Time for Grocers to Adopt VR?
Although virtual reality (VR) technology in recent years often has been associated with consumer-facing entertainment – such as the novel and upcoming film “Ready Player One,” or the Playstation VR system – it’s finding growing potential to drive back-end efficiency in business, including brick-and-mortar grocery.
And while many believe VR is an idea to approach in the future, some see earlier adoption as a way to actually approach the future, today. Renowned grocery veteran Bob Mariano – who helmed Chicago-area grocer Dominick’s and Midwestern grocer Roundy’s, and now sits on the board of VR technology firm InContext Solutions – is one of those advocates.
Chicago-based InContext offers the ShopperMX flagship SaaS VR platform, through HIVE (Hi-Immersion Virtual Experience), which transports users via headset into a virtual store environment. This allows them to interact with products, shelf sets, store layouts and in-store displays to simulate in-store concepts “on the fly” and obtain data-driven insights on customer behavior by testing concepts and simulations with live shoppers using the technology.
In an interview with Progressive Grocer, Mariano offered three areas where VR technology can help grocers improve performance:
Shopper intelligence: Today’s retailers talk much about understanding the customer and what that means. VR technology can take away estimation about how a new product or concept is going to perform, essentially allowing for new ideas and concepts to be tested and even fail without significant time and financial strain. Even something like a department or store redesign can be tested before anything is changed or removed.
“This allows the retailer and the CPG to really put their heads together and come up with iterations, and then determine how the consumer changes behavior most effectively,” Mariano said. “This is important because when you get back to it, how can you change the results if you don’t change what the customer sees? 'I need to do something different to get a different result.' … This allows you to more confidently get out of ‘last-year-itis,’ in my opinion.”
Category management: Category management, in its long existence, has been a broad analysis based on logistics, and has had to do more with shelf supply than anything else. However, it’s only recently that the process is beginning to realize the importance of factoring in the shopper. Using VR gives the category and brand managers real-time, accurate data to test real shoppers’ experiences and work toward a reality.
“If we’re trying to match a category to give us a 2 or 3 percent increase next year, [and] all we do is look back on what we did, and that’s the basis for our decision on how to go forward with testing new ideas with the customer, it’s a matter of luck then,” Mariano said. “In today’s retailer market, you can’t make it by luck.”
The first time he tested the technology, Mariano felt like he was in an actual Walgreens store, seeing everything designed as it is in one of the chain’s typical stores. So if the customer feels that she's in a store she recognizes and even shops, insights into her behavior and reactions can be considered more trustworthy.
Planogram improvement: Grocers can determine how to best update their planograms by determining which categories should be adjacent, what customers are seeking and how to get shoppers down the aisle.
As an industry, “we really haven’t been doing a lot of work in terms of why consumers go down certain aisles, how heavy they shop, what do they look for,” Mariano noted. “That’s a whole area that is really underdeveloped in terms of knowledge of actually what makes a difference to the customer in terms of adjacency and things across the aisle from other categories.”
The major barriers to adoption, however, are twofold: cost and unfamiliarity, which go hand in hand to create skepticism. But stories of major cost cuts can encourage jumping such hurdles, Mariano suggests. For instance, when working with its grocery partners for a new store layout, one manufacturer partnering with InContext sought to purchase 22,000 complex display cases. After testing them in VR, though, it found that customers reacted more favorably to a less expensive model, saving the firm $880,000.
To move into the future and see VR’s potential, grocers will have to “put their foot in the water and try it,” Mariano said. Because if VR reveals a way to cut costs, it could pay for itself.
“You don’t want to arbitrarily start cutting the tail and reducing facing – you’d like to do that in a rational and logical way with the customers at the center of what you’re trying to do,” he said. “I think it makes all the sense in the world, given today’s environment in retail, to do it far more scientifically than the old way we always did it.”
Because ultimately, Mariano warns, if grocers don’t embrace VR to rethink the path to purchase and consumer-centricity, they may never turn the tide of fading center-store sales.