Fridge’s Dare

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Fridge’s Dare

By Jim Dudlicek, EnsembleIQ - 02/10/2016

In an era where customization and personalization are the operative words in food retailing, the challenge to build closer connections with shoppers has never been greater.

Ubiquitous internet connectivity is driving radical transformation of a retail world whose epicenter of consumer intelligence, long entrenched in the front end and back office, has given rise to a new ecosystem of data derived from interconnected devices, many of which enable consumers to shop for just about anything without ever entering a store.

Now it’s possible for folks not only to shop for groceries without leaving their kitchens, but also for their refrigerators to make up the shopping lists.

“We live in a hyperconnected world, where every device, from the phone to the fridge, is becoming connected to the internet,” says Betty DeVita, chief commercial officer of Purchase, N.Y.-based MasterCard Labs, a partner with Samsung in the development of its Family Hub refrigerator, which launched at the recent annual Consumer Electronics Show in Las Vegas (see related sidebar on page 28).

This so-called “smart fridge” is equipped with the Groceries by MasterCard app, which, according to DeVita, “demonstrates a significant enhancement to the Smart Home environment by bringing consumers a simple and convenient way to shop for groceries directly from their kitchen.”

The Family Hub promises to be a game-changer for traditional grocery retailers, in particular Keasby, N.J.-based Wakefern Food Corp., which has been at the forefront of the industry with its popular online delivery and click-and-collect services.

The Northeastern supermarket cooperative, whose members operate 250 ShopRite supermarkets throughout New Jersey, New York, Pennsylvania, Connecticut, Delaware and Maryland, has teamed up with MasterCard to integrate its popular online grocery shopping service, ShopRite from Home, with Groceries by MasterCard, which comes preloaded in the new Samsung Family Hub refrigerator and allows consumers to order directly from the fridge using a built-in screen.

Cool Comfort

The fridge is readying for its retail debut this spring, after which time ShopRite customers will be able to use the appliance’s integrated tablet to order groceries from the comfort of their own kitchens by scheduling in-store pickups or at-home delivery with a few simple taps on the Samsung Family Hub refrigerator.

Using the Groceries app’s secure, easy-to-navigate interface, customers also have the ability to add products to a ShopRite shopping basket and pay online.

Items are added to a cart and paid for in a simple, single checkout experience that accepts any U.S.-issued credit and debit cards. Orders are delivered directly by the merchants and aren’t dependent on a third-party or concierge service, making shopping more efficient.

DeVita notes that features such as cameras within the fridge and a companion mobile app will allow consumers to view contents and shop on the go using the device most convenient to them, with the highest level of security.

“Multiple members of the family can add to the cart and build a single cart over the week, and final approval and submission of the cart is secured through a four-digit PIN to allow more control and avoid ordering duplicate items,” DeVita explains. “Virtual-aisle shopping technology allows consumers to search for their favorite brands across multiple grocers. Since the app directly connects grocers, consumers are able to access deals and coupons, and there is no markup on delivery charges.”

The family cart is intelligent and learns from shopping habits, and MasterCard is continuing to work with partners to create simple and convenient experiences for cardholders. “Consumers appreciate the convenience, and merchants value having another way to engage with customers and build their brands,” DeVita observes.

Seamless Convenience

Groceries by MasterCard was developed in a partnership between MasterCard Labs and Samsung. At launch, consumers will be able to shop and select their needed items and favorite brands from leading online grocer and key integration partner FreshDirect, as well as from ShopRite.

MasterCard has also developed a companion mobile app for Groceries, which allows multiple members of a family to add to a single cart from a device of their choice. At home, consumers can use the mobile app to scan bar codes on products for easy additions to the online shopping cart.

“Just as Family Hub changes the way we interact with our fridge, the new Groceries app will change how consumers shop,” says John Herrington, SVP and GM of home appliances for Ridgefield Park, N.J.-based Samsung Electronics America.

Aside from ShopRite, Groceries by MasterCard is creating a new channel of consumer engagement for fellow online launch partners FreshDirect and MyWebGrocer, whose respective executives are equally pumped about the prospects for seamless consumer convenience.

“Since launch, FreshDirect has been on a mission to get consumers great, fresh food with less friction,” says Jodi Kahn, chief consumer officer at the Long Island City, N.Y.-based e-grocer. “This new technology speaks directly to that mission, giving consumers a new, seamless way to shop for groceries right from their own kitchen.”

Commerce-enabled devices like the Family Hub fridge, adds Eric Healy, president of Winooski, Vt.-based MyWebGrocer, “represent an unprecedented opportunity for our customers, because it puts them right where the consumer path to purchase begins: in the kitchen.” Moreover, Healy notes, the platform provides great opportunities to “leverage the open, API-centric capabilities of our Digital Experience Platform … with MasterCard, and enable grocers and CPG brands to capitalize on the way in which the Internet of Things (IoT) revolution will transform the grocery shopping experience.”

