Both e-commerce and in-store customers are reaping the benefits of an increased investment in the IoT at food retail.
Food retailers have been making investments in technology for as long as they’ve been around, from cash registers to Just Walk Out and milk deliveries, to buy online, pick up in store. One solution that has proved itself to be the true game-changer of the past two decades, though, is the often-befuddling Internet of Things (IoT).
Put simply, IoT is a term that describes a network of physical objects embedded with software or sensors that allow them to share data with other devices and systems over the internet. Its use at food retail has been building up for quite some time, and today’s solutions go far beyond what many might expect.
Walmart, for example, has been employing IoT for several years, using millions of data points across its stores to monitor product temperatures, reduce food spoilage, manage energy usage over time, and much more. Amazon facilities use internet-connected robots to track, locate, sort and move products, while Simbe Robotics’ Tally robot has been roaming the aisles at myriad grocery stores in an effort to detect out-of-stocks and ultimately optimize store execution.
According to Hamburg, Germany-based market data company Statista, the global market for IoT end-user solutions is poised to grow to a whopping $1.6 trillion by 2025. With this type of technology rapidly changing and accelerating, and its solutions reaching into practically every segment of the grocery business, retailers should consider taking a closer look at all that it has to offer.
Avery Dennison's technology allows businesses to access item-level insights for their products across the whole supply chain.
IoT solutions come in many shapes and forms, and the basic devices and sensors that define them are often combined with other technologies such as artificial intelligence (AI), automation and machine learning (ML) to create the most effective solutions, explains Scott Headington, VP, strategy and solutions for Teaneck, N.J.-based IT services company Cognizant.
“We try to, first and foremost, leverage those things to improve the overall customer experience,” Headington says. “How can we make it more relevant, more personalized for those consumers as they come into a store? For stores and supply chains, how do we make them more predictable, more seamless and more efficient in the long run?”
When looking at an IoT shelf-edge solution, for example, Headington notes that a camera is programmed through AI to know how much product should be on a given shelf; then the camera will trigger an alert to replenish stock or reorder items when what’s available drops below that level. “It’s triggering that information to then be transferred to wherever the next touchpoint needs to be, as far as a reorder or for a store clerk to then act on it,” he says. “Over time, the models become smarter and more intelligent to better understand the situation on the shelf.”
For his part, Sachin Gupta, global sustainability industry lead for Armonk, N.Y.-based IBM, has seen an evolution in IoT from a focus on operational efficiency, such as refrigeration and temperature control, to supply chain efficiency and optimization, and finally to the consumer efficiency that Headington addresses. Especially post-pandemic, Gupta explains, there has been a move toward experience-based retailing that’s being helped along by IoT solutions that can help consumers with seamless ordering and delivery, in-store shopping, and more.
Walldorf, Germany-based software company SAP, which offers robust IoT solutions for retail, is partnering with hardware technology companies to drive innovation, from AI-powered computer vision and RFID for checkout and inventory management, to cameras and weight sensors that help associates further understand and automate store operations. SAP’s technology helps retailers better serve their customers in real time while continuing to invest and improve in their day-to-day operations.
Improving Pain Points for Retailers, Consumers
When it comes to IoT solutions that make operations easier on the back end while also creating a superior customer experience, Cognizant’s Headington believes store associates are a big part of the equation. IoT can help enable inventory visibility so employees can know exactly where a product is at any given time, which in turn translates to a better customer experience, thanks to fewer out-of-stock headaches.
Many IoT-enabled solutions that take care of these types of tasks also lead to cost reduction in overhead and labor at a store, and free up associates to better help customers. As Headington explains, the Apple retail store has a QR code on the wall that allows customers to check themselves out, much like grocery self-checkout. While the company isn’t necessarily reducing labor, it’s dedicating more associates to helping people understand the technology and sell it.
“If a grocer is looking to provide better service at a store, maybe you’re freeing up an associate that can then spend more time on the floor helping customers find products, answer questions and things like that,” Headington explains.
SAP is also working to solve retail pain points, especially in relation to changing consumer preferences, according to Sameer Patel, SAP’s chief marketing and solutions officer. Convenience giant Casey’s General Stores Inc., for example, is creating a more convenient customer experience using the SAP CX portfolio, and has since streamlined its online ordering platform, introduced a mobile app and created a new loyalty program. Using other SAP solutions has allowed Casey’s to increase its average order value per customer during the pandemic, due to highly personalized offers.
Avery Dennison Corp., based in Mentor, Ohio, is helping retailers address food waste by partnering with SAP and integrating its Analytics Cloud into its own connected product cloud. Through the partnership, businesses will be able to access item-level insights for their products from manufacturing to distribution to shelf, with this transparency providing unique supply chain information and enabling expiration date management and automation.
According to Max Winograd, VP of connected products at Avery Dennison Smartrac, the company’s additional solutions can help retailers experience up to a 20% reduction in food waste through smarter tracking at all touchpoints. This tracking can also help consumers prevent excessive food waste in the home when a food recall is involved, as the granular producer- and lot-specific data lets them know for certain whether they’re directly affected by a recall and enables them to act accordingly.
The technology can also help accelerate the time to recall, Winograd says, which will be especially helpful when a new FDA rule pertaining to the Food Safety Modernization Act and greater visibility into food recalls comes online in the near future.
Additionally, IBM’s blockchain-enabled Food Trust and its other IoT solutions are making inroads with regard to reducing food waste and promoting sustainability. According to Gupta, this technology has an impact across the entire value chain, but especially perishables, since shelf life can be more easily managed.
“Imagine the whole supply chain optimization that can happen because of IoT. Now the distributors can simply do a QR code scan and know where something is meant to go, where it’s coming from and how much shelf life it has,” Gupta says. “It’s the same for retailers as well. Retailers don’t need to bother with looking manually for the shelf life.”
IoT solutions from IBM's Food Trust can help companies trace their products from production to store shelf.
Getting Started and Looking Forward
While there’s no linear path to IoT integration in any given food retail environment, Headington believes that grocers should start with an assessment of where they’re at as a company with technology and the overall mindset behind technology integration. “If we get down to the store level, what are the issues or pain points we’re trying to address?” he asks.
Gupta also believes that grocers should think strategically about their main objectives for wanting to incorporate IoT solutions into their tech stack, and base decisions on their own resources, number of stores, types of products they offer and other considerations.
“I think the simplest use cases of IoT today are the operational efficiency ones, in terms of refrigeration control and automatic movement sensors,” he explains. “These have proven themselves: They save between 20% and 30% of all energy, and that presents an automatic business case.”
Clearly, IoT solutions are becoming smarter, and the technology is only expected to become cheaper and more accessible to retailers of all sizes. SAP’s Patel believes these solutions will become interoperable, and as they’re further embraced by consumers, more potential use cases will emerge that could blend health and food to lead to a more personalized and sustainable future.
“Combined with machine learning and AI, IoT solutions will form the backbone of store operations, supply chain processes and customer experience,” Patel says. “IoT capabilities will be commoditized and thus more accessible and easier to deploy.”
Headington expects the treasure trove of data being collected through IoT technology to help grocers get better at making strategic decisions, and also that theft prevention is a major area where IoT can make even more headway.
“We have clients that are looking at IoT technologies where you can take a handbag, scan something on the inside of the bag, and it’ll tell you if it’s authentic,” he notes. “How do you apply that technology to food?”