CINCINNATI - The Kroger Co. is testing a new digital shelf technology that can stream ads in full-motion video and alert customers when they’re passing an item that’s on their shopping list.
"It’s absolutely transformational,” said Chris Hjelm, executive vice president and CIO for the Cincinnati-based grocery chain. “The digitization of the store will allow a better experience for customers and associates because our heads are up. We can do our tasks without being buried in a device.”
The new technology is on display this week at the Kroger Leadership Summit, a gathering of more than 5,200 Kroger managers who work in stores, factories and distribution centers all over the country. It’s a chance for Kroger executives to catch up on new products and company innovations.
The event is being held at the Duke Energy Center, U.S. Bank Arena and Washington Park in Over-the-Rhine.
Kroger is trying to perpetuate a 47-quarter streak of identical-store sales growth by promoting best practices in hiring, customer service, technology and new-product innovation. One example is an employee-retention program in Seattle that helps the company deal with an ever-tightening labor market by making sure new associates don’t get frustrated and leave.
“Our QFC division in Seattle has a ‘No new hire left alone’ program,” said Tim Massa, Kroger group vice president of human resources and labor relations. “They call it a lifeline. Every associate in the store takes turns in shadowing the new hire, checking in with them.”
Massa thinks the program has potential to not only retain workers, but develop new managers as co-workers mentor each other on a regular basis.
“Our learning labs are our stores,” he said. “We’re testing things around the country and seeing if it sticks.”
On the new product front, Kroger managers were able to sample the new HemisFares brand, a private label offering that launches this week as part of a “Taste of Italy” promotion in Kroger stores nationwide. HemisFares is an international food brand that is launching with 27 different products, most with an Italian theme.
“The gelato market is extremely hot right now,” said Brad Studer, a senior brand manager at Kroger. “So, the introduction of gelato we think will be huge. And then, honestly, olive oil. People are increasing their usage of olive oil as a healthier alternative in cooking."
Back to technological innovations, Kroger has been working on digital shelf technology for more than a year now, but only recently has it deployed its weapon of choice. It’s a triangle-shaped rear-projection unit that fits beneath store shelves with a plastic screen that’s durable and software that’s hacker resistant and adaptable to a variety of uses.
For example, Kroger could sell ad space on the banners, now being tested at a store in Cold Spring, Ky. It could display custom-pricing that changes when it recognizes a loyal shopper. It can be programmed to be interactive, allowing customers to learn more about a product by touching the screen. It could employ dynamic pricing, raising or lowering a price in response to customer demand. Or it could flash inventory updates to customers as a promotional tool, a chance for Kroger to test whether shoppers are more motivated to buy if they learn only 20 items remain in stock city-wide.
“If you look at the list of potential things we can do, it’s a pretty long list,” Hjelm said. “We’re trying to make sure it’s rock solid” before developing new uses for the technology.
Hjelm has been pursuing the idea of a “connected store” at Kroger where Bluetooth-enabled sensors monitor freezer temperatures, track customer movements and link shoppers to hand-held price scanners. He sees it as a way to enhance the grocery-shopping experience and differentiate Kroger stores from rival chains.
Even as Kroger experiments with online shopping, Hjelm is convinced brick-and-mortar retail won’t ever perish in the grocery industry.
“You’ll get customers who love the convenience (of online shopping) and then there will be people like me who love the food or love the experience,” he said. “I love the store. I love seeing what’s new. I love getting my own produce. It doesn’t mean someone else couldn’t do a great job for me, but I love the store.”
He’s also fond of the latest digital-shelf prototype. So much so that he wants to sell it to other retailers, either by licensing the technology or launching a new company to build units and sell them.
“We are thinking about commercializing of the technology and allowing other retailers to take advantage of this. It’s early, but there’s no reason why (this can’t be) a commodity in five years,” he said.