The digitization of trade: What will the supermarket of the future look like?
In the 500-square-meter “Innovative Retail Laboratory” (IRL) at the headquarters of Globus SB-Warenhaus Holding in the German town of St. Wendel, researchers are designing new digital systems to guide brick-and-mortar retailers into a new age. Professor Antonio Krüger, Scientific Director of the lab, reveals what shopping will look like in the future.
Professor Krüger, you’re a computer scientist who specializes in human-machine interaction. That doesn’t really sound all that romantic. Isn’t shopping something that involves the senses too?
Krüger: Of course. Picking out fresh food is a pleasant and sensuous experience. And it should stay that way, naturally. At the Innovative Retail Laboratory, we’re basically trying to pare down all the aspects of shopping that tend to be annoying. And what’s helpful for that are digital systems that interact with people in order to give them the best possible information.
What IRL-developed systems are already in use?
Krüger: The product finder, basically like a Google search for the supermarket, was one of the first developments to be adopted for commercial use. Globus stores, for example, where we launched the system in 2011, are huge, with approximately 100,000 products spread over an area of 15,000 square meters. It’s easy to lose track of where things are at times. So we made it possible to do a product search for the store. Customers can call up the exact location of a product on a display. So far, the product finder has only been available as a terminal in the store, but a mobile application will soon be launched too. The app will include a navigation feature. When the user puts together a long shopping list in the app, it will determine the shortest possible shopping trip through the store.
Don’t supermarkets want to keep their customers in the store as long as possible so that they see many other product offers?
Krüger: In the case of smaller stores, that may be true, but if you’re operating very large supermarkets like Globus, Kaufland or Rewe XXL, then the time it takes customers to do their shopping is a critical quantity. Customers would generally rather shop efficiently in that case. But in the product finder app, there will also be discovery tours, such as for exotic cuisine. This kind of application offers countless ways to satisfy all the individual customer preferences.
That really would blur the distinction between in-person and online shopping.
Krüger: Exactly, offline and online are growing closer together. With the app, customers don’t feel as though they’ve wasted time in the brick-and-mortar store either. Often, it’s more a matter of perceived time. Customers mustn’t get the feeling that they’re not spending their time the way they’d most like to. So looking for a product for an unnecessarily long time wouldn’t be good.
With regard to payment, the IRL has helped Globus bring the scanner checkout to a wider audience, as it were.
Krüger: Yes, after the consultation with us, Globus introduced hand scanners in all new supermarkets. Customers can now scan their products themselves as they put them into their shopping carts — while they’re shopping, in other words. That has the advantage that they no longer have to wait in line at the checkout; they simply pay at a terminal. And customers no longer have to go through the extra step of placing the products on the conveyor belt at the checkout. This has met with a very good response, although a professional cashier could generally perform this job much faster. But during busy periods with fairly long lines, it’s definitely worth it. Even during off-peak times, though, customers have the feeling that things are going faster with self-scanning, because they scan in the prices themselves and don’t have to stand idly at the checkout and watch. They gain more control over the shopping process. The scanning devices are also comfortable to hold in your hand, which makes it fun and easy to operate them. So the user experience is very good.
Will brick-and-mortar retailers become more popular again as a result of innovations?
Krüger: Yes, concepts from online shopping are increasingly moving into brick-and-mortar retail, which has significantly enhanced the latter. The fact that you have electronic assistants and aids that mitigate the disadvantages of offline shopping to some extent has the effect of making it more entertaining to shop in brick-and-mortar stores.
As recently as a few years ago, there was a lot of hype around RFID as a way to digitize brick-and-mortar retail. What’s your view of this radio ID tag technology today?
Krüger: In our opinion, RFID will never be adopted by food retailers in a comprehensive way. In the textiles field, it’s common practice to sew RFID chips into articles of clothing. With this technology, textile manufacturers have the entire supply chain under control. Brands like Gerry Weber or the Japanese manufacturer uniqlo then have an eye on everything, starting with the raw materials. But in the textiles field, the margins are also higher. RFID chips are still too expensive to be integrated into yogurt containers. In our lab, we’ve tested cooling shelves that know via RFID chips what products have been removed. These can then be ordered autonomously so that the customer is never faced with an empty shelf. By now, though, there are alternative optical processes that have become much better.
So a camera is used in places where the chip is too expensive?
Krüger: Exactly, yes, many products could be identified based on the packaging. That’s much cheaper, because nothing has to be attached to the packaging. Product recognition using camera images has improved a lot in recent years. Artificial intelligence is really doing its bit here as a result of improvements in neural networks. These systems are also capable of learning, so product recognition is getting better and better over time.
What does the future hold? What are you researching at the moment?
Krüger: One big topic is shelving with recommendation and filtering systems. The idea behind this is that customers get information about products that are relevant to them right at the shelf. The systems that currently exist are somewhat cumbersome, because the information is only displayed after the customer has scanned in a bar code, for instance. But it gets interesting when you have a system using smart glasses that display certain information — and that do so automatically as soon as you look at a shelf. It would be possible to mask out products that aren’t appropriate in any event, because the customer is allergic to their ingredients or just doesn’t like them, for example. The result is a personalized view as soon as the customer enters a supermarket. We’ve successfully tested this in our lab using a muesli shelf. In this case, the muesli varieties that are of no interest to the customer are grayed out.
So far, smart glasses have had a hard time gaining acceptance.
Krüger: The glasses are still a bit too clunky and too expensive, but if you look ahead ten years into the future, when these smart glasses will be much smaller and cheaper, they’ll have a big influence on our shopping experience. And a lot of elements will be automated. By means of cameras in the refrigerator and in cupboards, a virtual purchasing manager will always be able to tell us how much bread and butter we still have at home. In the future, these common everyday products whose consumption is easy to predict will probably be delivered to the home automatically for the most part, so that in the supermarket, we’ll be able to concentrate fully on products that are special, items that are not commonplace. Thanks to digitization, we’ll go about our shopping with a different attitude.
Professor Antonio Krüger is the Scientific Director of the Innovative Retail Laboratory (IRL) in St. Wendel, which is part of the German Research Center for Artificial Intelligence (DFKI) in Saarbrücken.
Author: Editorial team Future. Customer.
Image: Innovative Retail Laboratory (IRL)