Times are changing! And by "times," I mean "technology, as it relates to grocery stores."
We've all seen changes in grocery stores in recent years, largely due to the use of new technology, but the basic supermarket business model remains very much intact. It may be one of the only bricks-and-mortar retail sectors that has not drastically altered its business plan with the advent of the Internet. The question is: How long will this last?
Groceries on the Web
Internet technology has encouraged major grocery chains to have some form of online shopping available to customers. Ruddick's (NYSE: RDK) Harris Teeter offers online shopping and in-store pick-up, while Safeway (NYSE: SWY) and Ahold's (OTC: AHONY.PK) Stop & Shop and Giant brands offer online shopping and at-home delivery. SUPERVALU (NYSE: SVU) used to have at-home delivery but stopped the service in 2009, claiming that customers preferred to shop at physical stores.
Peapod -- Ahold's online and home-delivery-only brand -- grew sales and expanded into three new U.S. markets in 2010. And yet the future of online shopping remains to be seen. With the exception of Peapod, you won't find annual sales figures for online shopping at any of these stores. In fact, annual reports and fact sheets may not even mention online shopping. That said, Peapod's continued expansion makes this a trend worth watching, especially as perennial game changer Wal-Mart (NYSE: WMT) joins the fray, albeit in a limited way.
Is there an app for that?
Uncertain about the future of online shopping, supermarkets have taken steps to improve the in-store experience in an effort to keep customers coming back. Stores utilize handheld scanners and the now-ubiquitous self-service checkout.
And again, the Internet plays a minor role. Stop & Shop has developed a mobile app that allows customers to sync up their loyalty card, giving them access to their points and savings numbers, as well as circulars and directions to the nearest store.
On top of that, a company named Modiv Media has designed an app that can replace the handheld scanner. The smartphone app allows customers to take a picture of an item's bar code as they put it in the cart, saving time at checkout. The app will also keep track of what you spend and offer coupons based on previous purchases. Stop & Shop is already testing this out and may run a program in three Massachusetts stores this summer.
The bottom line
Eliminating the need for handheld scanners and other equipment is just one example of how technology helps to reduce operating expenses and improve customers' in-store experience. It is important to keep an eye on the online shopping trend in grocery stores and your company's ability to utilize Internet technology to win customers.
Have you had a moving experience with supermarket technology? Share your thoughts in the comment section below.