As the rollout continues in 2016, additional grocers will be added to the Groceries app through MasterCard’s partnership with MyWebGrocer, which provides e-commerce and digital marketing solutions for more than 130 grocers across the globe.

“As with a lot of technology, in its early days there will be eager adopters and those that question the merits of the innovation,” says Barry Clogan, MyWebGrocer’s SVP of business consulting services. “However, the IoT has amazing potential and will continue to be a growth area that inspires changing lifestyles and consumer behavior. Initially, the entry price points [$4,000] seem prohibitive,” he acknowledges, but anticipates that it won’t be long before “these innovations are more widely available, and at prices that will drive customer adoption” from a want to a need.

May Crowning

The refrigerator, which will be tested in ShopRite’s main trading area in greater New York, is scheduled to roll out to the market this coming May.

“The game-changer, I believe, is about helping our customers get their ShopRite groceries through a variety of methods,” says Donna Zambo, Wakefern’s director of digital commerce and innovation. “We see it as our mission to allow them to shop on their terms — anywhere, anytime — and we want to provide as many opportunities as possible to allow them to do that.”

Wakefern already offers a ShopRite mobile app, the previously mentioned ShopRite from Home click-and-collect service and ShopRite Delivers.

“We are committed to providing the best service online and in-store. It’s not an either-or [brick-and-mortar or online] — it’s about both,” Zambo notes. “It’s about overall growth and providing a great shopping experience in-store and online. Many of our customers do both in-store and online shopping, and it’s all about the personal service and experience that we offer across both platforms that makes us successful.”

DeVita cites Cisco Systems research indicating that there will be 50 billion connected devices by 2020, “and this connectivity is quickly changing the way people transact,” she affirms. “Our focus for 2016 is to first expand the number of merchants on the platform, giving the consumer incredible choice in shopping.”

Throughout 2016, MasterCard Labs will also be adding more product features, including natural-language voice commands, fridge-camera integration, merchant couponing and loyalty programs, and video integration.

Perks of Being First

“The Family Hub isn’t a silver bullet — yet — but it serves to illustrate that grocery retailers need to provide solutions that enable consumers to access their online stores directly from the kitchen, if they are to compete with e-commerce grocery pure-plays from Amazon down,” asserts Supriya Chaudhury, CMO of Boston-based online analytics provider Clavis Insight. “These solutions will include devices similar to the Amazon Dash scanner as well as easy-to-use mobile and tablet apps, and partnerships with the likes of Samsung for this emerging class of in-home technology.”

Looking ahead, Wakefern’s Zambo is pleased about the retailer co-op’s pioneering role in the promising platform. “It’s good to be a first adopter on technology, because that’s how you grow loyalty and develop good products,” she says, despite the fact that it’s admittedly difficult to predict what the exact impact will be on the future shopping landscape.

“We know digital is a huge part of this new world. We recognized that more than a decade ago, when we began offering online services and integrating digital into the ShopRite shopping experience,” Zambo continues. “Online customers now represent one of the fastest-growing segments of our business, and service is really the key [to why] we’ve been so successful. We rely heavily on our knowledge as grocers — the supermarket business is in our DNA — and we’ve taken that knowledge and leveraged it on the digital side.”

“e-Commerce is an attempt to make grocery shopping more convenient, and the last decade has seen a general push toward that,” Clogan concurs. “Whether it is the increase in convenience stores’ locations, the proliferation of grocery items in other formats (e.g., drug stores) or the provision of tools that let people order their groceries whenever or wherever, this technology is part of that general trend. This is a case of evolution rather than revolution.”

The Family Hub refrigerator, according to Clogan, “brings the battleground between traditional retailers and pure-play retailers into the consumer’s kitchen. It doesn’t give traditional retailers an advantage, as pure-play retailers are doing similar things — it merely allows traditional retailers to compete.”

Of course, it ultimately depends on the rate of adoption by consumers. “This technology is yet another way to embed a retailer into the daily life of a consumer, so grocery retailers who adopt this technology can get first-mover advantage over other grocery retailers and Amazon,” Clogan says. “To some degree, this product competes with Amazon’s Dash product, which gets Amazon into people’s kitchens and pantries. However, it is important to note that Samsung plans to integrate with Amazon’s Alexa [a cloud-connected AI assistant], so it’s a fair assumption that Amazon Fresh integration can’t be far behind.”

Comparing the two technologies, Chaudhury notes that while “the potential benefits of the Amazon Dash button [are] brand advertising, instant reordering and captive future purchases,” consumers “could be skeptical about the lack of control in their purchase process, and fear trading convenience for higher pricing, given Amazon’s dynamic pricing models.”

She continues: “Family Hub appears to deliver the convenience of push-button reordering without the same concerns of brand monopoly and, perhaps in the future, retailer monopoly as the app expands to cover more retailers in more markets.”

