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What Kroger's Smart Tech Means for Grocery Stores


Jan 21, 2021 by Barbara Zito
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Grocery home delivery is a convenience many enjoyed well before the pandemic, and indeed it became a necessity for some during it. But while malls and other retail outlets have had to close for a lack of foot traffic, larger grocery stores will likely not face the same fate. And it all has to do with a new type of shopping cart.

A "smart" move to get shoppers back in stores

One of the reasons people love grocery delivery services is that they don't have to deal with long lines at the checkout. Smart shopping carts allow shoppers to skip that inconvenience entirely. It all adds up to an experience that's not only quicker but also touchless -- which means everything in the time of the coronavirus.

The recently opened Amazon Fresh (NASDAQ: AMZN) stores feature the Dash Cart, a cart with embedded sensors that offers a checkout-free experience for customers, as well as other conveniences accessed through the Alexa app. Now Kroger (NYSE: KR) has announced the KroGO cart, which it is currently testing at a store in Madeira, Ohio.

The KroGO cart, designed by the tech start-up Caper, features a video screen scanner that captures bar codes on the products as customers load up their carts. Kroger customers can use a built-in scale to weigh produce as well as keep an eye on their subtotal as they go through the aisles so they don't blow their budget.

The best part? Instead of joining a long line at the checkout, customers can simply scan a credit or debit card and then walk out the door. As of now, KroGo carts are only equipped for debit or credit and the store rewards card -- no cash, coupons, or gift cards. Government programs like EBT and WIC are not supported at this time. To promote the carts at the Madeira pilot location, Kroger is offering 5 percent off any Kroger-branded products purchased using the KroGo carts.

The future of food shopping

Smart carts are a total game changer for the supermarket shopping experience. People enjoy the convenience of home delivery because it saves them time. But the smart carts also save time and make the thought of navigating a crowded supermarket a much more palatable experience.

Smart shopping carts are a boon for grocery store owners, too. The KroGO cart gathers data based on what a customer scans and makes shopping suggestions. This plus the cart's ease of use has led shoppers to ring up hauls that are around 18% higher than average, as reported by Winsight Grocery Business. The combination of increased sales and a decrease in staff wages -- fewer cashiers will be needed, after all -- makes the smart cart a very smart move for grocery stores.

Mom-and-pop stores, however, stand to suffer. These small, independently owned stores are not likely to offer smart carts, and they certainly can't offer nearly the same amount of inventory. While it's convenient for shoppers to be able to quickly pick up just a few items, they also might find it just as easy to run to the supermarket when they know they can bypass a long checkout line with a smart cart.

Touchless shopping in the COVID-19 era

While smart shopping takes the cashier out of the equation, a touchless experience is a healthier one for all involved. In fact, the signs in the Kroger pilot store advertising the KrogGO carts say: "Faster checkout. Less contact."

Whereas home delivery is touchless in that purchases are dropped off at the door, customers are at the mercy of a delivery timeline and out-of-stock items. Now, customers once again are in control of every step of the grocery shopping experience.

Food for thought

In the era of home delivery and curbside pickup, smart cart technology could be what gets customers back into the grocery stores more quickly than a BOGO sale. As the coronavirus vaccine continues its rollout and makes people more confident about venturing out into crowded stores, many will be attracted to supermarkets that offer this quick, touchless experience.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. bz829 has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.