic in a world of exponential growth of technological capability.

Law #3: The innovation gap will continue to grow.

Think of the difference between the more linear growth of innovation deployed at traditional retailers and the rampant growth of tech-fueled innovation as the innovation gap. This gap grows by the day, and represents a clear and present danger to retailers. It is from this gap that new capabilities and new competitors emerge, enabled by faster and cheaper processing power, big data, AI and the cloud.

Technology-driven innovation has forever changed the retail landscape, and the largest companies have recognized this new competitive reality and are investing resources accordingly. Consider that Amazon invested $15 billion in new tech innovation last year, more than the combined investments of the next 20 retailers, excluding Walmart. Kroger now employs 2,500 people in its technology division and is investing heavily in new digital capabilities. Walmart has set up an incubator called Store No. 8, charged with identifying, evaluating and investing in new technologies focused around AI and automation.

In the face of this, 75% to 85% of IT budgets at traditional retailers go to maintaining or upgrading existing systems—not new innovation. This profound difference in how technology and innovation is viewed exacerbates the innovation gap threat.

Flowing from these immutable laws are several fundamental challenges that retailers confront:

Retailers no longer lead. Innovation is now being forced on retailers from new competitors such as Amazon and rapid consumer adoption of new technologies. Retailers are no longer in the driver’s seat regarding what capabilities they need to deploy; rather, retailers today must react to outside forces.

Change will happen much faster than you think. Any specific innovation will become widely adopted much faster than executives believe. Human beings have difficulty thinking exponentially; we are accustomed to linear change. Tomorrow will be much like today that was much the same as yesterday. This is no longer true. By the time some new innovation appears on the radar of retail executives, it is probably already moving toward mass adoption.

Awareness of new innovation. Simply trying to maintain awareness of new capabilities and solution providers is nearly impossible for retailers. To provide some perspective, Walmart’s Store No. 8 initiative reviews an estimated 700-750 new solutions each year. How can a traditional retailer keep up with this?

Limited ability to test and deploy. Even if a retailer is able to gain an expansive view to new innovation flowing into the industry, how does a retailer decide which capability to focus on, what solution providers to talk with and which solution to pilot, let alone utilize across all their stores?

Organizational skill sets. Given new capabilities that are rapidly transforming retail, such as robotics, artificial intelligence and customer insights, how do retail companies ensure they have the right skill sets needed to take advantage of new capabilities? How do you structure your organization to facilitate rapid change? There are implications here across the enterprise, from incentive plans to training programs, to having the needed skill sets when required.

https://www.winsightgrocerybusiness.com/technology/three-immutable-laws-retail-innovation

Healthcare and Food Align to Benefit the Individual

The personalized wellness vision aligns managed care organizations, healthcare providers, employers, food manufacturers and retailers to improve and maintain the wellness of each individual. Powerful economic benefits accrue to each member of the ecosystem in addition to the societal good resulting from improved health across the nation’s populace.

The personalized wellness food-health supply chain begins with the individual consumer and an understanding of their health condition and food products beneficial to that condition. As the source of food, supermarket retailers have an opportunity to become an extension of personalized healthcare, a trusted partner in wellness for each individual. What better loyalty can a retailer seek than helping customers live better lives?

"Big food" manufacturers, challenged by declining sales as growing numbers of consumers push back against processed foods, have an opportunity to reorganize efforts around new consumer segments driven by health and well-being. This realignment is already underway as we see a growing number of gluten-free, sugar-free, natural and organic products across the store.

Healthcare providers play an invaluable role in identifying the individual’s health condition and enrolling them in personalized wellness services provided by local retailers as part of the treatment regimen. Improved eating habits are inextricably linked to improved outcomes.

The benefits of personalized wellness are most readily apparent to employers and managed care companies as they seek to reduce claims and lower risk profiles. A recent Wells Fargo Insurance survey found 51% of employers are looking to add or increase wellness initiatives to improve the health of their workforce. Employees appear to be on board as well. According to a recent HealthMine Survey, 75% of employees want their employer to offer health and wellness incentives.

The personalized wellness vision creates a powerful new paradigm by closing the loop, validating purchase of beneficial foods and products through access to customer identified transaction data. For the first time, it is possible to understand an individual consumer’s health condition, understand what food products throughout the store are beneficial to that condition, communicate that selection of foods to the consumer via any digital channel, and then close the loop by validating which of those products were purchased. Such a closed ecosystem underpins a new world of wellness incentives driven by proof of performance.

The exponential growth of computer processing power is fueling an explosion of innovation and new capabilities across every industry, including healthcare and food. Yet the concept of exponential growth is challenging for human beings to comprehend as our lives have been lived linearly; tomorrow will be much like today, which is much the same as yesterday. But this is no longer true. We are at the knee of the growth curve, and the pace of change is only increasing as exponential gains become more noticeable.

It is only now that the data and the technologies are available to create the personalized wellness paradigm envisioned here. Deconstructing nutrition information to countless data attributes enables powerful linkage between health conditions and the hundreds of thousands of food products available across the United States. The ability to use artificial intelligence and machine learning to personalize, at a product level, food recommendations that are beneficial to each individual is only recently available. And what makes it all work is the ability to convey personalized food guidance to the individual via the smartphone in hand while in the store aisle.