Wake-up Call

Clogan notes that Samsung is looking into the possibility of programming Alexa directly into the fridge, “to give your kitchen the full run of functionality that you’d get with the Amazon Echo smart speaker. You’d say ‘Alexa’ to wake the fridge up, then ask it to stream some music, set a kitchen timer or add tomatoes to your shopping list.”

He adds that Samsung had indicated its intention to have Alexa functionality ready to go for the refrigerator’s U.S. launch this spring, “but after a bit of backpedaling, they’re now classifying it as a possibility for further down the road. It’d be a shame if it didn’t happen — piggybacking on Alexa’s popularity would be a clever way to boost this refrigerator’s appeal. With Amazon’s open approach to the software that powers its voice-activated AI, it should be possible for Samsung to add it into the fridge with just a few lines of code.”

As the new technology makes inroads, Clogan expects a minor dip in sales, due to current options like online ordering for delivery or click-and-collect.

“By knowing exactly what is in your fridge at any given moment, digital shoppers may skip impulse purchases that form an important part of grocery retailers’ sales,” he says. “However, our data suggests that digital shoppers spend more per shopping trip than traditional shoppers, so these smart fridges will certainly contribute to that trend. The fridge’s ability to send consumers personalized offers based on their shopping history — and what’s already in their fridge — will offset any cannibalization. In the longer term, this may help add incremental growth,” he notes, adding that there might still initially “be a slight cannibalization, as shoppers will have a choice between devices — mobile phones, tablets, fridge or desktop.”

Retailers that are early adopters will have another way to reach their consumers in a highly personalized way. “They will be able to communicate with their customers by alerting them to items in their fridge that are on sale and sending special offers to these presumably affluent customers, thereby deepening customer loyalty to their particular store,” notes Clogan. “Unlike email, which can end up in a spam folder, the retailers will have the ability to customize offers and customer communication in a very unique way.”

MasterCard’s partnership with MyWebGrocer, whose digital commerce solutions are present in more than 10,000 retail stores and used by 500-plus major consumer packaged goods brands. “Looking ahead, we continuously seek and evaluate new partnerships that enable us to innovate in order to create new benefits for our stakeholders,” she says. “MasterCard may explore other joint development opportunities with other partners.”

With Family Hub entering the market, what could the grocery shopping experience look like a year, or even five years, from now?

“This technology heralds the first signs of collaboration between the ever-popular IoT and grocery e-commerce,” affirms Clogan. “Over the coming years, we will see the profusion of grocery e-commerce-enabled devices throughout the home and office, including watches and other wearables. Not all of these devices will succeed, but between the IoT and development in areas such as 3D printing and artificial intelligence, the future appears to be much more consumer-centric and convenient.”

As connected homes become more pervasive and as the price of smart appliances continues to drop, Clogan believes more consumers will adopt these types of consumer durables, and shopping digitally, whether from a phone, tablet, desktop or refrigerator, “will become the norm,” he predicts.

From a supply chain perspective, the technology should allow retailers to become more profitable and efficient. “With these types of smart appliances, they can begin to predict the shopping habits of the digitally enabled customers and manage their inventory more effectively, with fewer out-of-stocks,” he explains, citing the rapid decline in the price of oil, which should also allow grocers to run their operations more profitably.

The mandate to build closer connections with shoppers will continue to evolve, says Sylvain Perrier, president and CEO of Toronto-based Mercatus Technologies Inc., driven largely by best-in-class retailers “engaging shoppers in more meaningful, personalized and contextualized conversations through all consumer touchpoints [via] implicit and explicit data sources and interactions.” (Read Perrier’s further thoughts on the subject in his Digital Dialogue column on page 117.)

Foremost to this progression, according Perrier, are mobile applications, which “are at the heart of most consumer micro-interactions and continue to drive success for many retailers. They are well poised to link both the online click and in-store physical interaction. Grocery retailers should focus on enabling their content and system platforms to be accessible and tailored for mobile, in-store and in-home consumer-facing solutions that will enable rich and personalized interactions.”

Retail trading partners have a host of untapped opportunities that remain to be unlocked as the rapidly evolving landscape continues to come into view, according to Perrier, who offers cautionary parting words. “The dawn of the smartphone revolution is over. In fact, we have reached mobile saturation in North America, [where] we now have access to shoppers at a moment’s notice and can engage with them privately and socially. The next big step,” he continues, “will be for retailers and supplier partners to learn how to deliver meaningful and purposeful content through personalization and contextualization.”

“Just as Family Hub changes the way we interact with our fridge, the new Groceries app will change how consumers shop.”
—John Herrington, SVP/GM of home appliances, Samsung Electronics America

“This new technology speaks directly to that mission, giving consumers a new, seamless way to shop for groceries right from their own kitchen.”
—Jodi Kahn, chief consumer officer, FreshDirect

“The game-changer, I believe, is about helping our customers get their ShopRite groceries through a variety of methods.”
—Donna Zambo, director of digital commerce and innovation, Wakefern Food Corp.