ScriptSave, a major player in pharmacy services and a part of MedImpact, is leading innovation in the space, having brought together the requisite technologies and needed skill sets. ScriptSave is partnering with significant regional supermarket retailers to meld health and food, pioneering transformation in both massive industries by bringing the vision to life as the WellRx Personalized Wellness program.

Perhaps what is most powerful about the personalized wellness vision is that everyone across the food-healthcare supply chain benefits from improved outcomes and quality of life for the individual. Retailers gain stronger customer relationships as they come to be viewed as true partners in wellness, and consumer goods brand manufacturers have a path to redemption from the processed foods abyss.

Employers and managed care organizations who shoulder a substantial portion of healthcare cost finally have an ability to link improved eating to performance based measures, providing the foundation for meaningful incentives to encourage the sought-after healthy behavior.

The vision of a new model joining together the massive healthcare and food industries is powerful. The data and the technology needed to make personalized wellness a reality are available today. Participants across the food-health supply chain—managed care organizations, employers, providers, food manufacturers and retailers—are already coalescing around the personalized wellness vision, bringing it to life and improving the human condition.

https://www.winsightgrocerybusiness.com/wellness/healthcare-food-align-benefit-individual

Personalized Wellness: A Virtual Dietitian

Healthcare has made valiant efforts to guide consumers to beneficial foods, only to find the information quickly forgotten within hours of leaving the doctor’s office. Understanding nutrition labels on packaged foods has proven to be a formidable barrier to time-starved shoppers in today’s vast supermarkets filled with a dizzying array of thousands of products. To have significant impact, guidance to beneficial foods has to be easy, convenient, and contextual to the shopper and it is only today that we have the technology necessary to do this.

The time is right as the healthcare and food industries are primed for change as traditional business models, practices, and products crumble in the face of financial pressures, profound change in consumer preferences, and technology-fueled innovation. As data from across the healthcare and food industries is increasingly stored in the cloud it is becoming easier to link previously disparate data to power personalized wellness.

Health data: Health records are rapidly becoming digitized and stored in the cloud where they can be used, under HIPAA compliant processes, to inform nutritional recommendations. Beyond this, prescription data can be used (again in HIPAA compliant fashion) to infer a disease state or health condition. Wearable devices are moving beyond activity tracking to provide monitoring of key health indicators. As an example, it is reported that Apple is working on non-invasive glucose monitoring via the Apple Watch. Increasingly, health condition data is becoming available in real-time.

Nutritional requirements: A vast number of peer-reviewed research studies establishing wellness criteria for nutrition-sensitive health conditions are leveraged to drive recommended macronutrients, vitamins, and minerals at a granular level for specific conditions and combinations of conditions.

Beneficial products: The recommended nutrients for a given health condition are then compared to the nutritional data of the tens of thousands of food products available, effectively creating a subset of products across the supermarket that are beneficial to the individual and their health condition.

Purchase data: Shopper-identified purchase data, gathered through retail loyalty programs and online shopping, is used to provide deep insight to a shopper’s food proclivities, brand preferences, preferred package sizes, discount propensity, product purchase frequency, and more, to further refine the subset of beneficial products and make recommendations most likely to be purchased—and provide an improved outcome.

These building blocks—health data, nutritional requirements, beneficial products, and food purchase data—form the foundation of personalized wellness. Understanding which of the 40,000+ products offered by the typical supermarket are beneficial to a given health condition effectively creates a ‘store within a store’ for the shopper. For the shopper with hypertension, personalized wellness filters the tens of thousands of products available to provide the shopper with a subset of beneficial products across the dozens of categories in the store. Further, using sophisticated AI-powered marketing personalization technology, beneficial product recommendations are communicated to the individual shopper that align with the shopper’s expressed preferences in brands, package sizes, flavors, and even purchasing frequency.

A Virtual Dietitian

Customers of Carnival Cruise Lines receive an Ocean Medallion, a wearable device, a week or two prior to departure. The cruise goer is invited to go online and create a profile linked to their wearable which includes any dietary requirements and meal preferences. When on the cruise, the Ocean Medallion acts as a digital room key, digital wallet, and automatically informs the waitstaff in the dining room as to that customer’s dietary requirements, the meal personalized to the individual per the information wirelessly conveyed.

Consumers are already predisposed to a customized shopping experience as they demand the marketing relevancy and personalization experienced online from the brick and mortar retailers they trade with. Retailers like Coborn’s and Foodtown are providing customization in the form of personalized weekly ads and relevant promotions.

Personalized wellness as we envision it provides a concierge service to consumers, a virtual dietitian helping guide them to products beneficial to their health condition as they shop their preferred stores. Rather than an Ocean Medallion, retailers can leverage in-store location technology and the shopper’s smartphone to help guide the shopper to beneficial products while that shopper is in the aisle, drawing on knowledge of the health condition and real-time shopper location in the store. Using the same technology, the retailer can message the shopper with an easy-to-prepare beneficial dinner recipe when the shopper enters the store in the late afternoon in search of dinner that night.

https://www.winsightgrocerybusiness.com/wellness/personalized-wellness-virtual-dietitian